Birla group moves SAT against Sebi order on L&T

The AV Birla group has filed an appeal with the Securities Appellate Tribunal (SAT) against the Securities and Exchange Board of India (Sebi) order which asked Grasim Industries not to proceed with the open offer for Larsen and Toubro (Land T) until further instructions. According to an AV Birla group spokesperson “We have referred an appeal in the SAT on Monday evening and we are advised that we have very strong legal grounds.” According to sources close to the Birlas, as far as the open offer is concerned, there is no point in going back or revising it, as the offer was made well within the takeover code regulations of Sebi. The AV Birla group, whose chairman Kumar Mangalam Birla was the head of the takeover code panel, is also said to be seeking legal opinion on the issue both within and outside the group. The Birlas are of the opinion that the group has complied with the regulations and acted in line with the highest standards of corporate governance. According to a prominent company law expert, “Prima facie, with a view to protect investor interest, Sebi can pass an order prohibiting a company from acquiring shares. However, it should give adequate reasons failing which there is no ground. Each case should be treated on its own merit. If Sebi is only saying that Grasim should not proceed with the open offer as it (Sebi) is currently investigating the ACC-Gujarat Ambuja case, then it would be thrown out by SAT.” The open offer was slated to commence on December 9, and close on January 7, and was to be made by Grasim and its wholly-owned subsidiary Samruddhi Swastik Trading and Investments Limited acting in concert. The move came at a time when a series of complaints were being voiced by investors relating to the open offer price of Rs 190 per share offered by Grasim. Financial institutions have also been unhappy with this price. Many investor bodies, including Investor Grievances Forum, National Association of Small Investors (NASI) and Midas Touch Investors Association, had come out against the Birlas’ offer. Sources in the regulatory authority said that the complaints related to the lower offer price of Rs 190 to shareholders while Grasim had paid a much higher price of Rs 306.60 per share to Reliance Industries for its 10.05% plus stake in November 2001.