SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
IN THE MATTER OF PROPOSED ACQUISITION OF SHARES OF INDUSTRIAL INVESTMENT TRUST LIMITED- EXEMPTION APPLICATION UNDER REGULATION 4(2) OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997
WTMO/56/CFD/02/04
1.0 Stanrose Mafatlal Investment and Finance Limited (hereinafter referred to as “the acquirer") is stated to be one of the constituents of the Stanrose Mafatlal Group headed by Shri R.N. Mafatlal. The acquirer is stated to hold 14,50,000 equity shares of Rs. 10 each which represents 14.58 % of the paid up capital of Industrial Investment Trust Limited (hereinafter referred to as the "target company”). The acquirer proposes to acquire 7,02,000 equity shares of the target company which is currently held by Shanudeep Private Limited which is also stated to be another constituent of the Stanrose Mafatal Group. The proposed acquisition would increase the holding of the acquirer in the target company from 14.58% to 21.60%.
2.0 The acquirer had made an application dated 15.12.2003 to the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) under sub-regulation (2) of regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 (hereinafter referred to as “the said regulations”) seeking exemption from the applicability of Regulation 10 and Regulation 11(1) of the said Regulations.
3.0 In the aforesaid application, the acquirer submitted, interalia, the following:
3.1 The shares of the target company are listed on the Stock Exchange Mumbai (BSE) and Ahmedabad Stock Exchange (ASE).
3.2 Stanrose Mafatlal Group is holding 21.77% equity in the Target company. In order to bring the said strategic investment of the group in one place i.e., with the acquirer which is the Group’s Investment company, the acquirer proposes to acquire 702000 equity shares of the target company from Shanudeep Private Limited which is also stated to be a constituent of the Stanrose Mafatlal Group.
3.3 As a result of the proposed acquisition, the individual stake of the acquirer in the target company would increase from the current level of 14.58% to 21.60%. However, the overall stake of the Stanrose Mafatlal Group would remain static at the same level at 21.77%.
3.4 As the proposed transaction is inter-se amongst the group it will not affect the current capital structure or equity pattern of the company. The paid up equity capital of the target company will remain the same at 1, 00,00,000 equity shares of Rs. 10 each, agreegrating to Rs, 10,00,00,000.
3.5 The acquisition price is Rs. 27.50 per share or as may be agreed upon between the parties to the transaction (which are within the same group) keeping in view the pricing guidelines given under Regulation 20(4) / 20(5) of the said regulations.
3.6 There is no change in the management control of the target company as a result of the proposed acquisition.
3.7 The proposed transaction between the acquirer and Shanudeep Pvt. Ltd. would have enjoyed the inbuilt exemption provided under the regulation 3(1) (e) (i) / (iv) but for the fact that the persons constituting the group was not disclosed in the annual report for the year ended March 31st, 2003 in the manner as required under the provisions of regulation 3(1) (e) (i).
4.0 The said application was forwarded to the Takeover Panel on December 18, 2003 in terms of sub-regulation (4) of regulation 4 of the Regulations. The Takeover Panel vide its report dated January 08, 2004 has recommended, interalia, as under:
In the facts stated in the application, it appears that the acquirer and the said Shanudeep Private Ltd. form part of the ‘Group’ coming within the definition of ‘group’ as defined in the Monopolies and Restrictive Trade Practices Act, 1969.
By the resultant acquisition of the said shares neither the control nor management of the target company is going to be affected. As stated in the application, the omission of requisite disclosure in the last published annual report of the target company in terms of Regulation 3(1) (e) (i) of the said regulations appears to be inadvertent. Grant of exemption as sought is recommended
5.0 I have taken into consideration the application dated December 15, 2003, the material available on record and the recommendations of Takeover Panel.
5.1 It is noted that the acquirer is stated to be one of the constituents of
the Stanrose Mafatlal Group. Stanrose Mafatlal Group is stated to hold 21.77% equity in the Target company.
5.2 In order to bring the said strategic investment of the group in one place i.e. with the acquirer which is the group’s Investment company, the acquirer proposes to acquire 702000 equity shares of the target company from Shanudeep Private Limited which is also stated to be a constituent of the Stanrose Mafatlal group.
5.3 As a result of the proposed acquisition, the individual stake of the acquirer in the target company would increase from the current level of 14.58% to 21.60%. However, the overall stake of the Stanrose Mafatlal group would remain static at the same level and hence the proposed acquisition will not result in any change in the management and control of the target company.
5.4 It is noted that though the proposed transaction is of the nature of inter-se transfer of shares amongst the constituents of the group company i.e., Stanrose Mafatlal group. However the constituents are not stated to have been disclosed as persons constituting the group in the annual report for the year ended March 31st, 2003 as required under the provisions of regulation 3(1) (e) (i). Hence the acquirer sought exemption from the applicability of Regulation 10 and Regulation 11(1) of the said Regulations in respect of the proposed acquisition.
6.0 Taking into consideration the above, the recommendations of the Takeover Panel and the interest of the public shareholders of the target company, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with sub-regulation (6) of regulation 4 of the Regulations, hereby grant exemption, to the acquirer from complying with the provisions of Regulations 10 and 11(1) of the said Regulations with regard to the proposed acquisition of 7.02,000 equity shares of the target company from Shanudeep Private Limited.
6.1 The acquirers are directed to complete the proposed acquisition within 30 days of the order and file a report under regulation 3 (4) with SEBI on the same.
6.2 This order shall come into force with immediate effect.
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A. K. BATRA |
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Date: Feb. 6, 2004
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WHOLE TIME MEMBER |
| Place: MUMBAI |
SECURITIES AND EXCHANGE BOARD OF INDIA |