The Hindu Business Line : Grasim has no hold over L&T: Bajpai

This came straight from the horse's mouth today. Mr G.N. Bajpai, Chairman of SEBI, himself told newspersons at the sidelines of a lecture here that SEBI investigations are complete and that Grasim does not hold management control in L&T.

"We have asked Grasim for a revised open offer with additional disclosures," he said.

This seems a clear pointer to which way the Grasim-L&T issue is headed after nearly four months of the matter topping the corporate news charts.

That Grasim must have been asked to make a revised open offer was indicated in Grasim's public announcement made to L&T shareholders a few days ago. The public announcement detailed the exchange between SEBI and Grasim, with the former asking Grasim, among other things, to justify the premium that it paid to Reliance for its initial stake in L&T.

Grasim ended the public announcement saying it has been asked by SEBI to supply the necessary disclosures by March 14.

SEBI had stalled Grasim's open offer for 20 per cent stake in L&T following the Securities Appellate Tribunal (SAT) ruling in a similar case pertaining to Gujarat Ambuja's purchase of 14 per cent stake in ACC Ltd. Grasim appealed against the stalling of the open offer but this was rejected by SAT. There were several complaints from investor fora as well, expressing discontent at the open offer price of Rs 190 per share. There was also the question of whether Grasim had management control in L&T when it got its initial stake.

Significantly, one of the disclosures that SEBI had recently asked Grasim to make was its alternative offer for L&T's cement division. The alternative offer was made after Grasim's open offer had been stalled, and in competition to the offer from CDC Capital Partners which was for an eventual 6.8 per cent stake in the L&T cement arm which was supposed to be subsidiarised, with L&T holding a mere 25 per cent stake in it. That would have left Grasim with a minuscule stake in the cement division, which has the maximum synergy with Grasim's own activities.

Grasim's alternative offer wanted a vertical division, instead of subsidiarisation of the cement division of L&T. One boardroom battle after another happened and finally both the CDC's as well as Grasim's offers were turned over to ICRA for evaluation. The ICRA exercise could even become redundant should Grasim be allowed to go ahead with its open offer.

What led SEBI to ask Grasim to publicly disclose its alternative offer is perhaps because it contains the price at which Grasim valued L&T. This turns out to be Rs 292.50 per share, significantly higher than Rs 190 per share, the price of Grasim's open offer that was stalled in November 2002.

Incidentally, during the SAT hearings, the Grasim counsel had requested that the open offer be allowed to go through with a clause that the price could be altered later and the subscribers furnished any extra amount, and that investigations could continue. But SAT had not allowed this.

The L&T scrip today closed at Rs 186.30 on BSE.

Responding to the SEBI Chairman's statement, a Grasim spokesperson said: "We are yet to receive any official communication from SEBI with respect to the investigations."

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