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ICI to quit Asian Paints

The ICI-Asian Paints drama has finally come to an end. ICI, which made a bold bid to acquire a stake in Asian Paints has agreed to sell back 4.5 per cent of the 9.1 per cent stake that it had acquired.

ICI plc said it has instructed Kotak Mahindra Capital Company, its broker in the deal, to sell its stake to the Unit Trust of India. ICI will suffer a 20 per cent loss in the resale. ICI had purchased the shares at Rs 3.67 million at Rs 351 per share. Now ICI will sell them back at Rs 1.8 million shares, at Rs 280 per share.

Asian Paints is the market leader in the paints sector, with ICI India Ltd a distinct second. ICI plc had purchased the shares from Ashwin Choksey, one of the promoters in the company. However, the three other promoters of Asian Paints took umbrage at the sale, and refused to register the deal. The drama soon took on complexion of a multinational versus Indian industry battle, and emotions rising. Aware of the political implications, the then industry minister Murasoli Maran had categorically supported the Asian Paints board against the foreign firm.

The Foreign Investment Promotion Board also supported the Asian Paints board's move, a major blow to ICI. Last month, the FIPB closed the file saying it will no longer entertain any claims by ICI.

An ICI official is reported to have said that the company was examining options on what to do with the remaining 4.5 per cent stake. One option was to keep them with a friendly foreign institutional investor.

UNI