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Sebi may ask Sardas to mend offer

BS Bureau in Kolkata

The Securities and Exchange Board of India is likely to ask the Sardas to rectify their proposed open offer for a 30 per cent stake in BSL Ltd, formerly Bhilwara Synthetics Ltd.

Sebi executive director R M Joshi said that market regulator prima facie has detected some irregularities in the offer. Sebi would come out with its observations on the issue shortly, he added.

Joshi said that revision of the bid following Sebi's instructions would not mean withdrawal of the issue. Therefore the cooling-off period of six months, which was necessary in case of cancellation of offer, would not be required.

Joshi was in the city on Sunday to attend a seminar on insider trading regulations and takeover code organised by the Institute of Company Secretaries of India.

"There are prima facie irregularities in the 30 per cent conditional offer made by the Sardas. Sebi is in the process of hearing them. After Sebi issues its observations, Sardas can revise their offer," he said.

Sebi's intervention in the open offer was in response to a complaint from the promoters of BSL, represented by the Jhunjhunwala and Churiwal families.

They alleged that Sardas had flouted Sebi regulations by not sending the draft letter of offer to promoters within the prescribed deadline.

Under the guidelines, a raider is bound to send a copy of the draft offer within two weeks so that promoters have adequate time to decide on whether a counter offer will be launched. BSL promoters had alleged that the violation of the rule prevented them from preparing a counter-offer.

After Sebi's intervention, SBI Capital Markets, merchant bankers to Sardas, issued an advertisement notifying that a revised schedule of the offer would be announced at a later date. Initially, the offer was slated to stay open for a month beginning September 30 at the offer price of Rs 80 a share.

Sebi was also informed that Namokar Vinimay Pvt Ltd, one of the companies, which Sardas had claimed to be an entity persons acting in concert, was actually held by a promoter group company, Shree Wardhman Stock Holdings.

The Jhunjhunwala-Churiwal combine recently acquired BSL shares through Shree Wardhman. Their holding in BSL now stands at 41.06 per cent, up from 36.78 per cent at the end of June. Sardas hold 11.86 per cent.

Financial institutions, who have remained silent, have around 8.6 per cent in BSL. Market sources said institutions may come out in favour of the offer given the pricing and liquidity benefits.

However, even if Sardas manage to pick their targeted 30 per cent stake in BSL through the public offer, their holding in the company will be at par with the promoters.

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