WTM/PS/50/CFD/DEC/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 requirement of minimum public
shareholding by listed companies
In respect of Saptarishi Agro Industries Limited

1.

Securities and Exchange Board of India (hereinafter referred to as "SEBI") had

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.

Saptarishi Agro Industries Limited (hereinafter referred to as "the Company") is

one such company against whom the interim order was passed. The equity shares of the
Company are listed on the Bombay Stock Exchange Limited ("BSE") and the Delhi Stock
Exchange Limited ("DSE") (recognition granted to DSE as a stock exchange has since been
withdrawn vide SEBI Order dated 19.11.2014).
3.

The Company vide letter dated July 17, 2013 informed SEBI that the Central

Depository Services (India) Limited ("CDSL") had admitted equity shares worth
Rs.18,51,42,000 for dematerialization and activated the 'ISIN'. The Company further
submitted that compliance with MPS requirements would be achieved by it within a period
of one month after the shares are dematerialized. As there was no correspondence

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thereafter from the Company regarding its compliance with MPS requirements, SEBI in
continuation of the instant proceedings afforded an opportunity of personal hearing to the
Company on July 02, 2014 and the same was intimated to the Company vide SEBI letter
dated June 05, 2014. However, the Company vide its letter dated June 30, 2014, requested
SEBI to adjourn the hearing and also submitted the following :
(a)

Due to severe electricity shortage, the Company had incurred regular cash losses

from November 01, 2008 and has stopped operations since February 2011. All its
employees were also relieved from their services in December 2012.
(b)

The Company has only one manager on its rolls.

(c)

The Company faces severe fund crunch and there is no staff to expedite collection

of information. The documents relevant to the interim order could not be accessed easily as
they are not in one office and the Company needs time in order to collect them from
various offices at Chandigarh and New Delhi and accordingly has requested for extension
of time to appear in the personal hearing.
4.

As requested by the Company, the personal hearing was rescheduled and fixed on

August 04, 2014, when Mr. B.S. Kalsi (Legal Consultant) and Mr. N.G.Angal (Factory
Manager) appeared before me and submitted that the Company intends to comply with
MPS requirements. However, factors like substantial erosion of capital, lack of investor
interest in the scrip have made the off-loading of shares by the promoters a difficult task.
They requested that the personal hearing be adjourned. The Company was advised to
submit a definite proposal as to how it intends to comply with the MPS requirements.
5.

In the further hearing held on September 09, 2014, the Company, represented by

Mr. B.S. Kalsi, submitted a letter dated September 01, 2014, wherein it had inter alia
submitted that though it was very difficult to find out any prospective buyer to place
approximately 8% equity shareholding of the Company, the management was serious about
complying with all statutory guidelines including MPS requirements. The Company further
submitted that it has approached the BSE with respect to the proposed Offer for Sale
("OFS") of shares by its promoter and for reduction of charges of the trading window for
offering shares for sale. The Company further requested time till December 31, 2014 for
complying with the MPS requirements. The above submissions were reiterated by the
authorised representative.

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6.

Thereafter, vide an e-mail dated November 24, 2014, the Company informed SEBI

that the Company's promoter, Calibre Rehabs Pvt. Ltd., has reduced its shareholding from
74.57% to 66.05% through an OFS by selling 29,00,000 shares on the BSE. It was also
informed that the total promoters' shareholding post the OFS is at 74.83%, as per details
below:
Promoters'

Pre-OFS

Post OFS

2,53,68,777 shares (74.5656%)

2,24,68,777 shares (66.0418%)

shareholding
Calibre Rehabs Pvt. Ltd.
Tamil

Nadu

Industrial 29,90,000 shares (8.7884%)

29,90,000 shares (8.7884%)

Development
Corporation Limited
Total

2,83,58,777 shares (83.3541%)

2,54,58,777 shares (74.834%)

The Company requested SEBI to take the same on record.

7.

This claim of the Company was verified with the BSE, which has confirmed vide e-

mail dated November 24, 2014 to SEBI, that the Company had made a successful OFS of
29,00,000 equity shares through the stock exchange mechanism on November 21, 2014.
8.

I have considered the submissions made by the Company and other material

available on record. The interim order was issued against the Company as it was noncompliant with the provisions of rule 19A of the SCRR and Clause 40A of the Listing
Agreement read with section 21 of the Securities Contract (Regulation) Act, 1956
("SCRA"), by not maintaining atleast the minimum level (of 25%) of public shareholding as
of June 03, 2013 (the time line before which such compliance was to be achieved). The amended
provisions of rules 19A of the SCRR came into force with effect from June 04, 2010,
offering a time period of three years (i.e., on or before June 03, 2013) for a listed company
to maintain public shareholding of atleast 25%. However, as per records mentioned above,
the Company has achieved compliance only on November 21, 2014, when its promoter
had off-loaded a portion of its shareholding in an OFS. Though the Company has made
submissions regarding its difficulties in achieving compliance within the due date, it is to be
noted that the relevant statute does not provide for any exemption or relaxation of the

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continuous listing requirements mandated under rule 19A of the SCRR. As long as the
Company remains listed, it shall comply with the applicable law including the continuous
listing requirements as stipulated. Therefore, such submissions cannot be accepted.
9.

Considering the fact that the Company has now complied with the MPS

requirements as stipulated under rule 19A of the SCRR read with clause 40A of the listing
agreement, it would be appropriate and reasonable to vacate the directions issued vide the
interim order against the Company, its promoters and directors. However, in respect of the
non-compliance of the MPS requirements by the Company within the due date, I am of the
considered view that, as contemplated in paragraph 18 of the interim order, the case be
referred for adjudication proceedings under sections 23E and 23H of the SCRA
10.

Accordingly, 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 revoke the directions issued vide the interim order dated June 04, 2013 against the
company, Saptarishi Agro Industries Limited, its directors, promoters and promoter group,
with immediate effect. The matter is referred for adjudication proceedings under sections
23E and 23H of the Securities Contracts (Regulation) Act, 1956. For this purpose, an
adjudicating officer shall be appointed by SEBI in terms of section 23I of the Securities
Contracts (Regulation) Act, 1956 read with the Securities Contracts (Regulation)
(Procedure for Holding Inquiry and Imposing Penalties By Adjudicating Officer) Rules,
2005, and such adjudicating officer shall conduct the inquiry in accordance with law.
Copy of this Order shall be served on the stock exchanges and depositories for
their information and necessary action.
11.

PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Date : December 06, 2014
Place : Mumbai

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