Asian Paints Promoters May Talk To Kotak

The promoters of Asian Paints are likely to make a renewed bid to buy back former managing director Atul Chokseys 9.1 per cent stake in the company, which is being held by Kotak Mahindra Capital Company (KMCC) pending a Foreign Investment Promo-tion Board decision on an ICI Plc application for its transfer.

The promoters chances of consolidating their stake in the company have brightened following a decision by the Centres core group of secretaries to seek a clarification on the FIPB guidelines on purchase of equity in local companies by foreign companies.

Although the Foreign Invest-ment Promotion Board (FIPB) is yet to take a formal decision on the application, sources say it is unlikely to be in ICIs favour. The core group, which consists of among others the secretaries of industry and finance, acts as an input body for the FIPB.

 

Although its decision is not binding on the FIPB, the board usually does not go against the core groups recommendations.

Neither Asian Paints promoters the Choksis, Danis, and Vakils nor ICI would comment on the issue.

While ICI stuck to its stand that it has received no intimation from the FIPB, sources among the promoters said they could only verify the governments stand today after the holidays are over.

Though ICI had purchased the shares for Rs 128 crore, physical delivery can take place only after the FIPB clears the deal. If the deal does not go through, KMCC is free to sell the shares in the open market.

The price difference between this sale and the previous purchase by Kotak Mahindra will be reimbursed by ICI. This is stated in one of the clauses of the agreement between KMCC and ICI Plc.

An offer by the Asian Paints promoters to ICI to buy back the 9.1 per cent share during one of the earlier rounds of negotiations had been rejected.