Vijay Mallya has offered to buy out Kishore Chhabria's entire 49 per cent stake in Herbertsons Ltd for Rs 80 crore (Rs 800 million).

Chhabria, on the other hand, will take complete control of BDA Distilleries.

Sources close to the development said that Chhabria is, however, negotiating for at least Rs 100 crore (Rs 1 billion) for his Herbertsons' stake.

Negotiations are still being held on these lines. But sources added that several other options, including Chhabria buying Mallya's complete stake in the company, were also being considered.

It is widely known that Mallya wants to retain control over Herbertsons which owns the largest selling whisky brand in India, Bagpiper.

Chhabria group officials told Business Standard it is too early to comment at this stage.

The move becomes significant in the wake of a recent hearing of the case in the Supreme Court where both the parties had asked for some time to reach a settlement.

Sources added that both Mallya and Chhabria have seriously started negotiations to reach a settlement.

They added that the two privately met on October 22 for a short while at the board meeting of Herbertsons and the negotiations are now progressing with the help of common 'friends.'

Since the next hearing of the case in the Supreme Court is slated for January 9, 2004, both the sides expect that a settlement would be reached before the due date.

Right now, however, both the sides are tight-lipped about the settlement issue.

As per the regulations of the Securities & Exchange Board of India and the Supreme Court directive, anybody who buys the other's stake in the company will have to offer the same price to all the shareholders who decide to tender their shares in the open offer which will close on January 30, 2004.

Chhabria has announced Rs 210 as the open offer price, Mallya too has announced Rs 210 as the counter offer price.

In the last hearing in the Supreme Court, both lawyers had said that since the market price of Herbertsons Ltd had gone down to Rs 40 and the offer price was Rs 215, both parties would suffer major losses.

According to company sources, the company's shares were last traded at Rs 76.50 on October 7.

The open offer by Chhabria, in accordance with the August 1, 2003 order of Securities Appellate Tribunal, opened on October 17 at Rs 210.74 per share (which includes the interest payable) to acquire an additional 20 per cent stake.