As part of this plan, shareholders had the option of taking Rs 150 per share or a share in the new company for every share held by them.

Shifting ground reality: Now the company has over-turned these plans, stating that the market conditions have improved, and that its plans for fund mobilisation in the global markets are also in place.

The stock price has spurted past the Rs 700 mark from the Rs 130-150 levels that prevailed when the buyback and the capital reduction programme were envisaged.

Inviting lower valuation: The frequent changes by Sterlite in its business strategy do not send the best of signals regarding the quality of its corporate practices.

The low price at which the public shareholding was sought to be bought out, and the manner in which key businesses have been sought to be vested in separate companies were similar to efforts by quite a few other companies to take private assets created through public funds.

With a neat portfolio of non-ferrous metals businesses, comprising copper, aluminium and zinc, Sterlite could unlock value for its promoters and shareholders by adopting investor-friendly and transparent practices than pursue plans that create negative vibes.

Shifting its plans and also making efforts to buy out non-promoter shareholding at low prices will not do the company's cause any good. It may have to face a steep valuation discount when it raises funds abroad.

Create cogent entity: Having rolled back its plans for the demerger, Sterlite can create sustainable value by outlining a clear business model, which also encompasses the future status of Madras Aluminium, Balco and Hindustan Zinc. Fund mobilisation plans need to be outlined clearly.

Practices such as capital reduction using archaic legal provisions and threat of delisting have to be avoided to improve the price-earnings multiple enjoyed by the stock. Infosys, Wipro, State Bank of India, Hindalco, Grasim, Gujarat Ambuja Cements, Dr Reddy's Labs and HDFC Bank, have shown that listing in India and abroad can be a value-enhancing proposition without restricting the ability to raise funds.

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