Calcutta, Oct. 3: Imperial Chemical Industries Plc — the British paints and speciality chemicals major — is expected to bid for the Indian government’s 9.2 per cent stake in its subsidiary, ICI India Ltd.
John Edgar, head of communications at Imperial Chemical Industries, said: “We are aware of the Indian government’s decision to sell its stake in ICI India. We are considering the proposed sale of the Indian government’s 9.2 per cent stake in our subsidiary in India, but have not decided on it as yet.”
Imperial Chemical Industries is expected to take a call on the proposed sale of shares next week.
The ICI India management refused to comment on whether the British paints major would bid for the government’s stake. Senior ICI India officials had previously said that the company’s British principal was willing to raise stake in it.
M. R. Rajaram, executive director of ICI India, said: “It’s an issue between two promoters. All we could say is Imperial Chemical Industries remains committed to India.” The British paints major holds 50.83 per cent in ICI India at present.
The government holds a little over 37.60 lakh shares in ICI India, which at current market price (Rs 168.80), is valued at Rs 63.40 crore, or a shade over £ 8.3 million.
Unlike most joint venture relationships, Imperial Chemical Industries does not have ‘first right of refusal’ for the Indian government’s 9.2 per cent stake in ICI India.
If it decides to put in a bid for the stake, it will have to compete with other bidders. The government has already invited bids for its stake through advertisements in newspapers.
Institutional investors control 25.20 per cent of ICI India’s shares, while 14.77 per cent is widely held.
Alongside, ICI India is looking to divest a couple of divisions in keeping with the group’s global strategy. “These moves are aimed at increasing shareholder value,” Rajaram said.