Hostile takeovers should be encouraged: Nimesh Kampani

By Staff
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Google Oneindia News

Mumbai, Mar 9 (UNI) Hostile takeovers should be encouraged as it keeps managements on their toes and compels them to deliver superior shareholder value, said JM Morgan Stanley Chairman Nimish Kampani here yesterday.

''Unfortunately, here in India where government-controlled institutions often have a large shareholding in companies, political pressure is often brought to bear on them to take a decision either way,'' he lamented.

Speaking at an All India Association of Industries (AIAI)-sponsored conference on corporate governance here, Mr Kampani pointed to the fact that political pressures during hostile takeover bids were common even abroad and cited the recent Mittal-Arcelor case where the French government has taken an anti-Mittal stance.

Emphasising the fact that hostile takeovers should be decided on ''purely commercial reasons'', Mr Kampani said that if managements are kept on their toes, then they they will have to perform and all stakeholders involved will benefit.

Speaking on the same issue, Mr Rakesh Jhunjhunwala of Rare Enterprises and one of India's top investors, called for promoter-financing to be allowed by the Reserve Bank of India (RBI).

Pointing to the fact that a large part of corporate India is presently owned by LIC and UTI, Mr Jhunjhunwala said it was high time that RBI allowed promoter-financing or at least the purchase of shares of institutions by the highest bidder.

Both Mr Kampani and Mr Jhunjhunwala reiterated the importance of good corporate governance and said that by and large companies with a good corporate governance track-record enjoyed huge market capitalisation and thus have proved beneficial to shareholders.

Organisations with good governance not only enjoy great respect in the marketplace but are also the organisation of choice for all stakeholders such as customers, employees and shareholders as well as potential employees and shareholders, they said.

UNI JJ KU/MAZ NV1330

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