ICI Plc, which holds 51 per cent stake in ICI India, has approached the central government with an offer to buy out the government's 9 per cent share in the company's equity to further consolidate its position in the Indian venture.
The government holds 9 per cent share in ICI India in the name of the President of India, inherited from the time when the Viceroy picked up this equity as an incentive to attract the British multinational to set up shop in India as far back as 1911.
Disclosing this, M R Rajaram, wholetime director, ICI India said the proposal was already lying with the government which was yet to respond to the offer.
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"ICI Plc had expressed its willingness to buy out 9.20 per cent stake of government of India and subsequently made a proposal. Unfortunately, there has been no response from the other side," Rajaram said.
If the move by ICI fructifies, the UK-based multinational would be bringing in no less than Rs 200 crore to its Indian subsidiary given the existing stock price which is hovering between Rs 54-56 at the Bombay Stock Exchange.
The total share capital of ICI India is Rs 40.9 crore, in which ICI Plc holds 50.83 per cent, followed by insurance companies 16.22 per cent, public 13.45 per cent, banks and financial institution 6.17 per cent and foreign institutional investors 4.13 per cent.
The Government of India holds 9.20 per cent or 3.7 crore shares in the company. Under the proposed move, ICI Plc can get hold of a significant chunk of share in one tranche. It also proves that the British major backs its Indian operation, said Rajaram.
Keen To Exit Pharma, Explosives:
ICI India has six business operations in the country, which are run on as separate business units (SBUs). The company restructuring its operation for quite a long time.
It has identified decorative paints, specialty chemicals, adhesive (National Starch) and fragrance and flavour as the four core area of operations following its parent's footstep.
The company has already exited from polyurethanes business by selling it to Huntsman of US. It also intends to get out of the pharmaceutical and explosive businesses.
"We do not see these as our focus areas in the future. The company is not in a hurry to divest them in a hurry. We will wait for the right time and the right buyer to maximise our return. ICI India will toe the policy of its parent which does not see them as the core area of operation worldwide," Rajaram said.