The Hindu Business Line : Nod for fresh share transfers — Gillette explains stake buys to Govt

GILLETTE said on Tuesday that it has written to the Government explaining the transactions that led to Gillette Group India Pvt Ltd (GGIPL) acquiring stakes from several other group companies in the past without prior approval.

The Government has sought these clarifications as a pre-condition to permitting Gillette India Ltd (GIL) to undergo yet another round of intra-company share transfers. This time, the US-based parent company plans to pare its stake in the Indian listed entity GIL by five per cent to 40.65 per cent.

In the past, GGIPL first acquired over 83 lakh shares each from two Gillette group companies — Braun India Pvt Ltd and Oral-B Laboratories India Pvt Ltd — in Gillette Diversified Operations Pvt Ltd.

GGIPL later also acquired close to 19 lakh shares in another group company, Wilkinson Sword India Ltd, but no Government permission was obtained for any of these downstream transactions, sources said here today.

When contacted, a Gillette India spokesperson told Business Line, "We have given the details of all past share transfer transactions. GGIPL was incorporated when restrictions of downstream investments had not come into force, so no existing norms were violated during past transactions".

Among the clarifications the Government has sought from the company is the source of funding of its past transactions, whether the condition of foreign exchange being brought in had been met and whether funds had been brought in from the associate companies of GIL.

"The source of funds of GGIPL was dividend income which it earned by virtue of its stake in the listed entity GIL," the spokesperson added.

Meanwhile, in the fresh round of restructuring, GGIPL plans to acquire five per cent of the US parent's stake in GIL. The spokesperson said this stake transfer was "merely internal restructuring" but declined to give any reasons for the move.

He said Gillette USA, together with other group companies in India, holds 76 per cent stake in the listed Indian entity, while the remaining 24 per cent is distributed between joint venture partner (the Poddar Group) and the Indian public.

Sources said the company has assured the Government that in the present request of stake transfer between GGIPL and the US parent, the consideration to be paid by the Indian holding company would be through internal accruals.

Also, GIL has sought Government's permission to transfer the entire equity stake of 49.99 per cent from Gillette South Asia Inc and 50.01 per cent from Saratoga Investment Inc to the parent company, Gillette Company USA.

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