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WTM/PS/29/CFD/AUG/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: PRASHANT SARAN, WHOLE TIME MEMBER

ORDER

Under sections 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India
Act, 1992 read with section 12A of the Securities Contracts (Regulation) Act, 1956 in the
matter of non-compliance with the minimum public shareholding requirements

In respect of Shantivijay Jewels Limited

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') passed an interim
order dated June 04, 2013 (hereinafter referred to as 'the interim order') with respect to 105 listed
companies who did not comply with the Minimum Public Shareholding ('MPS') norms as
stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957
(hereinafter referred to as 'SCRR') within the due date i.e., June 03, 2013. The interim order
was passed without prejudice to the right of SEBI to take any other action, against the non-
compliant companies, their promoters and/ or directors or issuing such directions in
accordance with law. The interim order was to be treated as a show cause notice by those
companies for action contemplated in paragraph 18 thereof.

2. Shantivijay Jewels Limited (hereinafter referred to as 'the Company') is one such company
against whom the interim order was passed. The promoter shareholding in the Company on
the date of the interim order was 93.09%. The shares of the Company are listed on the
Bombay Stock Exchange Limited ('BSE').

3. The Company filed its replies to the interim order vide letters dated June 20, 2013 and
September 25, 2013, wherein the following submissions were inter alia made:

a. The Company had initiated steps towards the compliance of Clause 40A during year 2006 by
increasing its authorised share capital in the hope to raise equity by issue of further shares
depending on investors perception/ risk appetite from companies involved in the jewellery
industry. However, it faced difficulties to get keen interest by the merchant/ investment
bankers as they were interested in bigger proposals. The company has paid up capital of 3
crores only and its shares are infrequently traded. It was further realized that perception for
investment in jewellery industry was quite poor due to highly competitive nature of business
and very low margins compared with other sectors.
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b. Further, the recession and global capital market meltdown in the year 2008 had adversely
impacted its hope of disinvestment as the major exports of the Indian jewellery industry
have been to US and European countries. The scenario had not materially improved since
then to enable divestment by the Company to be able to comply with the requirement of
Clause 40A of the Listing Agreement.
c. The Company in order to ensure compliance with the requirement of MPS had examined
the various options available. To start with, the promoters and the members of the promoter
group had undertaken an Offer for Sale (hereinafter referred to as 'OFS') on May 24, 2013
(Tranche 1), for an aggregate of up to 5,45,000 equity shares at a price of 100 each. The
response to this was very poor as at the close of the Tranche 1 offer, out of the 5,45,000
equity shares offered only 140 equity shares were subscribed which brought down the
shareholding of promoters/ promoter group from 93.10% to 93.09%.
d. Thereafter at the meeting of the Board of Directors of the Company on June 12, 2013, it was
decided, in principle, to go for voluntary delisting of equity shares of the Company in
accordance with the provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009
(the 'Delisting Regulations').

4. Thereafter, an opportunity of personal hearing was afforded to the Company on January 22,
2014, when Mr. Pradeep Godha, the Chairman and Managing Director of the Company and
Mr. Anurag Godha, Vice Chairman and Managing Director of the Company appeared along
with Ms. Shailashri Bhaskar and Mr. Sunil Dedhia (both from Corporate Law Advisor) and
reiterated the submissions made in the reply. The representatives submitted that they are
taking possible steps for complying with the MPS requirements. They also sought for
another opportunity of personal hearing. The hearing was adjourned and the Company was
advised to report the status thereof to SEBI.

5. The Company vide its letter dated February 20, 2014, intimated that after deliberations and
advisory from Hem Securities Limited, the Merchant Banker, the promoters of the Company
again decided to offer equity shares via stock exchange mechanism as a last attempt to
continue with the listing. The promoters namely Mr. Pradeep Kumar Godha, Mr. Anurag
Godha and Ms. Rajrani Godha had undertaken OFS on February 13, 2014 (Tranche 2), for
an aggregate of up to 5,43,250 equity shares. At the close of the Tranche 2 offer, out of
5,43,250 equity shares offered, only 1,83,100 equity shares were subscribed and the
promoters' shareholding reduced to 87% from 93.09%. The Company vide this letter
submitted that as its last effort by its promoters to achieve the MPS requirement and remain
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listed had failed, the promoters have desired for voluntarily delisting of the equity shares of
the Company.

It was also submitted that the Board of Directors of the Company on taking cognizance of
the same confirmed once again to go for voluntary delisting of equity shares. The Company
proposed to initiate the process to obtain approval of shareholders on the receiving approval
from SEBI for voluntary delisting. The Company in its communication requested for
relaxation of all actions indicated in the interim order to enable the promoter/ promoter
group to go ahead with the offer for delisting of equity shares by acquiring remaining public
shareholding and for withdrawal/ relaxation of interim order in respect of the independent
directors as they had tried their best to contribute their ideas to ensure that the Company
becomes MPS compliant.

6. Thereafter, the Company vide letters dated March 27, 2014 and May 09, 2014, submitted
that the postal ballot process for seeking approval of the public shareholders of the
Company for delisting of shares were dispatched on April 02, 2014 and the scrutinizer vide
its report dated May 03, 2014, has reported that the resolution has been approved with the
requisite majority as 4,98,374 (equity shares) votes were casted in favour of the resolution
and 1,852 (equity shares) votes were casted against the resolution. In view of the
submissions, the Company requested SEBI to consider granting permission to its promoters
to acquire equity shares of the Company, for the purpose of delisting of its equity shares and
also requested necessary extension of time to complete the delisting process.

7. The Company was afforded another opportunity of personal hearing on June 10, 2014 when
Mr. Pradeep Godha, the Chairman and Managing Director of the Company and Mr. Anurag
Godha, Vice Chairman and Managing Director of the Company appeared along with Ms.
Shailashri Bhaskar and Mr. Sunil Dedhia and reiterated the above submissions. During the
course of hearing, when the representatives were asked whether the sale of 6.09% shares in
the tranche 2 OFS was done so as to achieve easier success in reaching the desired levels in
the delisting offer, the representatives sought liberty to submit a proposal.

8. Thereafter, the Company vide its letter dated June 13, 2014, proposed that for the purposes
of Regulation 17 of the Delisting Regulations, it would consider the pre-OFS (concluded on
February 13, 2014) shareholding of the promoters. The Company while referring to a letter
received from a relative of an independent director holding 10,000 equity shares (i.e. 0.33%
of the paid up capital of the Company), being part of the public shareholders, jointly with
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Independent Director whose shares are frozen by virtue of the interim order has requested
SEBI to relax the directions in respect of their shares as aforesaid and allow them to take
part in the proposed delisting offer, if they may be interested. The Company sought
permission to apply to BSE for the grant of 'in-principle' approval for delisting. The
Company also requested SEBI to grant atleast a period of five (5) months to complete the
delisting process.

9. I have considered the submissions made by the Company vide their replies, oral submissions
made during the personal hearings, the proposal for delisting as submitted by the Company
and the material available on record. I note that in tranche 1 OFS, the shareholding of the
promoters/ promoter group had come down from 93.10% to 93.09%. Thereafter, the
Company in its Board of Directors meeting held on June 12, 2013, had decided to go for
voluntary delisting of its equity shares. However, the Company in an attempt to achieve the
MPS requirement and remain listed had undertaken tranche 2 of OFS on February 13, 2014,
whereby, the shareholding of promoters/ promoter group has come down to 87%. Having
failed in its attempt to comply with the MPS norms, the Company has desired to delist the
shares of the Company from the stock exchange. Considering the fact that the shareholders
have approved the proposal for delisting as seen from the scrutinizers report dated May 03,
2014 and the proposal of the Company, I am of the considered view that the Company/
promoters could be allowed to proceed with the delisting process in accordance with the
Delisting Regulations and also to suitably relax the directions issued against the Company's
promoters to enable them to purchase shares in the delisting offer to be made by them.

10. I note that in terms of Regulation 8(1)(d) of the Delisting Regulations, the final application
for delisting should be made within one year of passing of the special resolution of the
shareholders approving the delisting proposal. Therefore, I find it reasonable and
appropriate to modify the directions issued vide the interim order to the extent that the same
does not affect or prejudice the efforts of the Company/ its promoters' from continuing
with the voluntary delisting process.

11. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 of
the Securities and Exchange Board of India Act, 1992 read with Sections 11(1), 11(2)(j),
11(4) and 11B thereof and section 12A of the Securities Contracts (Regulation) Act, 1956,
hereby issue the following directions which are in modification of the directions issued vide
the interim order dated June 04, 2013 :

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(i) The direction issued in paragraph 17(b) of the interim order dated June 04, 2013 stands
modified to the extent that it shall not hinder the already commenced voluntary delisting
process initiated by the Company, Shantivijay Jewels Limited and the promoters shall be
permitted to buy the equity shares from the public shareholders as part of the delisting
offer. The Company shall complete the delisting process within a period of five (5) months
from the date of this order and shall report the outcome within one (1) months' period
from the date of delisting. Further, the directors who are not part of the promoter group
and who are restrained inter alia from selling their shares in the Company would be allowed
to sell them in the delisting offer.
(ii) The direction contained in 17(b) of the interim order dated June 04, 2013 shall be re-
imposed/ revived immediately (without the need for passing of a separate order) in case the
delisting process of the Company is not successful within the period directed in sub
paragraph (i) above.
(iii) The directions contained in paragraphs 17(a), (c) and (d) of the interim order dated June 04,
2013 shall continue to be in effect till such time the Company is delisted from the stock
exchanges or till the time the Company becomes compliant with the MPS norms,
whichever is earlier.

12. This Order shall come into force with immediate effect.

13. The aforesaid directions are issued without prejudice to the right of SEBI to initiate action as
contemplated in paragraph 18 of the interim order in case the delisting process of the
Company is not successful within the period as directed in paragraph 6(i) above.

14. Copy of this Order shall be served on the stock exchanges and depositories for their
information and action that may deem fit and necessary in this case.



PLACE: Mumbai PRASHANT SARAN
DATE: August 14, 2014 WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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