IN THE MATTER OF PROPOSED ACQUISITION OF SHARES OF GOVIND RUBBER LIMITED - EXEMPTION FROM THE PROVISIONS OF REGULATION 11 OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997

IV. 80,00,000 equity shares to the promoters, their relatives, associate companies etc.

ICICI Bank Ltd, IDBI, IFCI Ltd, and the promoters and associates have agreed to subscribe to the above mentioned equity shares proposed to be issued to them. On behalf of the Promoters and their relatives, group/associate companies (hereinafter referred to as “acquirers”), Shri Vinod Poddar, MD of the target company submitted an application dated October, 15^th 2003 to the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) seeking exemption from complying with the provisions of regulation 11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the said regulations").

2. In the application, it is submitted that the company ran into huge financial losses and more than 50 % of the networth of the company has been eroded as on March 31, 2002. The revival package initially put forward by the company was not acceptable to the lenders. Subsequently a revised revival package was forwarded to the CDR and the same has been approved by CDR.

3. As a part of the revival package approved by the CDR, the company is required and proposes to convert part of the simple interest dues to the institutions into equity shares capital and also the amount of Rs. 8 Crores lying with the company as share application money from the promoters, their relatives, associate companies etc into equity share capital and issue equity shares to the acquirers. Accordingly a resolution was passed in the annual general meeting of the company held on September 29^th,2003. It was submitted that relevant disclosures were made in the explanatory statement under Section 173 (2) of the Companies Act to the shareholders along with notice and that interested parties abstained from voting on the resolution.

4. The promoter group holds 57.96% in the target company. The shareholding of acquirers, (who are a part of the promoter group and hold 22.12%) would become 46.74% after the proposed allotment under the CDR package.

5. The said application was considered by the Takeover Panel in terms of the said Regulations. The Takeover Panel vide its report dated November 27^th, 2003 recommended grant of exemption as sought and made the following observation.

“ On the facts stated in the application and subsequent letter dated 24^th November 2003 addressed by the company to Reserve Bank of India , it appears, the revised package for rehabilitation of the company has been approved by the Corporate Debt Restructuring Cell of the Reserve Bank of India and the intended fresh issue of 80,00,000 equity shares of the target company to the promoters, their relatives, and associate companies etc.. is in compliance with the condition imposed by the lenders for revival of the target company . This would not constitute any change in the control of the target company nor it would adversely affect the interest of the minority shareholders”

6. However, as there was no specific request for waiver of requirement of postal ballot, an issue arose as to why the exemption should not be subject to a condition in this regard. In terms of the provisions of Regulation 4(6) of the said Regulations, an opportunity of personal hearing was granted to the acquirers. Shri. R.S. Chamadia, Company Secretary of the target company attended the personal hearing before me on February 13, 2004 and reiterated the submissions made in the application. Further vide its letter dated February 13^th2004 the target company also sought exemption from postal ballot requirement in respect of the special resolution under Section 81(1A) of the Companies Act passed by the shareholders in AGM held on September 29, 2003 for the proposed preferential allotment to the acquirers.

7. I have taken into consideration the application dated October 15, 2003, the material available on record and the recommendations of Takeover Panel.

8. It is noted that as a part of the revival package approved by the Corporate Debt Restructuring Cell, the company proposes to convert part of the simple interest dues payable to the institutions into equity shares capital and also the amount of Rs. 8 Crores lying with the company as share application money from the promoters, their relatives, associate companies etc into equity share capital. The share capital that would be formed as a result of such conversion is proposed to be allotted in the following manner:

iv. 80,00,000 equity shares to the promoters, their relatives, associate companies etc.

9. The acquirers are the promoters their relatives and associate companies and the names of such persons and entities as mentioned in the application are S.P. Finance & Trading Ltd., Balgopal Holdings & Traders Ltd., Cosmo Synthetics (I) Ltd., Sanchana Trading & Finance Ltd., S. P. Investrade (India) Ltd., Ashadevi Poddar, Madhudevi Poddar, Avnish Poddar, Vishal Poddar, Anurag Poddar, Gaurav Poddar, Abhishek Poddar, Ankit Poddar, Harshit Poddar, Dharaprasad & Sons HUF, Dharaprasad Poddar & Co. HUF, Rameshkumar Poddar & Co., HUF, Oxemberg Fashions Ltd., Sagar Silk Ind. Ltd. and Vinod Poddar.

10. It is noted that in the annual general meeting of the target company held on September 29, 2003 the shareholders approved the special resolution under Section 81 (1A) of Companies Act for the preferential issue of equity shares at par to financial institutions and the acquirers in terms of the CDR package. Necessary disclosures regarding identity of acquirers, price and purpose of allotment, consequential changes in control / management are stated to have been made in the explanatory statement under Section 173 (2) of the Companies Act. The interested parties to the resolutions are also stated to have abstained from voting on the said resolution.

would not result in change in control over the target company. It is further noted that the proposed allotment of shares interalia to the promoters and their relatives group/ associate companies is in pursuance to a package approved by financial institutions and banks under Corporate Debt Restructuring mechanism for revival of the company and would not therefore adversely affect the interest of minority shareholders.

12. Taking into consideration the above, the recommendations of the Takeover Panel and the larger interest of the 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 said Regulations, hereby grant exemption, to the acquirers from complying with the provisions of Regulation 11 of the said Regulations with regard to the proposed acquisition of shares and voting rights of the target company by them in the manner mentioned in the application.



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