Ici Bides Time For Sorting Out Asian Paints Tangle

After failing in its bid to transfer shares in Asian Paints, the British multinational ICI Plc has decided to wait till the formation of a new government to initiate a dialogue, company sources said.

ICI Plc had sought to acquire 9.1 per cent shares of blue chip Asian Paints India Ltd (APIL) in August, and had approached the Foreign Investment Promotion Board (FIPB) to obtain permission for the same.

In November, FIPB refused to take up the application of the British company saying that it could not be considered without a supporting board resolution from Asian Paints.

ICI had obtained permission from the Reserve Bank of India (RBI) to bring in Rs 129 crore to buy the shares purchased on their behalf by Kotak Mahindra Capital Company (KMCC).

 

KMCC recently obtained RBI permission to retain the money for a further three months in view of FIPBs decision not to consider the application.

The purchase of 9.1 per cent shares of Asian Paints promoter-cum-managing director Atul Choksey by ICI had raised a controversy with the other promoters of the company the Danis, the Vakils and the Choksis threatening that they would not allow the transfer of shares to the British company.

ICIs bid to purchase the shares was only a pre-emptive bid to prevent other multinationals from purchasing these shares, and the delay is not a cause of worry, the sources said. The recent permission obtained by KMCC from the RBI can be extended further if required, and the company is in no hurry right now, the sources said.

ICI Plc, which has been studying the situation carefully, has asked its subsidiary to wait for the time being, the sources added. They said the company was of the opinion that they were legally on a strong wicket, and according to their understanding of the laws, the case could be considered favourably by FIPB.

In its application to FIPB, ICI had made it clear that there was no takeover bid in acquisition of APIL shares.

Company sources said a board resolution by APIL supporting ICIs move was not required, and they had approached FIPB clearly stating that they would not be part of the management or try for a seat on the companys board.