The Hindu Business Line : Arvind Remedies calls off FII deal

ARVIND Remedies has informed the stock exchanges that its governing board has withdrawn the plan to place shares with a foreign investor, almost a year after a shareholders' meeting where the deal's transparency was questioned.

The proposal to place shares with Citiconsult Emerging Markets, UK, was withdrawn because the latter stopped responding to the company's communication, said Arvind Remedies' message to the stock exchanges.

The Arvind Remedies' Managing Director, Mr Arvind Shah, could not be reached for comment on the development. Less than a month ago, he had told Business Line that the deal with Citiconsult was likely to be signed soon.

In August 2003, Arvind Remedies had announced a preferential allotment of shares to Citiconsult in UK. Arvind was to place its Re 1 share at a price of Rs 11, about twice the then ruling market price.

For a 15 per cent stake in the company, Citiconsult was to bring in $10 million.

The next month, the issue dominated the proceedings in the company's annual general meeting.

A section of the shareholders questioned the management about the transparency associated with the deal.

The essence of the shareholders' problem was that the stock market price had gone up when the deal was announced; subsequently information about the deal was limited and price drifted down.

The share price that ruled around Rs 6.80 in early September had dropped to about Rs 3.50 towards the end of the month when the AGM was held.

During the AGM, in response to shareholders' questions, Mr Shah said it would take about seven months for the process associated with Citiconsult's investment to finish.

They had to carry out a due diligence exercise, he added. Mr Shah assured the shareholders, "Placement cannot go back."

Almost a year later, Arvind Remedies' governing board has announced that it would take the steps necessary to end the agreement with Citiconsult.

Arvind Remedies' share price closed today on the National Stock Exchange at Rs 1.60.

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