Exemption order under regulation 11(5) of SEBI (SAST) Regulations, 2011 in the matter of Vadilal Industries Limited

WTM/SKM/CFD/ 23 /2021-22 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1) AND SECTION 11(2)(h) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 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 VADILAL INDUSTRIES LIMITED ACQUIRERS RAJESH GANDHI FAMILY TRUST

Background 1. Vadilal Industries Limited (for convenience “Target Company”) is a company incorporated under the Companies Act, 1956 and has its registered office at Vadilal House, Shrimali Society, Near Navrangpura Railway Crossing, Navrangpura, Ahmedabad - 380009. It was incorporated on April 28, 1982. The equity shares of the Target Company are listed on the BSE Ltd. (for short “BSE”) and National Stock Exchange of India Ltd. (for short “NSE”). The Target Company is primarily engaged in in business of manufacturing and also marketing of Ice-cream, Frozen Desert, Other Milk and Milk Products and processed food products. 2. An Application dated May 29, 2020 and an addendum to the said Application dated December 16, 2020 (for convenience collectively referred to as “Application”) seeking exemption from the applicability of regulations 5 and 3 read with regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (for convenience “Takeover Regulations, 2011”) in the matter of proposed direct and indirect acquisition of shares in the Target Company by Rajesh Gandhi Family Trust (for convenience “Acquirer Trust / Proposed Acquirer/ Applicant”) as a result of the acquisition of equity shares of the Target Company by Acquirer Trust from promoters and promoter holding companies. 3. Regulation 3, 4 and 5 of the Takeover Regulations, 2011 states as under –

Order in the matter of Vadilal Industries Limited “Substantial acquisition of shares or voting rights. Reg. 3(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 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. 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. 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, the following was, inter alia, stated: (a) Details of Board of Directors of the Target Company are as follows:

Sr. Name of the Director Category No. 1 RAJESH R. GANDHI Executive Director, MD 2 DEVANSHU L. GANDHI Executive Director, MD 3 DEVAL D. GANDHI Non-Executive - Non Independent Director

4 KALPIT R. GANDHI Non-Executive - Non Independent Director

5 VIJAYKUMAR R. SHAH Non-Executive - Independent Director, Chairperson

6 PREET P. SHAH Non-Executive - Independent Director

7 SHAILY J DEDHIA Non-Executive - Independent Director (b) The Settlor, Trustees and beneficiaries of the aforementioned Acquirer Trust are as under – Rajesh Gandhi Family Trust Settlors Initial Trustees Beneficiaries Relationship Shri Arpit Shri Rajeshbhai Shri Rajeshbhai The Trustees and Kantilal Ramchandra Ramchandra Gandhi beneficiaries are immediate Patel Gandhi relatives /lineal Smt. Mamtaben descendants of the Smt. Mamtaben Rajeshbhai Gandhi Promoter. Rajeshbhai Gandhi Shri Kalpit Rajeshbhai Gandhi (c) The details of the proposed acquisition are as follows: i. The proposed acquisition involves direct and indirect acquisition of shares by Proposed Acquirer from promoter and members of promoter group of the Target Company. Pursuant to acquisition of shares and voting rights by acquirer, the Proposed Acquirer along with other promoters and promoter group will directly and indirectly have control over the Target Company. Present shareholding of Target Company is as follows:

No. of fully paid No. of Shareholding as a % of Category of shareholder up equity shares shareholders total no. of shares held

Promoter & Promoter 20 46,52,156 64.72 Group Public 11,280 25,35,674 35.28 Total 11,300 71,87,830 100

Shareholding of promoter and promoter group

No. of fully Nos. of Shareholding paid up Category of shareholder sharehol as a % of total equity shares ders no. of shares held

VIRENDRA RAMCHANDRA 1 1,19,699 1.67 GANDHI HUF RAJESH R GANDHI HUF 1 62,411 0.87 VADILAL INTERNATIONAL 1 28,09,704 39.09 PRIVATE LIMITED VADILAL FINANCE COMPANY 1 3,28,311 4.57 PRIVATE LIMITED VERONICA CONSTRUCTIONS 1 2,44,600 3.4 PRIVATE LIMITED VADILAL MARKETING PRIVATE 1 10,330 0.14 LIMITED BYAD PACKAGING INDUSTRY 1 10,137 0.14 PRIVATE LIMITED AXILORD PRIVATE LIMITED 1 9,943 0.14 VADILAL ENTERPRISES LIMITED 1 150 0

RAJESH RAMCHANDRA GANDHI 1 2,27,721 3.17 DEVANSHU LAXMANBHAI GANDHI 1 3,45,691 4.81 VIRENDRA RAMCHANDRA 1 1,58,634 2.21 GANDHI MAMTA RAJESH GANDHI 1 1,22,251 1.7 ILA V GANDHI 1 1,07,931 1.5 DEVAL DEVANSHU GANDHI 1 59,266 0.82 JANMAJAY VIRENDRABHAI 1 14,893 0.21 GANDHI NITAALIASHEMALI PIYUSH SURATI 1 11,558 0.16 DHARINI KETAN KHAMBHATTA 1 811 0.01 KHEVNA RAJ RAMANLAL 1 811 0.01 NAVINCHANDRA CHIMANLAL 1 7,304 0.1 MODI Sub Total 20 46,52,156 64.72

Direct Acquisition:

ii. Acquirer Trust proposes to acquire shares of the Target Company on the stock exchange at prevailing market price and / or by way of gift directly from Rajeshbhai Ramchandra Gandhi, Smt. Mamtaben Rajeshbhai Gandhi, Rajeshbhai Ramchandra Gandhi HUF and Vadilal Marketing Private Limited.

Shareholders who are part of promoter No. of equity % of total paid up and promoter group shares being capital acquired Rajesh R Gandhi HUF 62,411 0.87

2,27,721 3.17 Rajeshbhai Ramchandra Gandhi Mamtaben Rajeshbhai Gandhi 1,22,251 1.70

Vadilal Marketing Private Limited 10,330 0.14

Total 4,22,713 5.88

Indirect Acquisition: iii. Acquirer Trust proposes to acquire shares of the Target Company held by the members of Gandhi family in Veronica Constructions Private Limited, Vadilal Finance Company Private Limited and Vadilal International Private Limited (Collectively referred as – Promoter Holding Companies). Acquirer Trust would acquire shares of promoter holding companies as fair market price and / or by way of gift.

iv. Details of equity shares to be acquired by the Acquirer Trust in Veronica Constructions private limited from existing shareholders are as under:

Shareholders who are part of Promoter No. of equity % of total paid up Holding Company shares being capital acquired Mamtaben Rajeshbhai Gandhi and Kalpit 1539 15.39 Rajeshbhai Gandhi Kalpit Rajeshbhai Gandhi 1500 15.00

Total 3039 30.39 v. Details of equity shares to be acquired by the Acquirer Trust in Vadilal Finance Company Private Limited from existing shareholders are as under: Shareholders who are part of Promoter No. of equity % of total paid up Holding Company shares being capital acquired Mamtaben Rajeshbhai Gandhi & 1448 14.48 Rajeshbhai Ramchandra Gandhi Rajeshbhai Ramchandra Gandhi HUF and 80 0.80 Mamtaben Rajeshbhai Gandhi Kalpit Rajeshbhai Gandhi and Rajeshbhai 9 0.09 Ramchandra Gandhi Mamtaben Rajeshbhai Gandhi 1500 15

Rajeshbhai Ramchandra Gandhi 78 0.78

Total 3,115 31.15 vi. Details of equity shares to be acquired by the Acquirer Trust in Vadilal International Private Limited from existing shareholders are as under:

Shareholders who are part of Promoter No. of equity % of total paid up Holding Company shares being capital acquired Mamataben Rajeshbhai Gandhi 1790 1.19

Rajeshbhai Ramchandra Gandhi & 47,027 31.36 Mamtaben Rajeshbhai Gandhi Kalpit Rajeshbhai Gandhi and Rajeshbhai 4 0.00 Ramchandra Gandhi Rajeshbhai Ramchandra Gandhi 1131 0.75

Rajeshbhai Ramchandra Gandhi and Smt. 5 0.00 Gira N Shah Rajeshbhai Ramchandra Gandhi 43 0.03

Total 50,000 33.33 vii. There would be no alteration in total equity share capital of the Target Company as a result of aforementioned acquisition. The shareholding pattern of the Target Company before and after the proposed acquisition will be as under:

Shareholders’ Before the proposed After the proposed acquisition category acquisition Number of % of equity Number of equity % of equity equity shares / total shares / total voting shares / total shares / total voting capital rights held voting capital voting rights held held held Promoter and Promoter Group other than Acquirer Rajesh R Gandhi 62,411 0.87 - - HUF RAJESHBHAI 3.17 RAMCHANDRA 2,27,721 - - GANDHI Mamtaben Rajeshbhai Gandhi 1,22,251 1.70 - -

Virendrabhai 1,19,699 1.67 Ramchandra 1,19,699 1.67 Gandhi HUF Virendrabhai 1,58,634 2.21 Ramchandra 1,58,634 2.21 Gandhi

Ilaben Virendrabhai Gandhi 1,07,931 1,07,931 1.50 1.50

Janmajay Virendrabhai 14,893 14,893 0.21 0.21 Gandhi Devanshubhai Laxmanbhai 3,45,691 4.81 3,45,691 4.81 Gandhi Devalben 59,266 Devanshubhai 59,266 0.82 0.82 Gandhi Nitaaliashemali 11,558 11,558 0.16 0.16 Piyushbhai Surali Navinchandra 7,304 7,304 0.10 0.10 Chimanlal Modi Dhariniben 811 Ketanbhai 811 0.01 0.01 Khambatta Khevnaben Rajbhai 811 811 0.01 0.01 Shah Vadilal 28,09,704 International 28,09,704 39.09 39.09 PrivateLimited Vadilal Finance 3,28,311 Company Private 3,28,311 4.57 4.57 Limited Veronica 2,44,600 Constructions 2,44,600 3.40 3.40 Private Limited Vadilal Marketing - 10,330 0.14 - Private Limited Byad Packaging 10,137 Industry Private 10,137 0.14 0.14 Limited Vortex Ice-cream Private Limited 9,943 0.14 9,943 0.14 (now Axilrod Private Limited) Vadilal Enterprises 150 0.00 150 0.00 Limited Acquirer and PAC Rajesh Gandhi 4,22,713 5.88 Family Trust Total Promoter and 46,52,156 64.72 46,52,156 64.72 Promoter Group

Public 25,35,674 35.28 25,35,674 35.28 Shareholding Grand Total 71,87,830 100 71,87,830 100 viii. The Acquirer Trust do not hold any equity shares in the Target Company. Pursuant to the aforesaid acquisition of shares by Acquirer Trust, the Acquirer Trust (through its representative trustees Rajeshbhai Ramchandra Gandhi and Mamtaben Rajeshbhai Gandhi) along with other promoters and members of promoter group shall directly and indirectly gain control over the Target Company. The aggregate shareholding of the promoter and promoter group in the Target Company before and after the proposed acquisition shall remain the same.

Grounds for seeking exemption

5. The following grounds have been cited by the Applicant while seeking the exemption from Takeover Regulations, 2011: (a) Consolidate control and achieve succession planning objectives- The proposed acquisition of shares of Target Company is undertaken to carry out an internal reorganization within promoter family and is intended to streamline succession and promote welfare of promoter family.

(b) Non-prejudicial to the interest of public shareholders- The proposed acquisition will not prejudice the interest of the public shareholders of the Target Company in any manner. (c) No change in the control and management of the Target Company- The acquisition would also not result in change in control or management of Target Company. Rajeshbhai Ramchandra Gandhi and Mamtaben Rajeshbhai Gandhi (trustees) through whom control would be exercised over assets of trust. The promoter family would continue to be in control of Target Company to the extent of shares held by them. There is no change in aggregate shareholding of promoter and members of promoter group in Target Company. (d) The acquirer trusts should fall within definition of ‘promoter group’ under SEBI (ICDR) regulations as trustees and ultimate beneficiaries of the Acquirer are promoters and members of promoter group family of Target Company. Thus, proposed acquisition would not result in any increase/decrease in holding of promoters or promoter group in Target Company. (e) No change in the public shareholding- Target Company shall continue to be in compliance with minimum public shareholding requirements under SCRR, 1957 and SEBI (LODR) Regulations as pre acquisition and post-acquisition shareholding of public in Target Company would remain same. (f) Proposed Acquisition imparts comfort and stability to public shareholders- Given the objectives for the settlement of the Trusts, it would be in fact incentivize the persons in control and management of the Target Company to continue to remain vested with the control of the Target Company for a longer period of time and the public shareholders of the Target Company are likely to benefit pursuant to the acquisition of shares by the Acquirer Trusts. It is submitted that a trust by its very nature is difficult to unwind, and it is submitted that the Trust provides for unified structure for the assets of the family, thereby making transfer of shares of the Target Company even more difficult than it currently is, and this will also prevent any erosion of promoter holding in the Target Company.

6. The Acquirer Trust, vide the Application read with subsequent submissions, have confirmed compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017:

(a) The Acquirer Trust is in substance, only a mirror image of the promoter’s holdings and consequently, there is no change of ownership or control of the shares or voting rights in the Target Company.

(b) Only individual promoters or their immediate relatives or lineal descendants are Trustees and beneficiaries.

(c) The beneficial interest of the beneficiaries of the Acquirer Trust has not been and shall not in the future, be transferred, assigned or encumbered in any manner including by way of pledge / mortgage.

(d) In case of dissolution of the Acquirer Trust, the assets will be distributed only to the beneficiaries of the Acquirer Trust or to their legal heirs.

(e) The Trustees will not be entitled to transfer or delegate any of their powers to any person other than one or more of themselves.

(f) Any change in the trustees / beneficiaries and any change in ownership or control of shares or voting rights held by the Acquirer Trust shall be disclosed within 2 days to the concerned stock exchanges with a copy endorsed to SEBI for its record.

(g) As far as the provisions of the SEBI Act, 1992 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.

(h) The liabilities and obligations of individual transferor under the SEBI Act, 1992 and the regulations framed thereunder will not change or get diluted due to transfer to the Acquirer Trust.

(i) The Acquirer 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 Target 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.

(j) The Acquirer 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.

(k) The proposed acquisition is in accordance with the provisions of the Companies Act, 2013 and other applicable laws.

(l) The transferor is disclosed as promoter in the shareholding pattern filed with the Stock Exchanges for a period of at least 3 years prior to the proposed acquisition.

(m) There is no layering in terms of trustees / beneficiaries in case of the Acquirer Trust.

(n) The Trust Deed does not contain any limitation of liability of the trustees / beneficiaries in relation to the provisions of the SEBI Act, 1992 and all regulations framed thereunder. Consideration

7. I have considered the Application submitted by the Acquirer Trust 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 direct and indirect acquisition of shares and voting rights in the Target Company i.e. Vadilal Industries Limited. The proposed acquisition as detailed above, which is to be made by the Acquirer Trust, will attract the provisions of regulations 5 and 3 (2) read with regulation 4 of the Takeover Regulations, 2011.

(b) There will be no change in control of the Target Company pursuant to the proposed acquisition, as stipulated under the SEBI Circular dated December 22, 2017.

(c) The pre–acquisition and post–acquisition shareholding of the promoters and promoter group in the Target Company will remain the same.

(d) There will also be no change in the public shareholding of the Target Company.

(e) The Target Company shall continue to be in compliance with the Minimum Public Shareholding requirements under the Securities Contracts Regulation Rules, 1957 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. (f) The Acquirer Trust has confirmed that it is in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 (as mentioned at paragraph 6 above). 8. 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 Acquirer, subject to certain conditions as ordered herein below.

Order 9. I, in exercise of the powers conferred upon me under Section 19 read with Section 11(1) and Section 11(2)(h) of the SEBI Act, 1992 and Regulation 11(5) of the Takeover Regulations, 2011, hereby grant exemption to the Proposed Acquirer, viz. Rajesh Gandhi Family Trust from complying with the requirements of regulations 5 and 3 (2) read with regulation 4 of the Takeover Regulations, 2011 with respect to the proposed direct and indirect acquisition in the Target Company, viz. Vadilal Industries Limited, by way of proposed transaction as mentioned in the Application. 10. The exemption so granted is subject to the following conditions: (a) The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws. (b) On completion of the proposed acquisition, the Proposed Acquirer shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations, 2011. (c) The statements / averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirer are true and correct. (d) The Proposed Acquirer shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed Acquirer shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017. (e) The Proposed Acquirer shall also ensure that the covenants in the Trust Deed are not contrary to the above conditions and undertaking provided by the transferor. In such case, the Trust Deed shall be suitably modified and expeditiously reported to SEBI. 11. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations, 2011 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. 12. The Application dated May 29, 2020 and addendum dated December 16, 2020 read with other submissions, filed by the Applicant, are accordingly disposed of. -Sd- Place: Mumbai S.K. MOHANTY Date: May 24, 2021 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA