Exemption Order in the matter of Rajratan Global Wires Limited

WTM/GM/CFD/20 /2019–20 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1) AND SECTION 11(2)(h) OF THE SEBI ACT READ WITH REGULATION 11(5) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011. IN THE MATTER OF PROPOSED ACQUISITION OF SHARES AND VOTING RIGHTS IN – TARGET COMPANY RAJRATAN GLOBAL WIRES LIMITED ACQUIRERS 1. SUNIL CHORDIA FAMILY TRUST 2. SANGITA CHORDIA FAMILY TRUST

BACKGROUND –

1. Rajratan Global Wires Limited (“Target Company”) was incorporated under the Companies Act, 1956. The Registered Office of the Target Company is at ‘Rajratan House’ 11/2 Meera Path, Dhenu Market, Indore, Madhya Pradesh–452003. The shares of the Target Company are listed on BSE Limited (“BSE”).

2. An Application dated September 4, 2018 read with the letters dated March 25, 2019 and April 9, 2019 (“Application”) seeking exemption from the applicability of inter alia Regulations 3, 4 and 5 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) in the matter of proposed acquisition of shares and voting rights in the Target Company, was received by SEBI from Sunil Chordia on behalf of Sunil Chordia Family Trust (“Acquirer Trust 1”) and Sangita Chordia Family Trust (“Acquirer Trust 2”) (collectively referred to as the “Proposed Acquirers”).

3. Regulation 3, 4 and 5 of the Takeover Regulations states – “Substantial acquisition of shares or voting rights. 3. (1) No acquirer shall acquire shares or voting rights in a Target Company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such Target Company, entitle them to exercise twenty–five per cent or more of the voting rights in such Target Company unless the acquirer makes a public announcement of an open offer for acquiring shares of such Target Company in accordance with these Regulations. (2) No acquirer, who together with persons acting in concert with him, has acquired and holds in accordance with these regulations shares or voting rights in a target company entitling them to exercise twenty-five per cent or more of the voting Order in the matter of Rajratan Global Wires Limited rights in the target company but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permissible non-public shareholding. Explanation — For purposes of determining the quantum of acquisition of additional voting rights under this sub-regulation,— (i) Gross acquisitions alone shall be taken into account regardless of any intermittent fall in shareholding or voting rights whether owing to disposal of shares held or dilution of voting rights owing to fresh issue of shares by the target company. (ii) In the case of acquisition of shares by way of issue of new shares by the target company or where the target company has made an issue of new shares in any given financial year, the difference between the pre-allotment and the post-allotment percentage voting rights shall be regarded as the quantum of additional acquisition.

Acquisition of control. 4. Irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.

Indirect acquisition of shares or control 5. (1) For the purposes of Regulation 3 and Regulation 4, acquisition of shares or voting rights in, or control over, any company or other entity, that would enable any person and persons acting in concert with him to exercise or direct the exercise of such percentage of voting rights in, or control over, a Target Company, the acquisition of which would otherwise attract the obligation to make a public announcement of an open offer for acquiring shares under these regulations, shall be considered as an indirect acquisition of shares or voting rights in, or control over the Target Company…”

4. In the aforementioned Application and subsequent submissions, the following was inter alia stated:

A. As on the date of Application, the present shareholding in the Target Company is as under:

TABLE I – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. SUNIL CHORDIA 5,00,959 11.51 2. SANGITA CHORDIA 5,80,443 13.34 3. YASHOVARDHAN CHORDIA 2,68,000 6.16 4. SUNIL KUMAR CHANDAN MAL HUF 1,80,000 4.14 5. SHUBHIKA CHORDIA 65,200 1.50 6. MOHINI CHORDIA 4,500 0.10 7. RAJRATAN RESOURCES PRIVATE LIMITED 3,81,420 8.76 8. RAJRATAN INVESTMENTS LIMITED 7,82,881 17.99 TOTAL 27,63,393 63.50 B. PUBLIC SHAREHOLDING 15,88,407 36.50 C. TOTAL (A + B) 43,51,800 100.00

B. As per the Application, i. Sunil Chordia [Promoter who holds 5,00,959 (11.51%) equity shares in the Target Company] has settled a Family Trust, viz. Sunil Chordia Family Trust, by executing a Trust Deed dated April 25, 2018.

ii. Sangita Chordia [Promoter who holds 5,80,443 (13.34%) equity shares in the Target Company] has settled a Family Trust, viz. Sangita Chordia Family Trust, by executing a Trust Deed dated April 25, 2018.

C. The Settlor, Trustees and beneficiaries of the aforementioned Acquirer Trusts are as under –

ACQUIRER TRUST 1 – SUNIL CHORDIA FAMILY TRUST SETTLOR TRUSTEE BENEFICIARIES RELATIONSHIP Sunil Chordia Sangita Chordia Sangita Chordia (Spouse); Yashovardhan Trustee and beneficiaries are part of the Chordia (son of Sunil and Sangita Promoter Group and have been disclosed as Chordia); Mohini Chordia (wife of such for more than 3 years. Yashovardhan Chordia); Shubhika The Trustee and beneficiaries are immediate Chordia (daughter of Sunil and Sangita relatives or lineal descendants of the Chordia); Lineal descendants of Promoters. Yashovardhan Chordia and Lineal descendants of Shubhika Chordia.

ACQUIRER TRUST 2 – SANGITA CHORDIA FAMILY TRUST SETTLOR TRUSTEE BENEFICIARIES RELATIONSHIP Sangita Chordia Sunil Chordia Sunil Chordia; Yashovardhan Chordia; Trustee and beneficiaries are part of the Mohini Chordia; Shubhika Chordia; Lineal Promoter Group and have been disclosed as descendants of Yashovardhan Chordia such for more than 3 years. and Lineal descendants of Shubhika The Trustee and beneficiaries are immediate Chordia. relatives or lineal descendants of the Promoters.

D. The proposed acquisition involves:

i. Transfer of 4,90,959 (11.28%) equity shares from Sunil Chordia to Sunil Chordia Family Trust.

ii. Transfer of 5,70,433 (13.11%) equity shares from Sangita Chordia to Sangita Chordia Family Trust.

iii. The aforementioned transactions will result in a direct acquisition of shares by the Acquirer Trusts in the Target Company attracting Regulation 3 of the Takeover Regulations 2011 (“Direct Acquisition”). The shareholding in the Target Company subsequent to the Direct Acquisition will be as under:

TABLE II – PROPOSED SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. SUNIL CHORDIA 10,000 0.23 2. SUNIL CHORDIA FAMILY TRUST 4,90,959 11.28 3. SANGITA CHORDIA 10,000 0.23 4. SANGITA CHORDIA FAMILY TRUST 5,70,433 13.11 5. YASHOVARDHAN CHORDIA 2,68,000 6.16 6. SUNIL KUMAR CHANDAN MAL HUF 1,80,000 4.14 7. SHUBHIKA CHORDIA 65,200 1.50 8. MOHINI CHORDIA 4,500 0.10 9. RAJRATAN RESOURCES PRIVATE LIMITED 3,81,420 8.76 10. RAJRATAN INVESTMENTS LIMITED 7,82,881 17.99 TOTAL 27,63,393 63.50 B. PUBLIC SHAREHOLDING 15,88,407 36.50 C. TOTAL (A + B) 43,51,800 100.00

E. In addition to the Direct Acquisition, there will be:

i. Inter se transfer of shares of Rajratan Resources Private Limited (“RRPL”) between members of the Promoter Group i.e. from Shubhika Chordia [54,600 (18.83%) equity shares] to Yashovardhan Chordia.

ii. Inter se transfer of shares of Rajratan Investments Limited (“RIL”) between members of the Promoter Group i.e. from Shubhika Chordia [1,03,110 (22.92%) equity shares] to Yashovardhan Chordia.

iii. The aforementioned Promoter Companies are owned and controlled by the Promoter family.

iv. Shubhika Chordia and Yashovardhan Chordia are siblings and fall within the definition of ‘immediate relative’ under the Takeover Regulations 2011 and are also Promoters of the Promoter Companies. The aforementioned transactions (at paragraph 4E. i. and ii.) will also result in an indirect acquisition of shares/control in the Target Company attracting Regulation 5 of the Takeover Regulations 2011 (“Indirect Acquisition 1”). However, the said transactions are exempt from the obligation to make an open offer on account of falling within the ambit of the exemption under Regulation 10(1)(a)(i) of the Takeover Regulations 2011 i.e. acquisition pursuant to inter se transfer of shares amongst qualifying persons being immediate relatives.

v. The shareholding in the Promoter Companies being acquired by Yashovardhan Chordia along with the Indirect Acquisition 1 in the Target Company will be as under:

TABLE III – SHAREHOLDING IN RRPL (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. SANGITA CHORDIA 89,350 30.81 2. SUNIL CHORDIA 25,750 8.88 3. YASHOVARDHAN CHORDIA 13,300 4.59 4. SUNIL KUMAR CHANDAN MAL HUF 1,000 0.34 5. SHUBHIKA CHORDIA 54,600 18.83 6. RAJRATAN INVESTMENTS LIMITED 1,06,000 36.55 TOTAL 2,90,000 100.00

TABLE IV – SHAREHOLDING IN RIL (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. SANGITA CHORDIA 34800 7.73 2. SUNIL CHORDIA 166070 36.90 3. YASHOVARDHAN CHORDIA 140510 31.22 4. SUNIL KUMAR CHANDAN MAL HUF 5400 1.20 5. SHUBHIKA CHORDIA 103110 22.93 6. MOHINI CHORDIA 100 0.02 7. HITESH JAIN 10 0.00 TOTAL 450000 100.00

TABLE V – SHAREHOLDING IN THE PROMOTER COMPANY BEING ACQUIRED BY YASHOVARDHAN CHORDIA (SOURCE: APPLICATION) % OF SHARES OF TRANSFEREE NAME OF SUCH % OF SHARES HELD BY RESPECTIVE PROMOTER PROMOTER TRANSFEROR PROMOTER COMPANY IN THE COMPANY COMPANY TARGET COMPANY BEING TRANSFERRED RAJRATAN 18.83 8.76 SHUBHIKA YASHOVARDHAN RESOURCES PRIVATE CHORDIA CHORDIA LIMITED RAJRATAN 22.92 17.99 SHUBHIKA YASHOVARDHAN INVESTMENTS CHORDIA CHORDIA LIMITED

F. Subsequent to transfer of shares of RRPL and RIL as mentioned at paragraph 4E above, the Acquirer Trusts will acquire shares in the aforesaid Promoter Companies (which are owned and controlled by the Promoter family) resulting in an indirect acquisition of shares/control in the Target Company as under:

i. Transfer of shares in RRPL from Sunil Chordia to Sunil Chordia Family Trust [25,650 (8.87%) equity shares] and from Sangita Chordia to Sangita Chordia Family Trust [89,250 (30.80%) equity shares].

ii. Transfer of shares in RIL from Sunil Chordia to Sunil Chordia Family Trust [1,65,970 (36.89%) equity shares] and from Sangita Chordia to Sangita Chordia Family Trust [34,700 (7.72%) equity shares}.

iii. The aforementioned transactions will also result in an indirect acquisition of shares/control in the Target Company attracting Regulation 5 of the Takeover Regulations 2011 (“Indirect Acquisition 2”). The Indirect Acquisition 2 in the Target Company involving transfer of 1,14,900 (39.62%) equity shares of RRPL and 2,00,670 (44.59%) equity shares of RIL held by the Promoters of such Companies to the Acquirer Trusts will trigger Regulation 5 of the Takeover Regulations 2011.

iv. The shareholding in the Promoter Companies being acquired by the Acquirer Trusts along with the Indirect Acquisition 2 in the Target Company will be as under:

TABLE VI – SHAREHOLDING IN THE PROMOTER COMPANY BEING ACQUIRED BY THE ACQUIRER TRUST (SOURCE: APPLICATION) TRANSFEREE NAME OF % OF SHARES PROMOTER OF SUCH % OF SHARES HELD BY RESPECTIVE COMPANY PROMOTER TRANSFEROR PROMOTER COMPANY IN THE COMPANY TARGET COMPANY BEING TRANSFERRED SUNIL SUNIL CHORDIA RAJRATAN 8.84 8.76 CHORDIA FAMILY TRUST RESOURCES SANGITA PRIVATE 30.78 SANGITA CHORDIA FAMILY LIMITED CHORDIA TRUST SUNIL SUNIL CHORDIA RAJRATAN 36.88 17.99 CHORDIA FAMILY TRUST INVESTMENTS SANGITA LIMITED 7.71 SANGITA CHORDIA FAMILY CHORDIA TRUST

G. Grounds for seeking exemption – a. There is no effective change in the exercise of voting power or in the control / management of the Target Company. The pre-acquisition shareholding and post–acquisition shareholding of Promoter and members of the Promoter Group in the Target Company would therefore remain same. The change in the identity of persons exercising voting rights over the Target Company would only be between persons, who in their personal capacities, are persons belonging to Promoter and Promoter Group of the Target Company and are the relatives of the persons transferring the shares.

b. The Trusts are private family trusts. The Trustees and ultimate beneficiaries are individuals from the Promoter family. The structure in no way results in lack of transparency and does not in any way impact the interest of investors. The transferors are disclosed as Promoters in the shareholding pattern filed with the Stock Exchanges for a period of at least 3 years prior to transfer.

c. The transfer to the Acquirers is for efficient succession planning and for holding the controlling interest in the Target Company in one entity rather than spreading the holding amongst different individuals which may not be in the best interest of the Target Company and investors.

5. The Acquirer Trusts (vide letters dated March 25, 2019 and April 9, 2019) have confirmed their compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 – i. The Trust is in substance, only a mirror image of the Promoters’ holdings and consequently, there is no change of ownership or control of the shares or voting rights in the Target Company. ii. Only individual promoters or their immediate relatives or lineal descendants are Trustees and beneficiaries. iii. The beneficial interest of the beneficiaries of the Trust has not been and will not in the future, be transferred, assigned or encumbered in any manner including by way of pledge/mortgage. iv. In case of dissolution of the Trust, the assets will be distributed only to the beneficiaries of the trust or to their legal heirs v. The Trustees will not be entitled to transfer or delegate any of their powers to any person other than one or more of themselves. vi. Any change in the trustees / beneficiaries and any change in ownership or control of shares or voting rights held by Trust shall be disclosed within 2 days to the concerned stock exchanges with a copy endorsed to SEBI for its record. vii. As far as the provisions of the SEBI Act and the regulations framed thereunder are concerned the ownership or control of shares or voting rights will be treated as vesting not only with the Trustees but also indirectly with the beneficiaries. viii. The liabilities and obligations of individual transferors under the SEBI Act and the regulations framed thereunder will not change or get diluted due to transfers to the Trust. ix. The Trust shall confirm, on an annual basis, that it is in compliance with the exemption order passed by SEBI. The said confirmation shall be furnished to the company which it shall disclose prominently as a note to the shareholding pattern filed for the quarter ending March

31 each year, under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. x. The Trust shall get its compliance status certified from an independent auditor annually and furnish the certificate to the Stock Exchanges for public disclosure with a copy endorsed to SEBI for its records. xi. The proposed acquisition is in accordance with the provisions of the Companies Act, 2013 and other applicable laws. xii. The transferors are disclosed as promoters in the shareholding pattern filed with the Stock Exchanges for a period of at least 3 years prior to transfer (except for holding on account of inheritance). xiii. There is no layering in terms of trustees/beneficiaries in case of Trusts. xiv. The Trust Deed does not contain any limitation of liability of the trustees/beneficiaries in relation to the provisions of the SEBI Act and all regulations framed thereunder.

CONSIDERATION –

6. I have considered the Application submitted by Sunil Chordia and other material available on record. Without reiterating the facts as stated above, the following is noted:

A. The Application submitted is in respect of the proposed acquisitions of shares and voting rights in the Target Company i.e. Rajratan Global Wires Limited. The proposed acquisitions as detailed at paragraphs 4D, 4E and 4F, which are to be made by Sunil Chordia Family Trust, Yashovardhan Chordia and Sangita Chordia Family Trust i.e. the Proposed Acquirers, will attract the provisions of Regulations 3, 4 and 5 of the Takeover Regulations 2011. As stated at paragraph 4E(iv), the indirect acquisition of shares/control in the Target Company by Yashovardhan Chordia on account of the transfer of shares in RRPL and RIL by Shubhika Chordia (his sister) to him will fall within the ambit of the exemption under Regulation 10(1)(a)(i) of the Takeover Regulations 2011.

B. Pursuant to the proposed acquisitions, the Proposed Acquirers will hold an aggregate of 51.14% of the paid up equity capital in the Target Company on account of the direct and indirect acquisitions in such Company.

C. The objective of the proposed acquisitions is to streamline succession and promote welfare of the Promoter family.

D. The shareholding in RRPL (Promoter Company) is substantially held by Sangita Chordia and her immediate relatives along with cross holding by the other Promoter Company i.e. RIL (see Table III). The shareholding in RIL is substantially held by Sunil Chordia and his immediate relatives (see Table IV).

E. There will be no change in control of the Target Company pursuant to the proposed acquisition.

F. The pre–acquisition and post–acquisition shareholding of the Promoters in the Target Company will remain the same (except that of the transferors and the transferees in the Direct Acquisition).

G. There will also be no change in the public shareholding of the Target Company.

H. The Target Company shall continue to be in compliance with the minimum public shareholding requirements under the Securities Contracts Regulation Rules, 1957 (“SCRR”) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

I. The Proposed Acquirers have also confirmed that they are in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 (as reproduced at paragraph 5).

7. Considering the aforementioned, I am of the view that exemption as sought for in the Application (read with further submissions) may be granted to the Proposed Acquirers, subject to certain conditions as ordered herein below.

ORDER –

8. I, in exercise of the powers conferred upon me under Section 19 read with Section 11(1) and Section 11(2)(h) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) and Regulation 11(5) of the Takeover Regulations, hereby grant exemption to the Proposed Acquirers, viz. Sunil Chordia Family Trust and Sangita Chordia Family Trust, from complying with the requirements of Regulations 3, 4 and 5 of the Takeover Regulations with respect to the proposed acquisitions in the Target Company, viz. Rajratan Global Wires Limited, by way of proposed transactions as mentioned in the Application.

9. The exemption so granted is subject to the following conditions:

i. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws. ii. On completion of the proposed acquisition, the Proposed Acquirers shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations. iii. The statements/averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirers are true and correct. iv. The Proposed Acquirers shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed Acquirers shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017. v. The Proposed Acquirers shall also ensure that the covenants in the Trust Deeds are not contrary to the above conditions and undertaking provided by the transferors. In such case, the Trust Deeds shall be suitably modified and expeditiously reported to SEBI. vi. The Proposed Acquirers shall at all points in time, ensure that Directors appointed in the Promoter Companies, viz. RRPL and RIL, are either the individual Promoters or their immediate relatives or lineal descendants.

10. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations and shall not be construed as exemption from the disclosure requirements under Chapter V of the aforesaid Regulations; compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015; Listing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other applicable Acts, Rules and Regulations.

11. The Application dated September 4, 2018 read with the letters dated March 25, 2019 and April 9, 2019, filed by Sunil Chordia on behalf of Sunil Chordia Family Trust and Sangita Chordia Family Trust, is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: July 1, 2019 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA