The Anil Agarwal-controlled Sterlite Industries on Tuesday said it had dropped its plan to demerge the copper business as part of its restructuring process that commenced in January 2003.

The demerger, which involved the formation of a new company, Sterlite Copper, with a separate international listing, was under fire from the Securities and Exchange Board of India, institutional shareholders as well as minority shareholders on the terms of demerger.

"The company's plans to raise resources from the international markets are at an advanced stage and therefore we have decided to dismiss the entire scheme of restructuring," Tarun Jain, director (finance), Sterlite, told Business Standard, explaining the reversal of the demerger decision.

The new company, which was to come into being from April 1, was expected to have an international listing, thereby attracting foreign investment.

The restructuring plan of the company included the transfer of assets and liabilities of the copper business to the new company, as a result of which, the shareholders were given the option of accepting one share of Rs 5 in the new company for every share held in Sterlite Industries, or a cash payment of Rs 175 as an exit option.

However, Sterlite shareholders had appealed to the high court, on grounds that the shares were undervalued.

The Sterlite scrip had risen above the Rs 200 in mid-June and has been rising consistently since then. It closed at Rs 534.85 on Tuesday, a gain of 6.76 per cent over Monday's close.

The Life Insurance Corporation of India with a 7.5 per cent stake and the General Insurance Corporation, along with four other state general insurance companies, holding a 9.5 per cent stake in the company had also questioned the valuation of the demerger.

Also the transfer of assets to a new unlisted company is said to affect the exit route for investors.

Sterlite has one of the largest copper businesses in India, apart from the Birlas-owned Hindalco, and also has an aluminium business. The group also owns the recently privatised Bharat Aluminium and Hindustan Zinc.