Mumbai: Sterlite Industries has withdrawn its scheme for demerger of its copper business. The company has cited its plan to raise resources from the international markets as the reason for the same.

Sterlite Industries informed the Bombay Stock Exchange as well as the Bombay High Court that its plans to raise resources in the international markets are now well advanced and the market capitalisation of the company has increased. In the changed circumstances, the board has decided not to proceed with the demerger scheme.

Early this year, Sterlite Industries had decided to hive off its copper business and its investments to a new company. As per the demerger plan, the residual Sterlite company was to retain power transmission lines, aluminium conductors and other non-metal assets in the company.

The copper business was to be transferred to the new company as a going concern with effect from 1 April 2003. The assets and liabilities of the copper business and investments will be transferred at their book values.

But the income-tax department and the minority shareholders of the company filed different petitions in the Bombay High Court and blocked the demerger plan. The I-T department had informed the Bombay High Court that Twinstar Holding Ltd, which controls a 54-per cent stake in Sterlite Industries Ltd, has to pay Rs 267.50-crore I-T arrears to the department.

Says I-T consul Benni M Chaterjee: "The department has informed the court that Sterlite Industries has yet to pay the tax arrears of Rs 267.50 crore to the department and unless and until the company pays the arrears, the demerger should not be approved. Following this, without much argument, Sterlite consul Virag Tulzapurkar withdrew the company''s petition to demerge the copper division."

The I-T affidavit filed in the court states that Dwarkaprasad Anilkumar Investment owes Rs 35. 70 crore, Pravin Navin Investment owes Rs 163.60 crore while Sterlite Copper Rolling Mills Rs 24.20 crore to the department.

The department stated that if the demerger scheme is approved by the court, the shares attached by the I-T department as the revenue of SIL, may undergo substantial devaluation and ultimately will have an effect on the revenue of the states. Due to the devaluation, the market price of the shares will be reduced and the very purpose of attaching the shares towards the dues of the IT will be defeated.