SAT order hits GACL stock

The stock price of Gujrat Ambuja Cement Limited (GACL) slipped on Monday on the back of apprehensions that a possible Securities and Exchange Board of India (Sebi) ruling in favour of an open offer could see it part with a huge amount. On the Bombay Stock Exchange (BSE), the stock of cement major slipped 3.5% to close at Rs 156.20 as against its previous close at Rs 161.95. A total number of 40,747 shares of GACL were traded on the counter. It currently trades close to its 52-week low of Rs 151.50 (on November 1, 2001). The fresh setback on the counter today follows concerns expressed by the market that if Sebi comes to the conclusion that GACL has, in fact, acquired management control over ACC, GACL’s cash position and balance sheet would be severely impacted. For, GACL would have to shell out a huge sum – an open offer at Rs 370 per share for a 20% stake would entail an outlay of an awesome Rs 1,2600000000. The outgo would be much higher as GACL would also have to pay interest on the offer price for the last three years. The Securities Appellate Tribunal (SAT) has ordered markets watchdog Securities Exchange and Board of India (Sebi) to take a re-look at the deal involving Gujarat Ambuja’s acquiring of 14.45% stake in cement major ACC. SAT in a statement on October 25, 2002 said that the market regulator had jumped to conclusions while stating that the acquisition of stake in ACC was not tantamount to a change in management control, and, therefore, did not trigger the takeover code. Sebi had reckoned earlier that the Tatas, despite having a 14.45% stake in ACC, India’s largest cement maker, did not exercise any control over the management of the company. and , therefore, a sale of stake to GACL did not result in a change in management control.