Indian Aluminium Co Ltd (Indal) has sent a communication to Montreal-based Alcan, its principal shareholder, to react to the latest media campaign by Sterlite Industries (India) Ltd, said sources in Indal. Indal feels that Sterlites public announcement specifying that Alcan would require the permission of the Reserve Bank of India (RBI) under 29(1)(b) of the Foreign Exchange Regulation Act (Fera), 1973, is an attempt to confuse the shareholders and the general public.
Indal has taken offence particularly because Alcan has clarified these conditions in its public announcement of its counter offer on March 9. As Sterlites announcement has caused tremendous discontent in Indal circles, they are now waiting for Alcan to react to Sterlites move either directly or through its merchant banker, J M Financial.
In its announcement, Sterlite seemed to suggest that Alcans counter offer would face difficulty on the grounds of Fera. This is one of Sterlites tactics to mislead shareholders on the validity of the offer and pose a problem for Alcan, said Vijaya Sampath, vice president of Indal.
In fact, Alcans public announcement of its counter offer clearly states that its offer is subject to receipt of all applicable statutory and regulatory approvals and clearances. Hence, there is no question of violation of either 29(1)(b) of Fera, 1973 or whatever other standard requirement applies to Alcan, pointed out Sampath.
She also added that 29(1)(b) is a standard requirement, which applies to Sterlite as well for buying the GDR shares. But there is no Foreign Investment Promotion Board (FIPB) bar for Alcan to have an equity up to 74 per cent in Indal.
According to Section 29(1)(b), no person resident outside India whether an individual or a firm/company (other than a banking company) incorporated outside India can acquire shares of any company carrying on trading, commercial or individual activity in India without the permission of the RBI.
While Indal circles are waiting for a reaction from Alcan, corporate watchers feel that a reaction should have come from Indals managing director, Tapan Mitra.
The delay in the process of apprising Alcan of the developments here and waiting for the Canadian major to make a move, Indal is causing itself lots of damage. Mitra could have avoided this bureaucratic hassle, they said. But Indal sticks to its argument: since the counter offer is being made by Alcan, there is no question of Mitra reacting to this.
