1.0. JCT Ltd (hereinafter referred to as "the target company") is stated to be one of the group companies controlled by M. M. Thapar Group. Shri. M.M. Thapar is stated to be the Chairman and Managing Director of the M.M.Thapar Group of companies. Provestment Securities Pvt. Ltd. (PSL) (hereinafter referred to as "the acquirer") is an unlisted private limited company and is also stated to be part of the M. M. Thapar Group. The acquirer proposes to acquire 4,23,72,972 (12.33%) equity shares and voting rights of the target company. On behalf of the acquirer, Shri. M. M. Thapar the Chairman and Managing Director of the M M Thapar Group of Companies submitted an application dated September 22, 2003 to the Securities and Exchange Board of India (hereinafter referred to as "SEBI") seeking exemption from complying with the provisions of regulations 10 and 12 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the said Regulations").
2.0. In this regard earlier, four brothers of the Thapar family viz, Shri Lalit Mohan Thapar, Shri Brij Mohan Thapar, Shri Inder Mohan Thapar and Shri Man Mohan Thapar who were jointly controlling around 100 companies belonging to the Thapar Group filed an application dated January 17, 2001 with SEBI seeking exemption under the provisions of the said regulations for acquiring voting rights of 8 listed companies as per a Family Settlement Agreement. (herein after referred to as FSA). In respect of the said application, SEBI vide order dated October 08, 2001, granted exemption in the matter of acquisition of 37.51% voting rights of the target company by Shri Man Mohan Thapar and his sons Shri Arjun Thapar and Shri Samir Thapar. It was stated in the order dated October 08, 2001, passed by SEBI that transfer of the voting rights of the target companies through proxies and power of attorney(s) in favour of Shri Man Mohan Thapar and his sons Shri Arjun Thapar and Shri Samir Thapar is an interim step in the implementation of the FSA. The order further stated that the shares shall ultimately be transferred in favour of persons acting in concert which are directly or indirectly owned / controlled by the Thapar brothers (in this case Shri M. M. Thapar) and the same shall be done in accordance with the provisions of the then prevailing Takeover Code.
3.0. Pursuant to the SEBI order dated 8th October 2001, the voting rights in respect of 4,48,56,412 equity shares constituting 37.51% of the total voting rights in the target company are stated to have been transferred to Shri M. M. Thapar.
4.0. In the present application dated September 22, 2003 the acquirer submitted that the application is made as a logical step in the implementation of the FSA in the manner contemplated in the SEBI order dated October 8th 2001. The transferors (mentioned in the present application) propose to transfer 4,23,72,972 equity shares to the acquirer which is a company controlled and managed by Shri M. M.Thapar. The voting rights in respect of the said shares which are proposed to be transferred to the acquirer are currently being exercised by Shri M. M. Thapar pursuant to the SEBI order.
4.1. It is stated that the transferors who propose to transfer the said shares in favour of the acquirer belong to the erstwhile Thapar Group of Companies.
4.2. In the application it is submitted that, the proposed transfer of shares and voting rights of the target company to the acquirer would take place in the following manner: (i) The transfer of equity shares of the target company from the transferors to the acquirer * Subsequent to the SEBI order dated 08.10.2001, the total paid up capital of the targetcompany has been increased and the proposed transfer of 4,23,72,972 equity shares represents 12.33% of the total paid up capital of the target company.
(ii) The transfer of voting rights by Shri M. M. Thapar to the acquirer which is controlled by Shri M. M. Thapar and/or Persons Acting in concert, subsequent to the transfer of shares contemplated in point (i).
4.3. It was submitted in the application that the above is in accordance with the terms of the FSA and as envisaged by SEBI Order dated 08.10.2001.
4.4. It was stated in the application that pursuant to the proposed acquisition the shareholding of acquirer in the target company would increase from 16.51% to 28.84%.
5.0. The said application was forwarded to the Takeover Panel in terms of sub-regulation (4) of regulation 4 of the said Regulations. The Takeover Panel vide its report dated December 18, 2003, made the following recommendation "Considering the facts stated in the application, it is evident that the intended transfers of equity shares and voting rights as applied for are to bring the total transaction to logical conclusion in line with the order dated 8th October, 2001 earlier passed by SEBI. This does not involve any change in management and control of JCT. The contemplated transfers are not likely to affect the interests of the minority shareholders of JCT. The intended transfer of shares are from one group company, the transferors being a part of Thapar Group of companies to another. The intended transfer of voting rights is from the promoter to companies controlled by him. Grant of exemption as sought is, therefore, recommended." 5.1. I have taken into consideration the application dated 22nd September, 2003, the material available on record and the recommendations of Takeover panel 5.2. It is noted that the shares of the target company are listed on the Bombay Stock Exchange, Delhi Stock Exchange, Kolkata Stock Exchange and Ludhiana Stock Exchange.
5.3. It is noted that the proposed acquisition is by way of transfer of 4,23,72,972 equity shares of the target company representing 12.33% of the paid up capital of the company from the transferors mentioned above to the acquirer. It is further noted that the voting rights in respect of the said shares which are currently exercised by Shri M M Thapar are also proposed to be transferred to the acquirer.
5.4. It is noted that earlier SEBI vide order dated 8th October 2001, granted exemption to the transfer of voting rights of eight companies including the target company among the four brothers of the Thapar family so as to enable them to have independent management and control as envisaged in the Family Settlement.
5.5. It is noted that pursuant to the exemption granted vide the said order dated October, Shri M M Thapar acquired control over the target company by acquiring the voting rights.
5.6. The present application is seeking transfer of 12.33% shares (for which the voting rights are already vested with Shri M. M. Thapar) from companies belonging to erstwhile Thapar group to companies controlled by Shri M. M. Thapar pursuant to the implementation of FSA. Further the application also states that the voting rights in respect of the said shares shall also be transferred from Shri M. M. Thapar to the acquirer which is controlled by him.
5.7. It is noted that the proposed transfer may not result in change in control over the target company. It is further noted that the proposed transfer may not affect the interests of minority shareholders of the target companies.
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 said Regulations, hereby grant exemption, to the acquirer from complying with the provisions of Chapter III of the said Regulations with regard to the proposed acquisition of 4,23,72,972 (12.33%) shares and voting rights of the target company.
7.0. The Acquirer is directed to complete the acquisition within a period of three months from the date of this order. The acquirer is further directed that on completion of the acquisition, a report under Regulation 3(4) read with Regulation 3(5) of the said Regulations shall be filed with SEBI.