Birlas May Seek Time-bound Sebi Probe Into L&T Control Issue

Mumbai, November 29: | Updated: Nov 30 2002, 05:30am hrs
Grasim Industries may consider the possibility of urging the Securities and Exchange Board of India (Sebi) for a time-bound probe into the latters investigation as regards whether Grasim has acquired control of Larsen & Toubro (L&T).

Sources close to the AV Birla Group said that the company would not hurry into a decision regarding its future course of action and was yet to decide on what course of action to chalk out following the Securities Appellate Tribunals (SAT) decision on Thursday upholding the Sebi decision to put Grasims open offer for an additional 20 per cent stake in L&T on hold.

Sebi Disallows Grasim To Buy More L&T Shares

Mumbai: Sebi chairman GN Bajpai said on Friday that Grasim Industries cannot buy additional shares in L&T after SAT declined the companys plea for interim relief to vacate Sebis stay on its open offer for L&T.
Talking to newspersons after the Sebi board meeting, Mr Bajpai said that since SAT has upheld Sebis advice on the open offer, the Aditya Birla Group flagship company cannot use the creeping acquisition route to buy additional shares of the cement and engineering major.
Meanwhile, Grasim also informed BSE that Sebi has advised its merchant banker, JM Morgan Stanley that Grasim should not acquire any further shares of L&T in the open market or through negotiation or otherwise with effect from November 29, 2002 until further advice.
Sebi sources, said that the excess holding of Grasim in L&T will be frozen till the time company comes out with the offer. Grasim holds 15.42 per cent and has 0.42 per cent stake in excess of permissible limit of 15 per cent which triggers the open offer.

The other options before Grasim include going to the Supreme Court on points of law and alternatively, pressing the companys submission before SAT which at a later stage, would hear the issue of whether an investigation can be launched by Sebi.

Meanwhile, in a statement, a Grasim spokesperson said, Grasim has always co-operated with Sebi and we will continue to do so and provide information as requested.

Legal experts pointed out that there is a question mark on whether the Birlas, if proved innocent in the Sebi investigation, would be allowed to come up with an open offer at the same price of Rs 190. This, added these experts, would not be of much use due to the time lag.

Sources added that the SAT order would have implications on the open offer price as the L&T scrip price would become speculative.

Moreover, sources close to the Birlas argue that its acquisition of the Reliance stake at a premium to the marketprice and the subsequent open offer had resulted in an attractive opportunity for L&T shareholders to opt for the exit route at Rs 190 per share as the L&T scrip price was ruling at Rs 150 levels before the acquisition and had subsequently, moved up.

Both Grasim and L&T shareholders lose as a result of stalling of the process. What if the Birlas later decide not to go ahead with an open offer the source queried.

Arguing that the decision to keep the open offer price at Rs 190 per share was purely a commercial one, sources hinted that the demand for Rs 306 per share (which was paid by Grasim to Reliance) was more of vested interests who had garnered L&T shares in anticipation of a higher price.