In the Matter of Proposed Acquisition of Shares of Delco Remy Electricals India Limited

5/5/2003

PR-106/2003

TAKEOVERS DIVISION

In the matter of proposed acquisition of shares of Delco Remy Electricals India Limited

Mr Bhupinder Singh Sahney & M/s Delco Remy America Inc.(hereinafter collectively referred to as the “Acquirers”) along with persons acting in concert intended to make an offer to buy out the outstanding shares aggregating to 1.82% of the total share capital of the Delco Remy Electricals India Limited (hereinafter referred to as the Target company).

The Acquirers made an application dated 27/11/02 to the Securities and Exchange Board of India (hereinafter referred to as SEBI) under regulation 4(2) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as “Regulations”) seeking exemption from making a Public Announcement and complying with other formalities of open offer in terms of Regulation 11(2) of the Regulations with regard to aforesaid proposed offer.

Earlier the Acquirers had made an application dated 16/02/02 in this regard and were granted exemption from complying with the procedure laid down in Chapter III vide SEBI order dated 17/04/02 subject to the same being completed within 3 months. The acquirers, however, could not complete the acquisition within the said period and even under the extended period i.e. by 17/10/2002 as approval from FIPB was not received. It was noted that the application to FIPB was made by the acquirer after 3 months from the date of SEBI Order. The FIPB granted permission on 28/10/2002, pursuant to which, the acquirers filed the present application. In the said application it was submitted, inter-alia, that the public shareholders being only 350 in number, the Acquirers may be allowed to make the offer for buying directly from each of such shareholder by way of individual letters .

This application was referred to the Takeover Panel. The Panel vide its report dated 12/12/02 recommended grant of exemption subject to certain conditions. The Acquirer was granted a hearing in terms of regulation 4(6) of the Regulations.

The acquirer requested that they be allowed to de-list the target company under the old procedure for de-listing in terms of Takeover Regulations prior to the amendment on 09/09/02 and not under the SEBI (De-listing of Securities) Guidelines, 2003 (hereinafter referred to as “New Guidelines”). The reasons submitted by the acquirer for continuing with the old procedure provided in the Regulations were not found tenable. The present application was made on 27/11/2002 i.e. after the notification of the amendment to the Regulations on 09/09/02. During the pendency of the application before SEBI, the New Guidelines for de-listing were issued by SEBI on 17/2/03, which apply, inter-alia, to voluntary delisting of a company from all or some stock exchanges. Pursuant to the proposed acquisition from the outstanding public shareholders, the shareholding of the acquirers / promoters would increase from 98.18% to 100%, resulting in delisting of the target company from the stock exchanges. That being the case, the said application for exemption from Regulation 11(2) which in effect resulted in seeking voluntary delisting from all the stock exchanges, would squarely fall under the provisions of the New Guidelines. Further, the acquirers had an opportunity to complete the acquisition prior to the amendment of the Regulations and they failed to complete the procedure then, due to lapse on their own part. There is no provision for any exemption from applicability of the New Guidelines and therefore, the acquirers have to comply with these Guidelines.

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5/5/2003

PR-107/2003

TAKEOVERS DIVISION

In the matter of proposed acquisition of shares of Rajath Finance Limited

Mr.C V Kamani, Mr.R C Kamani, Mr.D C Kamani, Unicorn Holdings Pvt. Ltd and Troupe International Ltd (hereinafter collectively referred to as Acquirer) collectively held 65.57% shares in Rajath Finance Limited (hereinafter referred to as Target company), promoted by Kamani family. The Acquirers proposed to acquire 20.11% shares of the Target company from public shareholders and 14.31% shares from other directors/promoters/ relatives. Pursuant to the proposed acquisition the Acquirers would hold 100% shares in the Target company.

The Acquirer made an application dated 30.11.2002 under sub-regulation (2) of regulation 4 of the Regulations to the Securities and Exchange Board of India (hereinafter referred to as SEBI) seeking exemption from the provisions of Regulation 11(1) for making public announcement by making an advertisement and to appoint Merchant Banker / Registrar in terms of the Regulations.

In the said application the acquirer submitted that the shares of the Target company are not quoted since last more than six years and the number of shareholders are small and concentrated mostly at Rajkot and Mumbai. To make minimum expenditure in the best interests of the investors and to complete the acquisition in the shortest period possible exemption may be granted from the long procedure for making public offer.

The said application was forwarded to the Takeover Panel. The Takeover Panel recommended grant of exemption subject to certain conditions. The Acquirer was given a hearing in terms of regulation 4(6) of the Regulations.

It was observed that during the Current Financial year ended 31/3/2003 the Acquirer acquired 2,06,760 shares from the public representing 5.17% of the share capital of the Target company. The said shares (acquired from public) representing more than 5% of the share capital of the Target company were transferred to Acquirer on 31.1.2003, during the pendency of exemption application with SEBI, and with the result the Acquirer violated provisions of Regulation 11(1) on 31.01.2003, while the Takeover Panel gave its recommendation vide Report dated 20.12.2002. Also, the number of public shareholders in the Target company as on date of application were 1384 who held 20.11% shares of the Target company. Thus, neither the number nor the percentage of public shareholding could be considered small to warrant exemption from the procedure laid down under the Regulations.

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 under section 4(3) of the Securities and Exchange Board of India Act 1992 read with regulation 4(6) of the Regulations, SEBI by order dated 30.4.2003, rejected the application for exemption. The acquirer was also directed to make public announcement within 45 days of date of the Order as required under Chapter III of the Regulations in terms of regulation 11(1) read with Regulation 14(1), taking January 31, 2003 as the reference date for calculation of offer price and to pay interest @ 10 % per annum on the offer price, from June 1, 2003 till the actual date of payment of consideration by the Acquirer.

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