SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
IN THE MATTER OF PROPOSED ACQUISITION OF SHARES OF BOISTUR COMMERCIAL LIMITED- EXEMPTION FROM PROVISIONS OF CHAPTER III OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997
NO. : CO/409/TO/12/2002
1.0 Mrs Rekha Jalan (hereinafter referred to as the "Acquirer") alongwith Mrs Snehal Jalan, M/s Woodland Associates Private Limited and M/s Morvi Industries Limited (hereinafter referred to as the "persons acting in concert") hold 90.63% shares in the equity share capital of Boistur Commercial Limited (hereinafter referred to as the "Target company"). The shares of the Target company are listed on The Stock Exchange Mumbai. The Acquirer along with persons acting in concert propose to acquire the outstanding equity shares i.e. 9.37% from the remaining 40 public shareholders of the Target company @ Rs. 25/- per share. The Acquirer would be required to make an open offer to acquire the said shares of the Target company in terms of sub-regulation (2) of regulation 11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "Regulations").
2.0 The Acquirer made an application dated 16/10/2002 to the Securities and Exchange Board of India (hereinafter referred to as SEBI) under sub-regulation (2) of regulation 4 of Regulations seeking exemption from making public announcement and complying with procedural formalities under the provisions of Chapter III of the Regulations.
3.0 In the aforesaid application, the Acquirer submitted, inter-alia, the following:
3.1 The Acquirer along with persons acting in concert is holding 90.63% shares in the equity share capital of the Target company and proposes to acquire the balance 9.37% shares from the public shareholders of the Target company.
3.2 There are only 40 public shareholders holding 9.37% in the equity share capital of the Target company.
3.3 There has been no regular trading in the shares of the Target company at The Stock Exchange, Mumbai and the last trading took place in the year 2000.
3.4 The shares of the Target company are infrequently traded in terms of explanation (i) to regulation 20(5) of the Regulations.
3.5 The Acquirer has offered to acquire the 9.37% shares from the remaining shareholders at a minimum price of Rs 25/- per share.
3.6 The acquisition of shares in the Target company would not lead to change in the management control over the Target company since the Acquirer along with persons acting in concert is holding 90.63% shares of the Target company and the acquisition is made only for the purpose of giving an exit option to the public shareholders and thereafter to delist equity shares of the Target company from the stock exchange.
3.7 There is no room for any competitive bid from any source as 90.63% shares of the Target company are held by the Acquirer and the persons acting in concert.
3.8 The Acquirer along with persons acting in concert wants to acquire the shares of the Target company in accordance with clause 40(A)(ii) of the Listing Agreement entered into with the stock exchange as the non promoter shareholding in the Target company is below the minimum required non promoter limit of 10%.
3.9 The Acquirer confirms that he would be sending individual notices to all the public shareholders for purchasing the shares.
4.0 The said application was forwarded to the Takeover Panel on 23/10/2002 in terms of sub-regulation (4) of regulation 4 of the Regulations. The Takeover Panel vide its report dated 7/11/2002 has recommended, inter alia, as under:
"The Acquirers form part of the promoter group. The promoters alongwith persons acting in concert are already holding 90.63% of the total paid up share capital of the target company. The public shareholding is around 9.73% of the total paid up share capital of the target company. The intended acquisition by the acquirers appears to be to provide an exit route to those very few shareholders who wish to dispose off their shareholdings. In the facts stated, grant of exemption as sought is recommended subject, however, to the acquirers –
(i) making individual offers to each of the remaining shareholders by directly addressing offer letters offering to buy the shares;
(ii) sending such letters to each of such shareholders at the recorded addresses by Registered Acknowledgement Due Post;
(iii) submitting of Certificate of auditor / independent Chartered Accountant to the effect that the offer letters were so posted; and
(iv) offering price determined as per Regulation 20(2) of the Takeover Code but not less than Rs. 25/- per share; and
(v) complying with other conditions as proposed in the application."
5.0 I have taken into consideration the application dated 16/10/2002 the material available on record and the recommendations of Takeover Panel.
5.1 It is noted that the Acquirer along with persons acting in concert is holding 90.63% shares in the equity share capital of the Target company.
5.2 It is noted that there are only 40 public shareholders who are holding 9.37% shares in the equity share capital of the Target company.
5.3 It is noted that there has been no regular trading in the shares of the Target company at The Stock Exchange, Mumbai and the last trading took place in the year 2000.
5.4 It is noted that the shares of the Target company are infrequently traded and as per regulation 20(5), the offer price is to be determined after taking into account the factors given in regulation 20(5) which include book value per share of the Target company, earning per share, return on networth, price earning multiple vis-a viz. the industry average etc.
5.5 It is noted that the book value per share of the Target company is Rs 24.53/- as on 31/03/2002.
5.6 It is noted that the Acquirer has proposed to give exit opportunity to the remaining 40 public shareholders at a price of Rs. 25/- per share which is in terms of regulation 20(5) and provides a fair opportunity to exit to the remaining public shareholder of the Target company.
5.7 It is noted that the Acquirer has confirmed that it would be sending individual notices to all the public shareholders for purchasing the shares.
5.8 It is noted that the Acquirer is acquiring the shares only for the purpose of giving an exit option to the public shareholders and thereafter to delist equity shares of the Target company from the stock exchange.
5.9 It is also noted that the Panel has recommended grant of exemption to the Acquirer subject to:
(i) making individual offers to each of the remaining shareholders by directly addressing offer letters offering to buy the shares;
(ii) sending such letters to each of such shareholders at the recorded addresses by Registered Acknowledgement Due Post;
(iii) submitting of Certificate of auditor / independent Chartered Accountant to the effect that the offer letters were so posted; and
(iv) offering price determined as per Regulation 20(2) of the Takeover Code but not less than Rs. 25/- per share; and
(v) complying with other conditions as proposed in the application.
6.0 Taking into consideration the above, the recommendations of the Takeover Panel and the interest of the public shareholders of the Target company, in exercise of the powers conferred upon me under sub-section (3) of Section 4 of the Securities and Exchange Board of India Act, 1992 read with sub-regulation (6) of regulation 4 of the Regulations, I hereby grant exemption, to the Acquirer from complying with the provisions of Regulation 13 (Appointment of a merchant banker) Regulation 14 (Timing of the public announcement of offer), Regulation 15 (Public announcement of offer) Regulation 16 (Contents of the public announcement of offer) Regulation 18 (Submission of letter of offer to Board) as contained in Chapter III of the Regulations with regard to the proposed open offer to be made to the public shareholders of the Target company for acquisition of 22,950 shares representing 9.37% shares of the Target company @ Rs 25/- per share in terms of sub-regulation (2) of Regulation 11 of the Regulations, subject to the Acquirer -
(i) Making individual offers to each of the remaining 40 public shareholders by directly addressing offer letters offering to buy the shares held by such shareholders in the Target company;
(ii) Sending offer letters to each of the remaining 40 public shareholders at the recorded addresses by registered acknowledgement due post;
(iii) Submitting of certificate of auditor / independent Chartered Accountant to the effect that the offer letters were so posted.
6.1 The Acquirer is also directed to make an offer in terms of the provisions of the Regulation 21(3)(a) in case it wants to get the Target company delisted from the stock exchange , if after the proposed offer under Regulation 11(2) , there are some shares outstanding with the public shareholders of the Target company .
7.0 The Acquirer is also directed that the proposed offer be completed within 3 months from the date of passing of this order and a status report on the same be filed by the Acquirer with the Board within 15 days of completion of the offer.
Date: December 13, 2002
Place: Mumbai
G.N. BAJPAI
CHAIRMAN
SECURITIES AND EXCHANGE BOARD OF INDIA