How seriously can one take Indian corporate houses when they talk of corporate governance? In 1999, Gujarat Ambuja Cement Ltd (GACL), a well-run, bluechip company blotted its copy book with a two-stage acquisition of ACC shares from the Tata group. The deal was designed as a strategic investment to avoid paying retail investors the same price as the Tatas. Despite investor outrage, GACL and the Tatas were allowed to violate the spirit of the Takeover Regulations on technical grounds.

At that time, GACL tried to cover its actions in nationalistic colour by raising the bogey of ‘‘foreign cement majors taking over Indian business’’. In 2005, it quietly began a sell-out to foreign cement major Holcim in a complicated four-part deal cloaked in the garb of a ‘strategic investment’. Top company executives continued to vociferously deny our charge that the ACC strategic-sale was a precursor to a similar deal in GACL and marked the beginning of a quiet exit by the Seksaria-Neotia families.

In 2006, history repeats itself. The 14.8 per cent sale to Holcim is a repeat of the ACC deal and structured to avoid an open offer. This time, however, Holcim has avoided criticism by offering to make an open offer, but with a catch. Holcim will pay the promoters a premium of Rs 15 (price of Rs 105 per share) as a non-compete fee, while the open-offer to ordinary investors is at a price of Rs 90. Retail investors are again being told that they do not merit equal treatment. In a raging bull market, with GACL quoting at just a shade lower, the open offer is unlikely to attract investors.
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