Sterlite Told To Pay Rs 221 Per Indal Share

The Delhi High Court has directed Sterlite Industries Ltd and Eastern Galvanising to pay Indal shareholders Rs 221 per share for the shares tendered in the former's open offer. It has ordered the company to pay interest at 15 per cent per annum on the amount due from July 2, 1998. It is to be paid to those shareholders who offered the shares under the open offer in May 1998.

The high court ruling, passed on May 31, 2002, held that withdrawal of the Sterlite open offer would not be permitted. When contacted, a senior Sterlite official said the company's lawyers were still studying the order and would be able to respond only after going through its implications.

Only those shareholders whose shares are still lying with Sterlite will be entitled to the benefit of the payout and not those who have withdrawn the shares.

In 1998, Sterlite had made a bid for Indal and made an offer for 20 per cent of Indal's equity at Rs 90 per share, which it subsequently revised in a bidding war to Rs 221 per share.

Due to competitive bidding by Alcan, Sterlite was unable to mop up the required number of shares to take over Indal.

It then withdrew the public announcement on the grounds that statutory approval of the shareholders had been refused. The Indal shareholders, who had tendered their shares were informed that their shares were being returned.

By then the market price of the shares had fallen to below Rs 100 per share.On August 2, 1998, Sebi issued a showcause notice to the company seeking forfeiture of the escrow account while it also directed it to make payment to the shareholders at the rate of Rs 221 per share along with interest.

Sterlite went in appeal to the Appellate Authority, which also upheld the Sebi order.