Sterlites buyback sans permission, says IGF

Mumbai: The Investors' Grievances Forum (IGF) claims that Sterlite Industries has initiated the buyback programme without obtaining any permission from National Securities Depository Ltd (NSDL) and the Securities and Exchange Board of India (Sebi).

IGF officials say in early May 2002, Sterlite had forwarded a proposal to NSDL for approval to transfer the shares from the shareholder account to the company's account in a case of a negative consent as per the scheme.

But NSDL, vide its letter dated 14 May, rejected Sterlite's proposal and said the company has to follow the proper procedures before going for a buyback offer. NSDL said if Sterlite wants to proceed with the buyback it should obtain permission from Sebi. NSDL also wrote to Sebi on 24 May regarding this.

But IGF says Sterlite, without having such permission in hand, proceeded with the implementation of the scheme. The company has stopped the trading on the stock exchanges from 13 May and the offer to shareholders was made on 24 May.

"Sterlite is in a fix now. How the shares will be transferred to the company under the scheme without the permission of Sebi and NSDL is not known. Sebi has also filed a petition for the cancellation of the scheme which is coming up on 25 June," the IGF officials say.

In the meantime, with the negotiations initiated by the Department of Company Affairs (DCA) failing to resolve the differences between the management and representatives of the minority shareholders of Sterlite, DCA has decided to join hands with Sebi in its case against the proposed share buyback by the company before the Bombay High Court. DCA has filed an appeal in the high court on 21 June 2002.