Unit Trust of India has said it would support the existing Asian Paints management in case ICI plc, the other paints major, were allowed to make an open offer to increase its stake in the company.
This is significant since UTIs stand can make a major difference in the way in which the battle for Asian Paints shapes up in the coming days.
UTI chairman G P Gupta told Business Standard that the performance of the company, under the existing management, was satisfactory and therefore there was no need for supporting a change in management.
Gupta said the existing Asian Paints promoters had come to an agreement and also were reported to be keen to pick up the ICI stake in the company to increase their own stake.
We see no threat to the company even if ICI comes in. This is so because the existing promoters already have a 45% stake, Gupta said.
Gupta said despite ICI being a global player, its market share in paints in India was not too high and Asian Paints, on the other hand, had been strong in the business.
The ICI marketshare is low. Besides, Asian Paints is working well and we see no need for change, he said.
UTI is the major institutional shareholder in Asian Paints, with just under 10 per cent in the company.
ICI has moved the Foreign Investment Promotion Board for a permission to buy into the company by picking up the stake sold by the Chokseys.
The stand taken by UTI and the other financial institutions would also determine much of the fate of Asian Paints in the battle between the existing management and ICI plc.
The ICI application is pending before the Foreign Investment Promotion Board (FIPB) and the FIPB view would determine the next move ICI makes in the Asian Paints drama.
