Exemption order under regulation 11(5) of SEBI (SAST) Regulations, 2011 in the matter of Borosil Glass Works Limited

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 BOROSIL GLASS WORKS LIMITED ACQUIRERS PRADEEP KUMAR FAMILY TRUST BAJRANG LAL FAMILY TRUST

BACKGROUND –

1. Borosil Glass Works Limited (“Target Company”) was incorporated under the Companies Act, 1956 on December 14, 1962. The Registered Office of the Target Company is at 1101, Crescenzo, G-Block, Opposite MCA Club, Bandra Kurla Complex, Bandra East, Mumbai- 400051. The shares of the Target Company are listed on BSE Limited (“BSE”) (Listing date – July 02, 2001) and NSE Limited (“NSE”) (Listing date – May 25, 2018).

Order in the matter of Borosil Glass Works Limited

2. An Application dated September 30, 2019 (“Application”) read with letter dated December 04, 2019 seeking exemption from the applicability of, inter alia, Regulations 3(1) and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations 2011”) in the matter of proposed acquisition of shares and voting rights in the Target Company, was received by SEBI from authorized representative of Pradeep Kumar Family Trust (“Acquirer Trust 1”) and Bajrang Lal Family Trust (“Acquirer Trust 2”) (collectively referred to as “Acquirer Trusts / Proposed Acquirers”).

3. Regulation 3(1) and 4 of the Takeover Regulations 2011 states as under – “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 the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.

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.”

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

A. The shareholding of the Target Company before the proposed acquisition is as under:

TABLE I – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. BAJRANG LAL KHERUKA 1,13,63,680 12.30 2. KIRAN KHERUKA 1,42,45,880 15.42 3. PRADEEP KUMAR KHERUKA 1,05,63,680 11.43 4. REKHA KHERUKA 1,40,43,880 15.20 5. SHREEVAR KHERUKA 2,000 0.00 6. CROTON TRADING PRIVATE LIMITED 1,21,34,240 13.13 7. FENNEL INVESTMENT AND FINANCE PRIVATE 49,62,280 5.37 LIMITED 8. GUJARAT FUSION GLASS LLP 80 0.00 9. SONARGAON PROPERTIES LLP NIL 0.00 TOTAL PROMOTER HOLDING 6,73,15,720 72.85 B. PUBLIC SHAREHOLDING 2,50,84,280 27.15 TOTAL 9,24,00,000 100.00

B. As per the Application and letter dated December 04, 2019:

i. The Family Members of Bajrang Lal Kheruka (collectively, the “Transferors”) propose to transfer equity shares held by them in the Target Company to the Acquirer Trusts by way of settlement, as described below: (“Proposed Transactions”)

TABLE –II – DETAILS OF PROPOSED ACQUISITION Sr. Transferors Acquirers No. of % of No shares total. share capital 1. PRADEEP KUMAR Acquirer Trust 1 1,05,63,580 11.43 KHERUKA 2. REKHA KHERUKA Acquirer Trust 1 1,40,43,780 15.20 3. BAJRANG LAL KHERUKA Acquirer Trust 2 1,13,63,580 12.30 4. KIRAN KHERUKA Acquirer Trust 2 1,42,45,780 15.42 Total 5,02,16,720 54.35 ii. Acquisition price is not applicable as no monetary consideration would be payable. The Transferors propose to transfer their respective equity shares held in the Target Company by way of settlement to the Acquirers, acting as trustees to the respective Family Trusts.

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

TABLE –III A - DETAILS OF ACQUIRER TRUST - ACQUIRER TRUST – PRADEEP KUMAR FAMILY TRUST (ACQUIRER TRUST 1) SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP PRADEEP 1. BAJRANG LAL Primary beneficiaries: Trustees: KUMAR KHERUKA 1. KIRAN KHERUKA Bajrang Lal Kheruka and KHERUKA 2. KIRAN KHERUKA 2. BAJRANG LAL Kiran Kheruka are the 3. SHREEVAR KHERUKA KHERUKA parents of Pradeep Secondary Kumar Kheruka (settlor). beneficiaries: Shreevar Kheruka 1. SHREEVAR KHERUKA (trustee) is the son of 2. PRIYANKA KHERUKA Pradeep Kumar 3. SHARANYA Kheruka. 4. TARINI Beneficiaries: 5. KRISHNAV

6. Children of Shreevar The primary beneficiaries Kheruka from his are Bajrang Lal Kheruka marriage to Priyanka and Kiran Kheruka, who and descendants are the parents of thereof. Pradeep Kumar Till the time any or all the Kheruka. The Secondary Primary Beneficiaries Beneficiaries are the are alive, no person immediate relatives and from Secondary Class lineal descendants of the shall have any right of a Settlor. Beneficiary and in no Transferors: case be considered to 1. Pradeep Kumar receive any Distribution Kheruka (11.43%) under the Trust 2. Rekha Kheruka (wife of Pradeep Kumar Kheruka) (15.20%)

TABLE –III B - DETAILS OF ACQUIRER TRUST - ACQUIRER TRUST – BAJRANG LAL FAMILY TRUST (ACQUIRER TRUST 2) SETTLOR SETTLOR SETTLOR SETTLOR BAJRANG 1. PRADEEP KUMAR Primary Trustees: LAL KHERUKA beneficiaries: Pradeep Kumar Kheruka KHERUKA 2. REKHA KHERUKA 1. REKHA KHERUKA and Rekha Kheruka are 3. SHREEVAR KHERUKA 2. PRADEEP KUMAR the son and daughter-in- KHERUKA law, respectively of Secondary Bajrang Lal Kheruka beneficiaries: (settlor). Shreevar 1. SHREEVAR KHERUKA Kheruka is the grandson 2. PRIYANKA KHERUKA of Bajrang Lal Kheruka, 3. SHARANYA and the son of Pradeep 4. TARINI Kumar Kheruka and 5. KRISHNAV Rekha Kheruka. 6. Children of Shreevar from his Beneficiaries: marriage to The primary beneficiaries Priyanka and are Rekha Kheruka (wife Descendants of Pradeep Kumar thereof Kheruka) and Pradeep Kumar Kheruka, who are (Till the time any or all the daughter in law and the Primary son, respectively, of Beneficiaries are alive, Bajrang Lal Kheruka. no person from The Secondary Secondary Class shall Beneficiaries are the have any right of a immediate relatives and Beneficiary and in no lineal descendants of the case be considered to Settlor. receive any Transferors: Distribution under the 1. Bajrang Lal Kheruka Trust.) (12.30%) 2. Kiran Kheruka (wife of Bajrang Lal Kheruka)(15.42%)

D. The proposed acquisition involves:

i. The shareholding in the Target Company subsequent to the proposed Acquisition will be as under:

TABLE IV – PROPOSED SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF % SHARES SHAREHOLDIN G A. PROMOTER/ PROMOTER GROUP 1. BAJRANG LAL KHERUKA 100 0.00 2. KIRAN KHERUKA 100 0.00 3. PRADEEP KUMAR KHERUKA 100 0.00 4. REKHA KHERUKA 100 0.00 5. PRADEEP KUMAR FAMILY TRUST 2,46,07,360 26.63 6. BAJRANG LAL FAMILY TRUST 2,56,09,360 27.72 7. SHREEVAR KHERUKA 2,000 0.00 8. CROTON TRADING PRIVATE LIMITED 1,21,34,240 13.13 9. FENNEL INVESTMENT AND FINANCE PRIVATE 49,62,280 5.37 LIMITED

10. G UJARAT FUSION GLASS LLP 80 0.00 11. S ONARGAON PROPERTIES LLP NIL 0.00 TOTAL PROMOTER HOLDING 6,73,15,720 72.85 B. PUBLIC SHAREHOLDING 2,50,84,280 27.15 TOTAL 9,24,00,000 100.00

E. Grounds for seeking exemption – i. The Proposed Acquisition is intended to streamline succession and welfare of the Family Members and their lineal descendants, being members of the promoter group of the Target Company.

ii. Post the proposed transactions, the trustees of the Family Trusts would be the legal owners of 54.35% of the total equity share capital of the Target Company. The trustees of the Family Trusts shall be holding the said equity shares of the Target Company for the benefit of the beneficiaries of the Family Trusts. The trustees and the beneficiaries of the Family Trusts are promoters and members of the promoter group of the Target Company or their lineal descendants. Therefore, the current promoters and promoter group would continue to exercise control over the Target Company even pursuant to the Proposed Transactions.

iii. The Proposed Transactions are only in the nature of a transfer of equity shares within the promoters and promoter group of the Target Company, with no change in the overall promoters and promoter group shareholding in the Target Company. Pursuant to the Proposed Transactions, the promoters and promoter group will continue to hold an aggregate of 72.85% of the total equity share capital of the Target Company. The public shareholders will continue to hold an aggregate of 27.15% of the total equity share capital of the Target Company. The Proposed Transactions are non-commercial transactions and therefore will not affect or prejudice the interests of the public shareholders of the Target Company in any manner.

iv. The Acquirer Trusts have confirmed and submitted that the present application has been prepared in compliance with the standard format for filing of exemption applications under Regulation 11 of the Takeover Regulations specified by Securities and Exchange Board of India (“SEBI”), vide its circular dated 22 December 2017 (“Circular”).

v. Further, the Acquirer Trusts have confirmed and submitted that the each of the Family Trusts acquiring equity shares of the Target as part of the Proposed Transactions satisfy all of the conditions, guidelines and certain undertakings which have been specified in the Circular, which are to be included in the trust deeds of trusts seeking exemption under Regulation 11 of the Takeover Regulations.

vi. The proposed transactions would not have any adverse impact on the Target Company or the wider securities market in India and is not expected to cause any appreciable adverse effect on the price of the shares of the Target Company.

5. The Acquirer Trusts (vide the Application read with letter dated December 04, 2019) have confirmed their compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 :

i. The Trusts are, 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 Trusts have 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 Trusts, the assets will be distributed only to the beneficiaries of the trusts 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 Trusts 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 Trusts.

ix. The Trusts shall confirm, on an annual basis, that they are 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 Trusts shall get their 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 the 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 Deeds do 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 the Acquirer Trusts and other materials 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. Borosil Glass Works Limited. The proposed Acquisition as detailed at paragraph 4B above, which are to be made by Pradeep Kumar Family Trust and Bajrang Lal Family Trust i.e. the Proposed Acquirers, will attract the provisions of Regulations 3(1) and 4 of the Takeover Regulations 2011.

B. Pursuant to the proposed acquisitions, the Proposed Acquirers along with promoter group will hold an aggregate of 72.85% of the paid up equity capital in the Target Company.

C. The objective of the proposed acquisitions is to streamline the succession and welfare of the Family Members of Bajrang Lal Kheruka and their respective descendants.

D. 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.

E. 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 Acquisition).

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

G. 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.

H. 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). Further, the Acquirer Trusts have undertaken to execute amendments in the Trust Deeds in this regard.

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 Acquirer, 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 2011, hereby grant exemption to the Proposed Acquirers, viz. Pradeep Kumar Family Trust and Bajrang Lal Family Trust, from complying with the requirements of Regulations 3(1) and 4 of the Takeover Regulations 2011 with respect to the proposed acquisitions in the Target Company, viz. Borosil Glass Works 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 2011.

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. References to voting trust agreements, ‘power to decant’ and ‘receiving trusts’ in the Trust Deeds shall be removed.

10. 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.

11. The Application dated September 30, 2019 and related correspondences, filed by the Acquirer Trusts are accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: March 31, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA