SAT reserves interim order

MUMBAI NOV. 27. The Securities Appellate Tribunal (SAT) today reserved its interim order on the Securities and Exchange Board of India's (SEBI) decision to stall the open offer by Grasim for acquiring a 20% stake in Larsen and Toubro (Land T), saying it would pass the order soon. After hearing the two sides for three-and-a-half hours, the SAT said it would pass the interim order in a day or two on whether Grasim can go ahead with its open offer to acquire shares in Land T. Grasim had appealed SAT for immediate relief to go ahead with the open offer. However, Grasim, at the initial stage, is not contesting the SEBI decision to investigate its alleged initiative to buy shares at a price lower from other Land T investors than what it paid Reliance to acquire the latter's entire 10% stake in Land T. In the course of the argument, Grasim said the SEBI had not served a notice to it on its November 8 decision to investigate whether Grasim was trying to acquire more shares to have a managing control in Land T. Grasim said Land T had mooted the demerger issue in 2000 when Grasim was not around. Land T had moved a supplementary application at the end of its board of directors meeting on October 29 to nominate two members of Grasim — Kumarmangalam Birla and Rajeshwari Birla, the company said. Grasim said it had bought 10.5% shares at the rate of Rs. 306 per share from Reliance Industries Limited (RIL) in January 2002. "This is nothing but an agreement between Reliance and Grasim,'' the company said. Grasim said SEBI officials had written letters enquiring about its various activities like when it has bought the shares, from whom it had bought the share. The company had clarified all the issues raised by the SEBI officials, Grasim said. In reply to Grasim's arguments, SEBI said that it had ordered for an investigation into Grasim's alleged buying of shares to acquire the management control. The capital market regulator said that it had received petitions from different consumer organisations alleging that Grasim was trying to buy shares to acquire management control over Land T. "SEBI has to investigate when there are so many allegations against Grasim,'' it argued. The board has to look on what basis Land T has decided to nominate two members of Grasim. "We have to look how two directors of Grasim stepped in and RIL's two members stepped out,'' the board said. The SEBI said it had decided to stall Grasim's open offer as the entire case had to be investigated from a holistic point view. In the case of Grasim it had not taken any stern action against Grasim, SEBI argued. — UNI