Khaitans Exit India Foils, Sells 20% To Icici

The Brij Mohan Khaitan group has severed its last ties with India Foils Ltd (IFL) by transferring its entire 20 per cent stake in the aluminium foils maker to ICICI.

The Khaitans, who acquired India Foils from Alcan in the late '80s, passed on the management control of the company to the Agarwals of the Sterlite group through a simultaneous issue of equity shares and warrants in April, 2000. Since then, the Khaitans held around 20 per cent mainly through group companies -Eveready Industries and Williamson Financial Services- while the Agarwals managed the company with a 55 per cent stake.

 

The move of pulling out of IFL may be followed by withdrawal of the group's representative from the board. Aditya Khaitan, director of Eveready, is the sole representative of the Khaitan group on the six-member board. The Sterlite group's representatives are Navin Agarwal, Agnivesh Agarwal, Tarun Jain and S C Krishnan. The sixth member is the ICICI's nominee Alok Agarwal.

Aditya Khaitan confirmed the share transfer deal. He could not quantify the amount of stake the Khaitans offloaded. However, sources in the Khaitan group said that the shares transferred represented 20 per cent of the equity capital of IFL.

When asked whether he would be stepping down from the board, Khaitan said, " I am still on the board".

The transfer of nearly 56.7 lakh ordinary shares, representing 20 per cent stake in IFL, to ICICI took place reportedly at around Rs 7 a piece, a gross discount over the price of the preferential allotment of shares through which the management control was changed hands. Sources said the preferential issue was priced at nearly Rs 24 a share.

Sources said the transfer of IFL shares appeared to be part of the group's strategy to hand over its long term equity investments in some companies to ICICI in lieu of the fees due to the financial institution for restructuring of the debts of Eveready Industries, the tea and battery maker from the Khaitan stable. Eveready's outstanding to ICICI stands at a shade below Rs 400 crore.

In addition to IFL, the group has transferred its entire or part holding in some companies and funds like Unit Trust of India, Morgan Stanley, Satyam, DSQ, Saregama, CESC, Pentamedia and State Bank of India. The worth of these transfer is fixed at Rs 15 crore. Khaitans have also transferred their 5.73 per cent holding in George Williamson (Assam), an erstwhile group company, to ICICI.

After an abortive attempt to sell India Foils to the Aditya Birla group, the Khaitans struck a "strategic alliance" with the Agarwals of Sterlite since the foils business did not fit into its core businesses of tea and battery.

IFL enjoys 40 per cent share in the domestic market with capacity of 19,000 tonnes per annum. It is also the largest Indian exporter of foils. It posted a turnover of Rs 285.24 crore in 2000-01.