Ashwin Dani, Director, Asian paints
The Sell-Out Was Expected

Ashwin Dani, the 54-year-old director of Asian Paints, explains his--and his allies'--standpoint to BT's Chhaya:

On ICI's involvement: When ICI chairman Charles Miller-Smith came to India about a year ago, he said that ICI would like to be the paints industry leader in this country by 2005. That means he has accepted that unless and until ICI really pursues aggressive polICIes, it cannot achieve leadership. But that is not going to be an easy task. That's why they saw an opportunity here and bought the equity because this is a much easier route to achieving leadership.

On why Asian paints had become synonymous with the Chokseys: There was a clear-cut distribution of responsibilities. Atul Choksey was only in charge of public relations, representing the company in chambers of commerce. He also provided overall supervision of the trade sales function. He rarely visited any of the factories.

On whether the sale of shares was expected: We were expecting some kind of sales of his shares in the near future. His family has been gradually unloading its holding, and we expected him to unload it gradually--but not at one go.

On why the partners fell out: The Global Depository Receipts issue is a very old matter, and we ourselves have never spoken about it. In fact, Atul Choksey may have been misquoted on that. We are flush with liquidity. So, I don't see any reason for pumping in more funds.

On why the Choksey family opted out: It would be most prudent to ask the Choksey family.

Aditya Narayan, Managing Director, ICI India
It's Not A Hostile Takeover

The inside view of the Rs 646-crore ICI's real asian Paints strategy is available only to Aditya Narayan, the 45-year-old CEO of the paints-and-chemicals transnational. In an exclusive interview to BT's Paroma Roy Chowdhury, Narayan provides the ICI perspective.

On the initiation of the deal: The Chokseys first contacted us in April, 1997. We clearly expressed our interest, but the deal could not be struck. We weren't really convinced about their desire to sell. Also, there was no agreement on the share price. The Chokseys talked to us intermittently after that. But it was only when they actually sold the shares to dsp Merrill Lynch on July 31, 1997, and the deal fell through, that Kotak Mahindra Capital (KMC) told us of the availability of the shares. And we decided to pick them up on August 18, 1997. But no other foreign institutional investor (FII)--Morgan Stanley or Capital International--was involved. Our only contact has been KMC, and we negotiated with them to arrive at the final share price. Whether it would have been a more expensive acquisition if we had bought shares directly from the Chokseys in April, 1997, is a hypothetical issue, on which I would not like to comment.

On why ICI picked up the shares: We did it primarily for two reasons. The Chokseys had contracted them out to the FIIs for placement, and any of our international competitors could have picked them up. We wanted to pre-empt them. Further, this is expected to add value to our paints business since future alliances would benefit both the consumers and the shareholders. But I want to make it clear that there is no hostility involved. There has been a willing seller, and we have picked the shares up because it suits our interests.

On negotiations with the other promoters: As far as the other promoters are concerned, we have made it clear that we are interested in a dialogue and we have had one meeting so far. We are still waiting to hear from them and, contrary to the statements in the media, I think the possibilities of a dialogue are still very much open.

On ICI PLC's involvement: This was a global offer through merchant bankers, and ICI PLC wanted to buy the shares directly. First, the offer materialised suddenly, and ICI India was not ready to raise such a large amount within a short time. Secondly, if we were to do so, our growth plans would have been temporarily scuttled, and we cannot afford to do that.

On Asian paints' refusal to transfer the shares: This is not a hostile takeover of an Indian company by a transnational. There is a willing seller and a willing buyer--which happens to be a transnational. It is a simple deal which has taken place in compliance with the laws of the land. If pressure is put on us, we will take appropriate legal steps.

On Atul Choksey's role in the ICI bid: I would not like to comment on the market speculations about our joining hands to bid for the rest of the shares or spinning the paints division off as a separate company.

On the possibility of an open offer: We have no such plans--even if the share price is plummeting and it makes financial sense to do so. This has not been done to take over Asian Paints. It is better to initiate talks with the other promoters and explore the opportunities for an alliance. An alliance would help the other promoters too. It is the Asian Paints scrip which has taken a hammering ever since the Chokseys went public with their plans. It rallied somewhat when we announced our purchase. In their own interest, as well that of the shareholders, the other promoters should probably think in terms of an alliance with ICI.

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