sebi:WTM/PS/55/CFD/OCT/2013

SEBI · SEBI · 2009-02-13 · Prashant Saran, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Interim directions dated June 04, 2013 vacated with immediate effect, subject to automatic revival on failure to comply by February 06, 2014

Provisions invoked

• s. 19
• s. 32
• s. 12A

Parties

• RMG Alloy Steel Limited
• Directors of RMG Alloy Steel Limited
• Promoters of RMG Alloy Steel Limited
• Promoter group of RMG Alloy Steel Limited

Holding

The directions issued vide the interim order dated June 04, 2013 against RMG Alloy Steel Limited, its directors, promoters and promoter group are vacated with immediate effect, but shall automatically revive without a separate order if promoter shareholding is not reduced to 75% or less and public shareholding increased to minimum 25% by February 06, 2014.

Full text

Page 2 of 6 the Appellate Authority for Industrial and Financial Reconstruction ("AAIFR") dated February 13, 2009, for the proper implementation of the order. (iii) The modified scheme specifically allowed the promoter group to collectively hold shares in excess of 75% of the share capital of the Company and required the Company to obtain specific permission from the BIFR before diluting such shareholding for the purpose of meeting regulatory guidelines. (iv) In accordance with the modified scheme, the Company applied to the BIFR from time to time and sought permission for its promoter group to offload their shares. The BIFR, by its orders dated September 08, 2009 and May 18, 2010 granted permission to two of its promoters to offload their shares. (v) Though the Company's promoters disposed of 50,86,298 shares (4.69%) between July- November 2010, they were unable to dispose of any additional shares due to circumstances beyond their control. The Company therefore filed a miscellaneous application before the BIFR and sought an extension of the period from 3 years to 5 years to reduce the promoter group's shareholding. A copy of the application and the next date of hearing before BIFR was informed to SEBI. However, SEBI failed to appear before BIFR at the hearing held on March 23, 2012. (vi) The BIFR by its order dated March 23, 2012 was pleased to permit the promoters of the Company to offload their shares within 5 years from February 07, 2009 i.e. by February 07, 2014. (vii) A

Page 3 of 6 6. According to the learned advocate, the Company had filed a miscellaneous application dated February 13, 2012 before the BIFR inter alia praying for a direction for extension of the period from 3 years to 5 years for the purpose of offloading the equity shares of promoters/co- promoters/strategic investors in order to bring their shareholding in the Company to 75% or less from the present level of 87.26%. The BIFR in the hearing held on March 02, 2012 directed that the copy of the summary of proceedings be served on SEBI and IDBI (the monitoring agency) for their comments and that the next hearing on the said application was fixed on March 23, 2012. The advocate further submitted that on March 23, 2012, there were no comments from SEBI and IDBI and after considering the submissions of the Company and the material on record, the BIFR allowed the prayer of the Company for offloading of shares within a period of 5 years from February 07, 2009.

Page 4 of 6 (iii) The promoter group is finding it extremely difficult to offload their shares in the Company, particularly when there is no market for the same ; (iv) The BIFR had in acknowledgement of the above reasons passed the Order allowing extension to the promoter group to offload additional shares ; (v) In order to improve the business and finances, the Company is inter alia taking the following steps subject to necessary approvals : a) Sale of surplus land in Bharuch and other immovable properties lying unused with the Company ; b) Grant of relief and concession from sales tax department, Government of Gujarat i.e., to get extension of composite scheme of sales tax deferment/exemption under scheme 1995 as a pioneer unit for the period 2012- 2013 to 2015-2016 ; c) Capital expenditure of 35 crore to modernize plant to improve productivity. (vi) Considering the positive developments, the Company is hopeful of revival and thereby generating investor interest in the Company. Furthermore, the Company is making sincere efforts to comply with all applicable regulations and the promoter group is in the process of initiating steps for disposal of their shareholding as per the BIFR's scheme in

Source: SecMarx — sebi:WTM/PS/55/CFD/OCT/2013. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.