sebi:8296

SEBI · SEBI · 2007-02-12 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Exemption granted from compliance with Regulations 10 and 12 of the Takeover Regulations

Provisions invoked

• s. 19

Regulations

• Reg. 4
• Reg. 10
• Reg. 5
• Reg. 4(2)
• Reg. 3(4)
• Reg. 8(2)

Holding

SEBI granted exemption to Arvind Brands Ltd. from complying with Regulations 10 and 12 of the Takeover Regulations in respect of the indirect acquisition of shares of Lifestyle Fabrics Ltd. pursuant to its proposed acquisition of 49% equity shares of Asman Investments Ltd. from Arvind Mills Ltd.

Full text

1.0 BACKGROUND 1.1 Arvind Brands Ltd. (hereinafter referred to as ‘the acquirer) is a public limited company incorporated under the Companies Act, 1956, having its registered office at Arvind Mills Premises, Naroda Road, Ahmedabad -

control of the target company. In the said application, the acquirer inter alia made the following submissions: a. All the companies viz. The Arvind Mills Ltd., Asman Investments Ltd., the acquirer and the target company are part of Lalbhai Group. b. The acquirer does not hold any shares directly in the target company. However, it has made disclosures under regulation 8(2) of the Takeover Regulation as one of the promoters of the target company. c. For strategic reasons and particularly with a view to focus on the core business activity i.e. manufacturing and selling garments, it has been decided by the management of Arvind Mills Ltd. to divest its investment portfolio in such a manner that the ultimate control remains is preserved with the flagship company i.e. Arvind Mills Ltd. d. There will be no change in the ultimate ownership or control over the Target company. e. Since the group companies have been exercising control over the target company, it would not affect the interests of the public shareholders of the target company. f. The acquirer is one of the promoters of the target company along with other promoter group companies belonging to Lalbhai Group. g. The proposed acquisition is an internal arrangement amongst the promoters of the target company. The proposed acquisition is for the purpose of consolidation of the shareholding of the target company in the

specific promoter group company. The acquirer further submitted that, even though as a result of the proposed acquisition there would be no change in the management and control of the target company and in its status, as the acquirer continued to be promoters of the target company, technically it might be possible to construe that there would be indirect acquisition. Accordingly the application is made. h. The share market value of the target company is not going to be affected by the proposed acquisition. The proposed acquisition would not cause any loss or prejudice to any of the shareholders of the target company. i. In view of the growing economy, inter alia the parent company (Arvind Mills Ltd.) proposed to transfer part of its investments held in Asman Investments Ltd. to the acquirer without effecting any kind of change of control of two listed subsidiary companies. 3.0 RECOMMENDATION OF THE TAKEOVER PANEL 3.1 The aforesaid application dated February 12, 2007 was forwarded to the Takeover Panel by SEBI in terms of sub-regulation (4) of regulation 4 of the Takeover Regulations. The Takeover Panel, vide report dated March 6, 2007 (forwarded to SEBI vide letter dated March 20, 2007) has recommended as under – “Arvind Brands Ltd. and Asman Investments Ltd. are 100% subsidiary of Arvind Mills Ltd. and Asman Investments Ltd. is holding shares in various group companies including Arvind Products Ltd. and on the date of application Asman Investments Ltd held 39,49,093 equity s

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