The Telegraph
Since 1st March, 1999
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Guj Ambuja wins ACC respite

Mumbai, March 17: Narottam Sekhsaria won a long-awaited reprieve today when Sebi ruled that a slice of ACC equity Gujarat Ambuja Cements (GACL) purchased from the Tatas in late 1999 did not give him control.

Sekhsaria, who owns much of Gujarat Ambuja, will not have to make an open offer that would have blown a Rs 1,000-crore hole in his company’s books. He had acquired over 14 per cent of ACC’s equity in an innovative deal that marked the departure of the Tatas from a company venerated as the oldest cement producer.

Sebi put out a communique on its website this evening, saying its probe to determine whether Gujarat Ambuja had acquired control of ACC by virtue of buying the 14 per cent stake has found no evidence that Regulation 12 of Sebi (Substantial Acquisition of Shares and Takeovers) 1997, has been violated.

Sebi had launched the investigation under Chapter V of the Act into GACL’s share acquisition, which was one of the most innovative deals in corporate India’s history.

Today’s decree paves way for Grasim Industries to make an open offer to Larsen & Toubro (L&T) shareholders, as indicated by Sebi chairman G. N. Bajpai. The AV Birla group was also let off the hook in a similar deal that re-opened the debate on the issue of control.

“Our stand has been that we don’t have any control over ACC. We haven’t breached any regulations and Sebi’s order vindicates our stand. We weren’t zreally involved in the day-to-day running of the company,” Gujarat Ambuja director Anil Singhvi told The Telegraph.

When the Securities Appellate Tribunal asked Sebi to take a re-look at the Gujarat Ambuja-Tata deal, the market regulator used its newly acquired powers to ask for documents from both companies to determine whether the acquirer gained control.

The minutes of the board meetings held at Cement House — ACC headquarters — and GACL were called for, along with letters. Gujarat Ambuja has two representatives on the ACC board.

Narottam Sekhsaria and A. K. Kapur, who is known in the industry as a cement expert, have contributed to ACC in their capacity as directors, sources said.

Like other independent directors and executive, the two nominees fulfilled their responsibilities for the betterment of ACC.

“However, there has been no control wielded by the two GACL nominees and ACC continues to be run by an independent and professional board of directors. They contribute to the proceedings of the board like another director on the board,” sources close to the two cement companies said.

When Sebi chairman alluded on Thursday that Grasim had no control over L&T, many analysts said it set a precedent for a ruling in the Gujarat Ambuja case.

Sebi’s order will deny many small investors of ACC the chance to gain from an open offer that would have to be made if Sekhsaria would have lost his case. The ACC share closed at Rs 139.35, down from Rs 141.05 on Thursday.

GACL acquired a 7 per cent stake at Rs 370 per share in a deal worth Rs 455 crore in December 1999. The Tatas had the option to sell the remaining equity, which was acquired by Gujarat Ambuja, piecemeal, in 2000.

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