Acc To Stay Out Of Tata Group

Shapoorji Pallonji Mistry likely to take over as chairman in September

The board of directors of Asso-ciated Cement Companies has decided to stay out of the Tata group. The decision was prompted by the opposition from the financial institutions to any move to bring the large cement maker under the Tata umbrella.

At a recent meeting, the board decided that the company should be closely associated with the Tata group, but not a part of it. This means that ACC will neither change its logo nor contribute to the Tatas brand royalty programme. The brand royalty programme has proved to be a contentious one with Tata Sons the holding company deciding to charge a fee

 

from group companies for the use of the Tata brandname by group firms. Several companies including ACC and Indian Hotels have resisted attempts to force them to pay up.

Outgoing ACC chairman Nani A Palkhivala told Business Standard yesterday that the board of ACC has decided that ACC should be treated as closely associated with the Tata group.

The ACC boards decision to stay out of the Tata group is a major victory for Palkhivala who has maintained all along that the cement company has a separate, distinct identity from the Tata group.

Following his line, the company had not contributed to the brand royalty programme, changed its logo. Nobody from the Tatas came to ACC asking it to take part in the programme, Palkhivala said.

It had also not participated in the Tata Sons plan to raise its stake in group companies as in the case of Tisco which subscribed to Rs 100 crore worth of Tata Electric shares and thereby increased the Tata group companies stake in the power company by five per cent. The two FI nominees on the ACC board strongly opposed Tata Sons move to make ACC formally a part of the Tata group and wanted it to retain its separate status.

According to ACC sources, the FIs felt that the company could be free from several obligations which it would have to honour if it were a part of a large industrial group like the Tatas.

Palkhivala, however, said that it was in the overall interest of ACC to ensure that it came closer to the Tatas. However, the Tatas should increase their shareholding in ACC, he added.

I do not want the sharks to swallow ACC,, he said.

Meanwhile, Shapoorji Pallonji Mistry has emerged as the favourite to become the chairman of the cement giant after Palkhivala steps down in September.

Palkhivala has announced his retirement from the company he has headed for so long. Mistry, who is the deputy chairman, holds an 11 per cent stake in the company.