Our Bureau

Mumbai, Aug. 25

SEBI has imposed a penalty of Rs 25 crore on Holcim (India) Pvt Ltd for not making an open offer to shareholders of Everest Industries Ltd (EIL), a subsidiary of Associated Cement Company (ACC).

In 2005, when the Swiss cement major Holcim acquired 34.71 per cent stake in ACC, it did not make an open offer to the shareholders of EIL. It was stated that since ACC held 76.01 per cent stake in EIL, acquisition of ACC stake by Holcim amounted indirect acquisition of EIL too.

According to SEBI, Holcim has violated the provisions in the SEBI - Substantial Acquisition of Shares and Takeovers Regulation, (SAST)

Holcim, the SEBI order said, has deliberately chosen not to seek an exemption from making an open offer to the shareholders of EIL. "This inference is amply supported by Holcim's act in seeking `no-action' under the informal guidance scheme of the board. It is not a mere coincidence that this letter was dated July 26, 2005, i.e; the last date of by which the open offer is required to be made. The intention is clearly mischievous. If at all any doubt was in the mind of Holcim, they could have approached SEBI," the order said.

Holcim had contented that acquisition of EIL is "as result of global arrangement, thus qualifying for exemption from making open offer."

However, SEBI differed with Holcim on this, taking the view that the term "global arrangement" is not defined in SAST.

"Considering the large amount of monies involved as a result of default by Holcim, which comes out to be in anyway above Rs 50 crore, since they failed to give public offer under SAST Regulations, I think it appropriate to impose a penalty of Rs. 25 crore on Holcim, which according to me would be commensurate to the nature of violation committed by Holcim," the adjudicating officer of SEBI said.

(This article was published in the Business Line print edition dated August 26, 2006)
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