The markets watchdog has, vide a letter dated March 3, 1999, also told the company that it can, if it wants, make a fresh offer for 20 per cent of the expanded equity of Saurashtra Cement (the expansion was due to a series of preferential allotments to promoters in the face of the takeover challenge).

The Autoriders group, which has locked up a sum of Rs 4.5 crore in the escrow account with the Union Bank of India has, in response, expressed its intention to withdraw the offer through a letter to Sebi.

The Sebi letter says: "You are advised to either revise the offer so as to increase it to acquire an aggregate minimum of 20 per cent of the actual voting capital or approach Sebi with a request to seek withdrawal of the offer in accordance withRegulation 27(1)(d) of the Takeover Regulations." The watchdog had asked Autoriders to convey its decision within 10 days from the date of issue of the letter.

Sebi had earlier held in a landmark judgment that the Autoriders open offer for 20 per cent of the company's equity was "not as per the regulations" because it failed to take into account an expansion in equity through preferential allotments to Saurashtra Cement's promoters, the Mehtas.

Also, concluding that the omission of the names of the allottees from mandatory corporate disclosures was not appropriate, the Saurashtra Cement promoters who used a series of preferential allotments to keep out the Patels of the Autoriders group had been asked to make an open offer to the shareholders through their private investment companies through which they increased their stake. The Mehtas have, however, contested the Sebi judgment and approached the appellate authority for exemption to make an open offer.

The Autoriders open offer had been held invaliddue to an eight-day gap between a quiet preferential allotment made by Saurashtra Cement to its promoters and the open offer. This implied that the equity base had expanded. Though the information was provided to the BSE later with explanations for the delay, the Autoriders group did not know of the preferential allotment at the point of its open offer.

Sebi had held: "Even though it is stated by the acquirer that they were not aware of the voting capital of SCL at the time of making the public announcement, there was nothing which prevented them from revising their offer so as to increase it to acquire an aggregate minimum of 20 per cent of the actual voting capital as soon as the acquirer came to know of the same. The acquirer has chosen not to revise the offer."