INTRODUCTION TO

MINISTRY OF FINANCE

The Ministry of Finance of the

Government of India has three
departments:
1. Department of Economic Affairs,

2. Department of Revenue, and

3. Department of Economic Affairs.

Capital Market Division of Economic

Affairs regulates capital market and
securities transactions.
SECURITIES EXCHANGE BOARD
OF INDIA

FUNCTIONS OF SEBI: -

There are two Indian laws that

substantially empower SEBI to carry out

various regulatory functions and duties

relating to the capital markets namely,

the securities Exchange Board of India

Act, 1992 and the securities Contracts

(Regulation) Act, 1956.

The Indian Government in 1988 in fact set

up SEBI.However it's power to regulate

the capital market was limited until the

SEBI 1992 was legislated apparently the

great Indian scam in 1991-92 prompted

the govt. of India and the Indian

Parliament to enact the

SEBI Act 1992.to discharge it's duty SEBI

is authorized under section 11 of the Act

to take measures providing for: -

Regulating the business in stock

exchanges and any other security

market;

registering and regulating the working

of stockbrokers,sub-brokers,share

transfer agents,bankers to an

issue,trustees of trust deeds,registrars

to an issue, merchant

bankers,underwriters,portfolio
 managers,investment advisers and such

other intermediaries who may be

associated with securities marker in any

manner;

registering and regulating the working

of collective investment schemes

including mutual funds;

promoting and regulating self-

regulatory organizations;

prohibiting fraudulent and unfair trade

practices in securities market;

promoting investors education and

training of intermediaries in securities

market;
prohibiting insider trading in securities;

regulating the substantial acquisition of

shares and take-over of companies;

calling for information from,undertaking

inspection,conducting inquiries and

audits of stock exchanges and

intermediaries and self -regulatory

organizations in the securities market;

performing such functions and

exercising such powers under the

provisions under the Securities

Contracts(Regulations) Act,1956,as may

be delegated to it by Central Govt.;

levying or other charges for carrying out

the purposes of section 11 of the Act;

conducting research for the above

purpose; and,

Performing such other functions as may

be prescribed by the govt.

The functions and powers that have been

delegated to SEBI under provision of

Securities Contract (Regulation) Act, 1956

extensively pertain to:

(i) recognized stock exchanges;

(ii) contracts and options in securities;

and

(iii) Listing of securities by public

companies.
SEBI is autonomous in principles but not

independent of the central govt.besides

the appointment of its board members

and the grants by the central govt. on

policy matters; and it may be superseded

by central govt. for a period of six months

or less in case the central govt. finds SEBI

unable to discharge its functions and

duties, or in other extraordinary cases.

Governing Laws-:

Two Acts mainly govern Securities

Transactions in India at present.

1.The Securities Contracts (Regulation)

Act, 1956; and

2.The Securities & Exchange Board of

India Act, 1992.

The paper based ownership and transfer

of securities has been a major drawback

of the Indian Securities

Markets since it often results in delay in

settlement and transfer of securities and

also lead to "bad delivery", theft, forgery

etc. The Depositories Act, 1996 was

therefore enacted to pave the way of

smooth and free transfer of securities.

The other relevant laws, which affect the

capital market, are: -

1.The Depositories Act, 1996;

2.The Foreign Exchange Regulations Act,

1973;

3. Arbitration and Conciliation Act, 1996;

4.Companies Act, 1956;

5. Debt Recovery Act (Bank and Financial

Institutions Recovery of Dues Act, 1993);

6.Banking Regulation Act;

7.Benami Prohibition Act;

8.Indian Penal Code;

9.Indian Evidence Act, 1872 and;

10.Indian Telegraph Act, 1885.

The Securities Contracts (Regulation) Act,

1956

The Securities Contracts (Regulation) Act,

1956 (hereinafter referred to as the Act),

containing a mere 31 sections, keeps a

tight vigil over all the Stock Exchanges of

India since 20th February 1957. The

provisions of the Act were formerly

administered by the Central Government.

However, since the enactment of The

Securities and Exchange Board of India

Act, 1992 the Board established under it

(SEBI) concurrently has powers to

administer almost all the provisions of the

Act.

By virtue of the provisions of the Act, the

business of dealing in securities cannot

be carried out without a

License from SEBI. Any Stock Exchange

which is desirous of being recognized has

to make an application under Section 3 of

the Act to SEBI, who is empowered to

grant recognition and prescribe

conditions including that of having SEBI's

representation (maximum three persons)

on the Stock Exchange and prohibiting the

Stock Exchange from amending its rules

without SEBI's prior approval. This

recognition can be withdrawn in the

interest of the trade or public. SEBI is

authorized to call for periodical returns

from the recognized Stock Exchanges and

make enquiry's in relation to their affairs.

Every Stock Exchange is obliged to furnish

annual reports to SEBI. Stock Exchanges

are allowed to make rules only with the

prior approval of SEBI. The Central

Government and SEBI can direct Stock

Exchanges to frame rules. Recognized

Stock Exchanges are allowed to make

bylaws for the regulation and control of

contracts but subject to the previous

approval of SEBI and SEBI has the power

to amend the said bylaws. The Central

Government and SEBI have the power to

supersede the governing body of any

recognized stock exchange and to

suspend its business.

A public limited company has no

obligation to have its shares listed on a

recognized Stock Exchange. But if a

company intends to offer its shares or

debentures to the public for subscription

by issue of a prospectus, it must, before

issuing such prospectus apply to one or

more recognized stock exchanges for

permission to have the shares or

debentures intended to be so offered to

the public to be dealt with in each of such

stock exchange in

terms of Section 73 of the Companies Act,

1956. SEBI can, however, under the

provisions of Section 21 of the Securities

Contracts (Regulation) Act, 1956 compel

the listing of securities by public

Companies if it is of the opinion that it is

necessary or expedient in the interest of

the trade or public. In the event of the

Stock Exchange refusing to list the

securities of any public company, an

appeal to SEBI is provided under the Act.

A Company as per the present provisions

of law is obliged to get listed on the

regional exchange, in addition to other

exchanges. (There has been a

recommendation that this restriction be

removed).

A company on the grounds specified in

Section 22A of the Act is entitled to refuse

to register transfer of any of its

securities, notwithstanding anything

contained in its

Articles or Section 82 or Section 111 of

the Companies Act, 1956.

MEMBERS OF THE BOARD

The Act sets down the SEBI 's Board as

follows:

A Chairman;

Two members from amongst the

officials of the ministries of the central

govt. dealing with the Finance and Law;

One member from amongst the officials

of the Reserve Bank of India constituted

 under section 3 of the Reserve Bank of

India Act 1934;

Two other members to be appointed by

the Central government who shall be

professionals and inter alia have

experience or special knowledge

relating to securities market.

STOCK EXCHANGES

Every thing in India has a history to tell,

her stock business being on the best

examples. It is said that the capital

market in India dates back to the

eighteen century. At that time, the East

India Company was ruling its territories

out of Calcutta, and the Mughal Emperor

was sitting in Delhi. Stock Exchanges

were organized much later from the and

the East Indian company, the British govt.

took over India in 1858 after the Indian

war of independence (the Mutiny)(1857-

1858). The Bombay Stock Exchange was

formed in 1875,the Ahemedabad Stock

Exchange was formed in 1894,Calcutta in

1908, Madras in 1920(the current Stock

exchange in 1937), the Indore Stock

Exchange in
1930,the Hyderabad Stock exchange in

1943,Bangalore in 1963,and Vadodara in

1990.

Calcutta and Bombay were the two

business centres in India of the

nineteenth century where securities were

traded.

India saw her first boom in stocks during

1861-65 and her first bubble bursting in

1865. A group of stockbrokers in Bombay

had already come into prominence by

1865. After this boom Indian Stock market

went through several ups and downs,

reflecting the two World Wars, Great

Depressions, and her own Independence

movement. The repeated collapses of the

market left causalities, together with a

clamor for reforms of

speculative market and manipulative

practices 1923,1936 and 1947.Stock

Exchanges were just associations of

stockbrokers.

There are 22 stock exchanges in India. All

are recognized and regulated under a

single Law namely the Securities Contract

(Regulation) Act 1956. They are Tightly

Regulated as Self-regulatory

Organizations (SRO's) under the Act.

BOMBAY STOCK EXCHANGE

ORGANIZATION: -

The Bombay Stock Exchange (BSE) is not

the official name of the stock exchange its

official name is `The Stock Exchange,

Mumbai` previously called `The Stock

Exchange Bombay` It's prestige stems

from the fact that it's the oldest stock

exchange in India. It was formally

established as Native Share & Stock

Brokers Association in 1875, and is still an

association of persons. The BSE was

molded on the London Stock Exchange

which is an independent institution not

subject to govt. regulation. It is located

on Dalal Street, in down town Bombay.

BSE INDICES: -

The BSE publishes four stock price

indices:

(i) BSE Sensitive Index,

(ii) BSE 100 Index,

(iii) BSE-200,and

(iv) DOLLEX.

In addition BSE-500 Index has been

proposed.

In this Project we are concerned with its

Sensitive Index.

The BSE Sensitive Index-:

The BSE Sensitive Index is also known as

the BSE Sensex or the BSE 30 Index, is the

most widely used and the most

extensively quoted stock price average in

India. BSE publishing the Index on 2

January 1986 and currently calculates it

and updates it in every two minutes.

The BSE Sensitive Index is the market

capitalization weighted Index composed

of 30 stocks with the base April 1979-

100,approximately 30% of the total

market capitalization of the exchange. In

arriving at the index figure, the BSE starts

by multiplying the price of each share by

the number of share outstanding in that

stock. These market values are then

added, given the

Aggregate market valve of the stocks

covered (the current market value). This

aggregate is expressed as a percentage of

the average market value using the Fiscal

year 1978-79 as a base (the base market

value) 40. Other stock price indices like

the NSE - 50, the S&P 500 composite

Index, NYSE Common Stock Index, FTSE-

100, and the Tokyo Stock Price Index

(TOPIX) are also market capitalization-

weighted.
The National Stock Exchange-:

Organizations

The official name of the National Stock

Exchange(NSE) is `The National Stock

Exchange of India Limited` , a

public limited company under the

Companies Act 1956. It is located in Worli,

in the heart of Mumbai.

The NSE was incorporated in November

1992 on the initiative of the Indian

Government. Its promoters include the

Industrial Development Bank of India,

Industrial Development Bank of India, Life

Insurance Corporation of India,General

Insurance Corporation of India,Industrial

Credit And Investment of India Ltd., the

State Bank of India and several other

highly reputed financial institutions in

India.

They represent major and important

participants in Indian fixed income and

equity markets. The Government directly

or indirectly and partially or wholly owns

most of them.

The NSE operates two market segments:

(i) The wholesale debt market (WDM)

segment, where fixed income

instruments such as government

bonds,treasury bills,commercial

papers,corporate debentures are

traded among institutional

investors; and

(ii) The capital market (CM)

segment,which facilitates trade in

equities and retail trade in

convertible and non-convertible

debentures and hybrid instruments.

Trading of the debt market segment

began in June 1994 and that of its capital

market segment, in November 1994 .

NSE-50 Index

The NSE-50 Index, commonly known as

`nifty`, is a market capitalization

weighted index like the BSE Sensitive

Index and S&P 500. It was introduced in

April 1996, replacing the earlier nse-100.

The objectives of the NSE-50 index are:

To reflect the market movements more

accurately;

To provide fund managers with a

benchmark for measuring portfolio

performance; and

To establish a basis for introducing

index-based derivative products.

 Reliance - Major Milestones

2004

• Reliance Industries Limited (RIL)

emerged as the 'Petrochemicals

Company of the Year' at the

prestigious sixth annual Platts Global

Energy Awards ceremony in New York,

USA

• The Board of Directors of Reliance

Industries Limited approved the

buyback of its fully paid up equity

shares of Rs.10 each, at a price not

 exceeding Rs 570 per share, payable

in cash, up to an aggregate amount

not exceeding Rs 2,999 crore. This

amount represents the limit of 10% of

the total paid up equity share capital

and free reserves of the Company as

on March 31, 2004.

• The European Commission approved

the acquisition of the German

specialty polyester manufacturer

'Trevira' by Reliance. Both, the

ownership and management control of

'Trevira' are promptly transferred to

Reliance following the decision. With

 this Reliance has emerged as the

largest polyester fibre and yarn player

in the world.

• Reliance Industries emerged as the

first and only private sector company

from India to feature in the 2004

Fortune Global 500 list of World's

Largest Corporations.

• Reliance announced it had struck gas

off the Orissa Coast in the Bay of

Bengal.
 • RIL became the first private sector

company in India to record a net profit

of US dollar of over 1 billion.

• Reliance Associate, Sunbright, signed

a Memorandum of Understanding

(MoU) with National Organic Chemicals

Industries Limited (NOCIL) to take

over its Petrochemicals and Plastics

Products Divisions.

2003

• Reliance announces Strategic Alliance

with Bongaigaon Refinery &

Petrochemicals Ltd. (BRPL) to restart

PSF manufacturing at BRPL.

 • Reliance Infocomm acquires FLAG

Telecom, a multinational telecom

company providing

bandwidth through its undersea cable

network comprising of over 50,000 kms of

undersea fiber optic cable that spans four

continents and connects the key regions

of Asia, Europe, Middle East and the USA.

• State-of-the-art Research and

Technology Centre is inaugurated at

Reliance's Patalganga complex to

develop differentiated polyester

products.
• Reliance strikes oil in an onshore block

in Yemen, where it has an equity oil

position.

• Reliance's refinery at Jamnagar was

ranked best in Shell Benchmarking for

the third consecutive year in 'Energy

and Loss' performance from amongst

50 refineries worldwide.

• Reliance dedicates 23rd January as

Shareholder's Day on the occasion of

25 years of the company going public -

A story of Relationship and Trust.

• BSES, one of the premier utility

companies of the country, engaged in

 the generation, transmission and

distribution of electricity becomes

part of the

• Reliance Group and Mr. Anil D Ambani

is appointed its Chairman.

2002

• Reliance Infocomm to launch various

telecom services on 28th December -

beginning with Gujarat, the Infocomm

revolution will cover thousands of

villages and hundreds of cities across

the country. Reliance Infocomm will

become a major catalyst for changing

the face of India and improving the

quality of life of Indians.

• Reliance announced India's biggest

gas discovery in nearly three decades

and one of the largest gas discoveries

in the world during 2002. The in place

volume of natural gas is in excess of 7

trillion cubic feet, equivalent to about

1.2 billion barrels of crude

oil. This is the first ever discovery by an

Indian private sector company.

• Reliance acquired control of Indian

Petrochemicals Corporation Limited

(IPCL) - India's second largest

petrochemicals company.
• Reliance signed MOU with DuPont

Polyester Technologies to license the

revolutionary resin technology NG-3

from DuPont. Reliance announced its

plan for the expansion of PET capacity

by 220,000 tonnes per year.

• The merger of Reliance Petroleum

Limited with Reliance Industries

Limited was announced - largest ever

merger in India - Reliance Industries

became the largest private sector

company in India on all major financial

parameters including sales, profits,

net worth, assets, and exports.

2001

• Reliance Industries Ltd. and Reliance

Petroleum Ltd. became India's two

largest companies in terms of all

major financial parameters

• Dhirubhai Ambani was conferred The

Economic Times Award for Corporate

Excellence for Lifetime Achievement

1999-2000
• Jamnagar Petrochemicals complex and

bulk of integrated refinery complex

commissioned comprising:

• World's largest grassroots refinery

• India's largest port with capacity of 50

million tpa

• World's largest PX Plant of 1.4 million

tpa

• World's largest PP plant of 0.6 million

tpa

• Captive power plant of over 300 MW

• World-class product handling, storage,

and despatch facilities

 • Reliance started commercial

production of 27 million tpa refinery,

the 5th largest in the world

1998

• The Wharton School, University of

Pennsylvania, USA awarded Dhirubhai

Ambani the Dean's Medal, for setting

an outstanding example of leadership.

• Reliance completed phase-II expansion

of Hazira Petrochemicals Complex

including world's largest multifeed

cracker, PET plant, MEG plant, PTA

plant, PE plant
1996-1997

• First corporate in Asia to issue 50 and

100 years bond in US debt market

• Reliance became the first private

sector company to be rated by

international credit rating agencies.

S&P rated BB+, stable outlook,

constrained by the Sovereign Ceiling.

Moody's rated Baa3, Investment

grade, constrained by the Sovereign

Ceilings

1995

• Net profit crossed the Rs 1,000 crore

mark (Rs 1,065 crores or US$ 338

million), unparalleled in the Indian

Private sector
1994

• Reliance offered the second Euro issue

of GDR

1993

• Reliance Petroleum Limited public

issue - India's largest public offering

• Reliance pioneered the first ever Euro

Convertible Bond issue by an Indian

company

1992

• Reliance raised funds by pioneering

foray into overseas capital markets

with first ever international GDR

offering by an Indian corporate

 • Reliance commenced the production of

High Density Polyethylene (HDPE) at

Hazira

1991

• Reliance commissioned phase-I of

Hazira Petrochemicals Complex -

consolidated its position

• in polyesters and entered into

attractive polymers business - started

VCM and PVC plants

1988

• Reliance started the PX plant at

Patalganga
1987

• Reliance commenced the Linear Alkyl

Benzene (LAB) plant at Patalganga

1986

• Reliance started PTA plant at

Patalganga

• Reliance commissioned Polyester

Staple Fibre (PSF) plant at Patalganga

1985

• Reliance entered phase-II of the

Polyester Filament Yarn (PFY) plant at

Patalganga

1982
 • Reliance launched phase-I of the

Polyester Filament Yarn (PFY) plant at

Patalganga

1977

• Reliance went public with IPO -

Dhirubhai Ambani introduced equity

cult in India, a new model of

• business leadership from a base of the

broadest public shareholding

Reliance - Financial Milestones

1977

First IPO to the Indian Public

1985

Total Assets cross Rs. 1,000 crores

1988
Sales cross Rs. 1,000 crores mark (Sales

for the year Rs.

1,778 crores)

1992

Offered the first ever Euro Issue of Global

Depository Receipts by an Indian company

1992

Set a record with Reliance Twin issues

that received over 1 million investor

applications

1993

Sales crossed Rs. 4,000 crores making

Reliance India's largest private sector

company

1993
Offered the first Euro Convertible bond

issue

1993

India's largest public offering - Reliance

Petroleum

Issue

1994

Offered the second Euro issue of GDR

1995

Net profit crossed the Rs.1,000 crore

mark (Rs 1,065 crores or US$ 338 million),

unparalleled in the Indian Private sector.

1995-96
Reliance became the first private Sector

Company to be rated by international

credit rating agencies. S&P rated BB+,

stable outlook, constrained by the

Sovereign Ceiling. Moody's rated Baa3,

Investment grade, constrained by the

Sovereign Ceilings

1997

First corporate in Asia to issue 50 and 100

years bond in

US debt market

1998

Total Assets cross Rs. 35,000 crore (Rs.

35,445 crore) and Revenues cross Rs.

14,000 crore (Rs. 14,115 crore)

2000

Group profits cross Rs. 2,500 crore mark,

Revenues cross Rs. 20,000 crore mark

(Rs. 21,541 crores) and Total assets cross

Rs. 50,000 crore (Rs. 52,094 crores)

2001

RIL and RPL become India's two largest

companies in terms of all major financial

parameters

2001

Group revenues cross Rs. 60,000 crore

(Rs. 60,160

crores), Reliance becomes largest

business group in India

2001

RPL raises USD 750 million syndicated

loan - deal named capital market deal of

the year by IFR Asia

History
Until the Second World War, raising of

capital in India from the Securities

Markets was free from all controls. After

the Second World War, the Defense of

India Rules was introduced which imposed

restrictions for the first time on the issue

of capital. They continued even after

Independence and were formerly

incorporated in the Capital Issues

(Control) Act, 1947. The office of the

Controller of Capital Issues (CCI)

administered the Act. After independence

in the year 1947, the Indian Government

followed the policy of giving

predominance to public sector enterprises

in the economy. As part of this policy,

various industries were nationalized and

certain sectors of economy were reserved

for the public

Sector. Private Sector Corporations was

restricted and access to equity was only

through the C.C.I.

Under the Capital Issues (Control) Act,

1947, companies were required to obtain

approval from CCI for raising capital. New

companies were allowed to issue shares

only at par. Only existing companies with

substantial reserves could issue shares at

a premium which had to be calculated in

accordance with CCI norms, which were

based on an estimate of "fair value" and

not on the "prevailing market price".

There were tight controls on the issue of

rights and bonus shares. With the repeal

of the Capital Issues (Control) Act, 1947

on 30th May 1992, Companies are now

able to raise capital without requiring any

consent from any authority either for

making the issue or for pricing it.

Restrictions on rights and bonus issues

have been removed. New as well as

established companies are now able to

price issues according to their estimate of

market conditions. From

hawking shares under a Banyan tree to

shouting matches in the trading ring, the

Indian Capital Market has now entered

the hush of screen based trading.

THE BOMBAY STOCK EXCHANGE (BSE)

The Bombay Stock Exchange (BSE)

established in 1875 has its roots in

brokers coming together in 1860s to trade

in shares issued by various companies.

The BSE today

is 120 years old and is perhaps the second

oldest stock exchange in the world. Out of

the total quoted

companies in India, 46% are listed on the

Bombay Stock Exchange and its share

market capitalisation is 74%.

The growth in the Indian Capital Market

was kicked off for the first time by the

heavy-handed policy laid down

Under the Foreign Exchange Regulations

Act, 1973 (FERA). FERA forced

multinationals to reduce their share

holdings to 40%. Multinationals unloaded

en-masse and that too very cheaply. The

shares of Hindustan Lever bought during

that period at Rs.16/- are today quoted at

Rs.605/-. Ponds shares then sold at

Rs.23/- have today grown to Rs. 900/-. In

those early

Days of the '70s most broker only dealt in

forward group and very few dealt in cash

script.

Mr. Dhirubhai Ambani of Reliance Textiles

and Industries provided people who

missed FERA an opportunity to become

millionaires in their lifetime. The public

issue of Rs.2.82 crores of Reliance

Textiles & Industries in November 1977

was over subscribed 8 times despite the

fact that Hindustan Lever and Hindustan

Dorr-Oliver had issues around the same

time. Since then the Reliance Group has

tapped the capital markets 33 times

raising Rs.10, 000 crores. From an initial

base of 6200 shareholders, the Reliance

Family

now has 4.3 million members, which

means that one out of every four

investors in India owns Reliance shares.

Then came Harshad Mehta, riding the

back of the economic liberalization and

the optimism, which it generated. Mehta,

illegally funded by Banks, sent the

stock prices sky-high. The BSE Index,

which was 805 in April 1990, went to 1245

by March 1991 and by the end of 1992,

just before the SCAM was detected, went

beyond 3500. During this phase when UTI

launched its Master Gain '92 Scheme, 6.2

million applicants poured in Rs.4712

crores.

VARIOUS STOCK EXCHANGES IN

INDIA
Ahmedabad Stock Exchange Association

Ltd.

Bangalore Stock Exchange

Bhubaneshwar Stock Exchange

Association

Calcutta Stock Exchange

Cochin Stock Exchnage Ltd.

Coimbatore Stock Exchange

Delhi Stock Exchange Association

Guwahati Stock Exchange Ltd.

Hyberabad Stock Exchange Ltd.

Jaipur Stock Exchange Ltd

Kanara Stock Exchange Ltd

Ludhiana Stock Exchange Association

Madras Stock Exchange

 Madhya Pradesh Stock Exchange Ltd.

 Mangalore Stock Exchange Limited

Meerut Stock Exchange Ltd.

Mumbai Stock Exchange

National Stock Exchange of India

OTC Exchange of India

Pune Stock Exchange Ltd.

Saurashtra Kutch Stock Exchange Ltd.

Uttar Pradesh Stock Exchange

Association Ltd.

Vadodara Stock Exchange Ltd.

SEBI INFORMATION OF

RELIANCE SHARE BUY

ORDER

IN THE MATTER OF PROPOSED ACQUISTION OF

SHARES/ VOTING RIGHTS OF BSES LIMITED --

APPLICATION FOR EXEMPTION UNDER

REGULATION 3(1)(l) OF THE SEBI (SUBSTANTIAL

ACQUISITION OF SHARES AND TAKEOVERS)

REGULATIONS, 1997

NO. : CO/504/TO/03 /2003

1.0 as the ‘Acquirer’) proposes to acquire

78,00,000 equity

2.0 shares constituting 5.66% of the

equity capital of BSES Limited

(hereinafter referred to as the ‘Target

Company') from Reliance Power Ventures

Limited (hereinafter referred to as

‘Transferor’).

1.2 The shares of the Target company are

listed at The Stock Exchange, Mumbai,

The National Stock Exchange of India

Limited, The Stock Exchange, Ahmedabad,

The Calcutta Stock Exchange Association

Ltd., The Delhi Stock Exchange

Association Ltd., Bangalore Stock

Exchange Ltd., Inter-connected Stock

Exchange of India Limited. The GDRs of

Target company are listed on London

Stock Exchange and

FCCBs are listed on Societe de la Bourse

de Luxembourg.

2.0 The Acquirer made an application

dated 28th February 2003 under sub-

regulation (2) of regulation 4 of the SEBI

(Substantial Acquisition of Shares and

Takeovers) Regulations, 1997 (hereinafter

referred to as "the Regulations") to the

Securities and Exchange Board of India

(hereinafter referred to as "SEBI") seeking

exemption from provisions of regulation

11(1) and compliance with the provisions

of Chapter III of the Regulations.

3.0 In the aforesaid application, the

Acquirer, inter-alia, submitted the

following:

The Acquirer and the Transferor are both

group companies of Reliance Industries

Limited (RIL).RIL along with the

Transferor and other persons acting in

Concert holds 44.12% equity capital of the

Target Company.

The Transferor and Reliance Industrial

Investments and Holdings Ltd. (RIIHL) are

wholly owned subsidiaries of RIL.

RIL is the promoter and holds 47.20%

shares/ voting rights in the Acquirer. This

has been clearly stated/ disclosed in the

prospectus dated 22 December 1994

issued by the Acquirer.The Transferor &

RIL (as Acquirers) along with RIIHL made

an open offer for

Purchase of 3,22,81,460 shares of Target

Company, which was open from January

17, 2003 to February 15, 2003.

In the aforesaid open offer valid

applications received against the said

offer aggregate to 14.10% of the Target

Company. As a result, the total

shareholding of RIL,

Transferor and other persons acting in

concert would be 58.22% in Target

Company, subsequent to the acceptance

of shares.
Both the Acquirer and Transferor would

constitute ‘group’ companies of RIL within

the meaning of Reg. 3(1)(e)(i) and would

be reflected as ‘group’ companies of RIL

in the Annual report of Target Company

for the Financial Year ending March 31,

2003.

Had the proposed acquisition taken place

after publication of the Annual Report of

Target company for

year ending March 31, 2003, the said

transfer would have been automatically

exempt under Regulation 3(1)(e)(i).

Proposed transfer is merely preceding

such publication of Annual report of

Target company and the proposed

transfer will not have any consequence on

the aggregate shareholding of the RIL

group.

The proposed transfer will not result in

change in the management or control of

Target company.

4.0 The said application for exemption

dated 28th February, 2003 was forwarded

to the Takeover Panel on 28th February,

2003 in terms of sub-regulation(4) of

regulation 4 of the Regulations. The

Takeover Panel vide its report dated 10th

March 2003 has recommended, inter alia,

as under:

"On the facts stated in the applications,

according to the applicant, RPVL and RCL

are group companies within the meaning

of Regulation 3(1)(e)(i) of the Takeover

Code. On this basis, had the proposed

acquisition taken place after the

publication of the Annual Report of BSES

Limited for the financial year ending 31st

March, 2003, the Acquirer would have

been entitled to automatic exemption.

Subject to Securities And Exchange Board

Of India satisfying that RPVL and RCL are

group companies within the meaning of

Regulation 3(1)(e)(i) of the Takeover

Code, grant of exemption as sought is

recommended."
5.0 I have taken into consideration the

application dated 28th February, 2003 the

facts and documents available

on record and also the recommendations

of Takeover Panel.

I have noted that RIL is a promoter of the

Acquirer and holds 47.20% in the Acquirer

company.

I have noted that RIIHL, and Transferor

are both wholly owned subsidiaries of RIL

and in the Annual Report of

RIL for the year ended March 31, 2002,

both RIIHL and Transferor have been

shown as subsidiary companies of RIL.

I have noted that the Acquirer, the

Transferor, RIIHL and RIL belong to the

same group in terms of definition of MRTP

Act, 1969.

9.0 In terms of regulation 3(1)(e)(i),

acquisition by virtue of inter-se transfer

of shares amongst ‘group’ coming within

the definition of group as defined in the

Monopolies and Restrictive Trade

Practices Act, 1969 are exempt from the

provisions of Regulations 10,11 and 12

where persons constituting such group

have been shown as group in the last

published Annual Report of the target

company, subject to compliance with

Chapter II by the transferor and the

transferee.
10.0 In the instant case, I find that

although the Acquirer and Transferor

have not been shown as a group in the

Annual Report of Target Company for the

FY 2001-2002, they are part of the same

group in terms of the MRTP Act, 1969.

11.0 I have also observed that RIL, the

Transferor along with RIIHL made an open

offer for acquisition of 32,281,460 equity

shares representing 23.44% of the total

subscribed and paid-up equity share

capital (20% of the

voting capital) of the Target company.

The said offer closed on February 15,

2003. From the information available with

SEBI regarding the said offer, it is

observed that pursuant to the said offer,

RIL along with

the transferor, RIIHL and other body

corporate holds 58.22% of the total

subscribed and paid-up equity share

capital (49.67% of total voting capital) of

the Target company. I have noted that the

Acquirer is not holding any shares in the

Target company and proposes to acquire

shares of the Target company from the

Transferor pursuant to which the

shareholding of the Acquirer in the Target

company would increase to 5.66%, while

the shareholding of RIL group would not

change.

12.0 I also find that as a result of the

proposed acquisition there will be no

change in control of the Target Company.

In view of the above, I find that in the

facts of the case, the grant of exemption

would not be detrimental to the interests

of the shareholders of the Target

company.

Taking into consideration the above, the

recommendations of the Takeover Panel,

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 Regulations for

the reasons recorded herein above, I

hereby grant exemption to the Acquirer

for the proposed acquisition of 78,00,000

equity shares constituting 5.66% of the

equity capital of the Target company from

Complying with the provisions of Chapter

III of the Regulations.

The Acquirer is also directed that

proposed acquisition of 78,00,000 equity

shares constituting 5.66% of the equity

capital of the Target company be

completed within 30 days from the date of

passing of this Order and

a report under regulation 3(4) on the

same be filed by the Acquirers with SEBI.