ORDER
G.N. Bajpai, Chairman
1. Mr. Brij Mohan Thapar (applicant) made an application dated 23.09.2002 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 Takeover Regulations”) seeking exemption from making public announcement and complying with procedures under the provisions of Chapter III of the Takeover Regulations in respect of acquisition of 28.96% of the shareholding and 28.96% of the voting rights of M/s Crompton Greaves Limited (hereinafter referred to as the “Target Company”) by M/s. Solaris Chem Tech Ltd. (SCL) and English India Clays Ltd. (EICL), the companies controlled by Mr. B.M. Thapar and stated to be persons acting in concert with him. The shares of the Target Company are listed on The Stock Exchange Mumbai, Calcutta Stock Exchange, Delhi Stock Exchange, Madras Stock Exchange and National Stock Exchange.
2. The Thapar brothers viz., Lalit Mohan Thapar, Brij Mohan Thapar, Inder Mohan Thapar and Man Mohan Thapar, controlling around 100 companies belonging to the Thapar Group, had earlier sought exemption under the Takeover Regulations for acquiring voting rights of the 8 listed companies viz., Greaves Limited, JCT Electronics Limited, English India Clays limited, JCT Limited, Crompton Graves Limited, Ballarpur Industries Limited, Bharat Starch Limited, Water Base Limited and to divide the Thapar group companies pursuant to a Family Settlement Agreement (FSA). The said FSA was to cause the cessation of joint control over the above mentioned 8 listed companies and divide the Thapar Group companies into 4 distinct groups, each to be controlled by one of the Thapar brothers.
2.1 Vide order dated October 08, 2001 the exemption was granted with respect to the above mentioned proposed acquisition in terms of the said FSA. In the said order it was noted that the transferor companies, under the common control of all the Thapar brothers shall be merged and then de-merged into seven companies. The transferor companies (other than the common companies shall transfer the shares ultimately in favour of the persons acting in concert which are directly or indirectly owned / controlled by the Thapar brothers and the same shall be done in accordance with the provisions of the then prevailing Takeover Code. In the said order the exemption was inter alia sought in respect of the following acquisitions –
a. The acquisition of 29.14% of the voting rights in the target company by Mr. Brij Mohan Thapar and his sons : Karan Thapar and Gautam Thapar.
b. The acquisition of 82.89% of the voting rights in English India Clays Limited by Mr. Brij Mohan Thapar and his sons.
3. In the present application, Mr. Brij Mohan Thapar has submitted, inter-alia, the following:
i. After the SEBI order, M/s. Nilkash Investments & Holdings Limited, Gupkar Investments & Holdings Limited, Janpath Investments & Holdings Limited, Graves Limited and Carnation Investments Limited (collectively, the ‘transferors’) had together transferred 29.14% of the voting rights in the target company to him in terms of the FSA as under –
Name of Transferor Transferee Voting Rights transferred (%) Nilkash Investments & Holdings Limited Brij Mohan Thapar 00.16 Gupkar Investments & Holdings Limted Brij Mohan Thapar 00.02 Janpath Investments & Holdings Limited Brij Mohan Thapar 00.60 Greaves limited Brij Mohan Thapar 27.50 Carnation Investments Limited Brij Mohan Thapar 00.86 Total percentage of voting rights in the target company transferred to Mr. Brij Mohan Thapar 29.14
ii. It is proposed that the transferors transfer their shareholding in the target company comprising 28.96% (out of total 29.14% of the paid up capital of the target company) to the SCL and EICL. It is submitted that the voting rights in respect of each of the shares proposed to be so transferred are being exercised by Mr. Brij Mohan Thapar pursuant to the FSA and the SEBI order dated October 08, 2001. The said 28.96% of the equity share capital is proposed to be transferred as under –
Name of Transferor Name of the Name of Transferor Equity Shares Voting Rights
transferee (Rs. 10/- each) transferred
(%)
Janpath Investments SCL and/or Janpath Investments 3,09,756 00.60
& Holdings Limited EICL
Greaves limited SCL and/or Greaves limited 1,44,00,000 27.50
EICL
Carnation Investments SCL and/or Carnation Investments 4,50,938 00.86
Limited EICL Limited
Total proposed to be transferred to SCL and EICL. 1,51,60,694 28.96
iii. It is also proposed that as part of the restructuring of the Thapar group of companies, subsequent to the transfer of shares as mentioned above, the voting rights in the target company be transferred from Brij Mohan Thapar to SCL and EICl, the persons acting in concert, in accordance with their respective shareholding that they may acquire in the target company.
3.1 In the above mentioned application the exemption have been sought from the compliance of regulations 10 and 12 of the Takeover Regulations for –
i. The transfer of shareholding of 28.96% from the Janpath Investments & Holdings Limited, Graves Limited and Carnation Investments Limited (hereinafter referred to as ‘the transferor companies’) to SCL and EICL, the companies controlled and managed by Mr. Brij Mohan Thapar, and
ii. transfer of 28.96% of the voting rights from Mr. Brij Mohan Thapar to SCL and EICL.
inter alia on the following grounds –
the voting rights in respect of the shares proposed to be transferred have already been transferred to Mr. Brij Mohan Thapar in terms of the FSA and SEBI order dated 08.10.2001.
there will not be any change in management and control of the target company as Mr. Brij Mohan Thapar will continue to direct policy of and control the target company directly and / or indirectly through the persons acting in concert with him i.e. his sons as well as SCL and EICL.
The contemplated transfer will not in any manner affect the interests of the minority shareholders.
The transfer of shares from one group company to another is in terms of regulation 3 (1) (e) (i) of the Takeover Regulations.
4. The aforesaid application was forwarded to the Takeover Panel on 28/10/2002 in terms of sub-regulation (4) of regulation 4 of the Takeover Regulations. The Takeover Panel vide its report dated 15/11/2002 has recommended, inter alia, as under:
“Pursuant to order dated 8th October, 2001 passed by SEBI, the Janpath Investments & Holdings Limited, Graves Limited and Carnation Investments Limited (Collectively ‘the Transferors’) had together transferred 28.96% of the voting rights in CGL (target company) to the Applicant. To implement FSA, it is now proposed that the Transferors transfer their entire Shareholding in CGL (voting rights having already been transferred to the Applicant earlier) to SCL and EICL, which are companies controlled and managed by the Applicant. As part of the restructuring of the Thapar Group of Companies, it is proposed that subsequent to transfer of the said shares in the voting rights in respect thereof be also transferred from the applicant to SCL and EICL. These transfers being in accordance with the order dated 8th Oct. 2001 the grant of exemption as sought is recommended.”
5. I have taken into consideration the application dated 23/09/2002 the material available on record and the recommendations of Takeover Panel. It is observed that the transferor companies alongwith M/s. Nilkash Investments & Holdings Limited, Gupkar Investments & Holdings Limited, had transferred 29.14% of the voting rights in the target company to Mr. B.M. Thapar in terms of the FSA after SEBI order dated 08.10.2001. Out of the said 29.14% of the voting rights, 28.96% of the voting rights were transferred by the transferor companies to Mr. B.M. Thapar. Now it is proposed that the transferor companies shall transfer 28.96% of shareholding of the target company to SCL and / or EICL. It is also proposed to transfer 28.96% of the voting rights (out of the said 29.14%) from Mr. B.M. Thapar to SCL and EICL, the companies managed and controlled by him such that the voting rights are held by SCL and EICL in proportion to their respective shareholding in the target company. It has been submitted that the proposed transfer of shareholding and voting rights from the transferor companies and Mr. B.M. Thapar to the SCL and EICL, (the companies under management and control of Mr. B.M. Thapar and acting in concert with him), will not result in change in control and management of the target company. I have also taken into consideration the submission of the applicant that pursuant to the transfer of shares of the target company from the transferor companies to SCL and EICL the applicant or the person acting in concert with him do not propose to change the management or control of the target company. The target company is proposed to be managed in the same manner as it is currently being managed. They also do not propose to change or reconstitute the Board of Directors of the target company as a consequence of proposed transfer of shares. The proposed transfer will not affect the interests of the minority shareholders.
6. 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 Takeover Regulations, I hereby grant exemption, to the applicant and SCL and EICL, the persons acting in concert with him from complying with the provisions of Regulations 10 and 12 (Requirements of making a Public Announcement for Acquiring 15% or more of the Shares or Voting Rights in the Target Company and acquiring control over the Target Company).
7. The Applicant and the said persons acting in concert are also directed that the proposed acquisition be completed within 30 days from the date of passing of this order and a report on the same be filed by the Applicant and the said persons acting in concert with the Board within 15 days of completion of the proposed acquisition.
