Our Markets Bureau

Mumbai, April 16: THE open offer of Bright Star Investments Ltd of Damanis for additional 20 per cent stake in Hyderabad-based VST Industries Ltd is facing hurdles in the form of further disclosure sought to be incorporated in the offer document by the Securities and Exchange Board of India (Sebi). The regulator is of the view that the open offer document is not complete without disclosure on the Sebi investigations on RS Damani, who it considers as a person in concert in this case.

“The investor is entitled to know the nature and extent of investigations, particularly by the Sebi, on RS Damani. So, disclosures about the investigations into Mr Damani’s businesses must be part of the document,” Sebi board member Prof JR Varma told The Financial Express on Monday.

However, Prof Varma denied that there was any proposal to stall the open offer at the moment. But the delay in clearing the offer document filed by Bright Star is expected to delay the whole process, which has to adhere to specific time frames for opening of offers and counter-offers under takeover code.

RS Damani is one of the promoters of Bright Star and there were reports earlier that, apart from Sebi, other government agencies such as Income-Tax Department and Central Bureau of Investigation (CBI) are also investigating the activities of Mr Damani.

“We are also yet to decide the extent of such disclosures and how they should be done,” Prof Varma said adding, if it has to taken from the Sebi report, it should come from the investigation department to the takeover department.

The open offer by Bright Star at Rs 112 per share of VST was supposed to take off on March 30, 2001, which if subscribed in full would have made Bright Star the largest shareholder in the cigarette major.

Bright Star already acquired 14.97 per cent stake in VST. Multinational, British American Tobacco (BAT) is the largest shareholder in VST now with 32 per cent stake. Last month, Russel Credit, a subsidiary of ITC Ltd, in which also BAT is the largest shareholder, has made an open offer for Rs 115 per share.

When contacted, John Band of ASK Raymond James & Associates, investment advisors to Bright Star, said “We believe that we have furnished all the details asked by Sebi.” About the details relating to investigation by Sebi, Mr Band said “We cannot disclose anything of that kind.” As the Sebi has investigated into the issue, the regulator must be able to make disclosures on the issue. Sebi has submitted its preliminary investigation report on the bear hammering witnessed in the stock market since March 2, as part of which RS Damani’s businesses were also probed.