FI meet on Grasim entry into L&T
By Praveen Chandran | 04 Jan 2002
Mumbai: Financial institutions, which control the largest single stake of 35.4 per cent in Larsen and Toubro, have called a Higher Investment Management Committee (HIMC) meeting on 6 January to discuss the backdoor entry of the AV Birla-promoted Grasim Industries into L&T.
Late last year, the FIs had picked up the Reliance Industries stake of 10 per cent in L&T. The FIs' move is based on a complaint mooted by Investors' Grievances Forum. Its president, Kirit Somaiya, says the meeting the four financial institutions — LIC, IDBI, UTI and the General Insurance Corporation — have convened will decide on the extraordinary general meeting of L&T shareholders and the removal of Grasim nominees from the L&T board.
Says Somaiya: "In a written communication received from L&T, the company management had agreed that Mukesh and Ashok Ambani have resigned from directorship on 22 November 2001. It also informed that Grasim has acquired 10.05 per cent shares on 21 November and the Birlas have been appointed directors at the board meeting held on 23 November. Now, all these developments cannot be a mere coincidence."
Grasim, he says, "acquired shares on 21 November, the Ambanis resign on the next day and immediately the day after that, the board holds its meeting and appoints its competitor, Grasim nominees, as directors of L&T. This is purely a milibhagat (combined act) of big business houses and the L&T management."
Besides, paying a higher premium of Rs 142 per share to acquire the shares is a purely backdoor, unannounced takeover, he says. "Grasim had paid Rs 306 against the market price of Rs 164 to acquire the Reliance shares."
Somaiya says the FIs' role in this issue is equally dubious. "L&T has officially conveyed to IGF that in the 23 November board meeting, FI representatives were also present. The resolution for co-opting the Birlas on the L&T board was passed in the presence of FI representatives."
Late last year, the FIs had picked up the Reliance Industries stake of 10 per cent in L&T. The FIs' move is based on a complaint mooted by Investors' Grievances Forum. Its president, Kirit Somaiya, says the meeting the four financial institutions — LIC, IDBI, UTI and the General Insurance Corporation — have convened will decide on the extraordinary general meeting of L&T shareholders and the removal of Grasim nominees from the L&T board.Says Somaiya: "In a written communication received from L&T, the company management had agreed that Mukesh and Ashok Ambani have resigned from directorship on 22 November 2001. It also informed that Grasim has acquired 10.05 per cent shares on 21 November and the Birlas have been appointed directors at the board meeting held on 23 November. Now, all these developments cannot be a mere coincidence."
Grasim, he says, "acquired shares on 21 November, the Ambanis resign on the next day and immediately the day after that, the board holds its meeting and appoints its competitor, Grasim nominees, as directors of L&T. This is purely a milibhagat (combined act) of big business houses and the L&T management."
Besides, paying a higher premium of Rs 142 per share to acquire the shares is a purely backdoor, unannounced takeover, he says. "Grasim had paid Rs 306 against the market price of Rs 164 to acquire the Reliance shares."
Somaiya says the FIs' role in this issue is equally dubious. "L&T has officially conveyed to IGF that in the 23 November board meeting, FI representatives were also present. The resolution for co-opting the Birlas on the L&T board was passed in the presence of FI representatives."