Exemption order under Regulation 11 of SEBI (SAST) Regulations, 2011 in respect of Greenway Advisors Private Limited in the matter of Sturdy Industries Limited.

WTM/GM/CFD/ 03 /2020–21 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 STURDY INDUSTRIES LIMITED ACQUIRER GREENWAY ADVISORS PRIVATE LIMITED

BACKGROUND –

1. Sturdy Industries Limited (“Target Company”) was incorporated under the Companies Act, 1956 on July 27, 1989. The Registered Office of the Target Company is at 21, Industrial Area, Parwanoo Baddi, Himachal Pradesh – 173205. The shares of the Target Company are listed on BSE Limited (“BSE”).

2. An Application dated May 20, 2019 (“Application”) seeking exemption from the applicability of Regulations 3 and 4 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 Greenway Advisors Private Limited (“Applicant/Acquirer”).

Order in respect of Greenway Advisors Pvt. Ltd. in the matter of Sturdy Industries Ltd.

3. Regulation 3 and 4 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 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.”

4. In the aforementioned Application, 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. Ramesh Kumar Gupta 65,29,701 4.32 2. Mohan Lal Gupta & Son;s HUF 44,76,778 2.96 3. Mohan Lal Gupta 32,29,826 2.14 4. Ramesh Kumar Gupta & Son’s HUF 10,36,420 0.69 5. Usha Gupta 5,49,085 0.36 6. Satya Bhama 4,24,600 0.28 7. Amit Gaupta 3,45,850 0.23 8. Ramesh Gupta 1,97,800 0.13

9. Amit Gupta & Son;s HUF 81,407 0.05 10. Shivam Deepak Jain U/G Pushpa Jain 3,89,150 0.26 11. Sahil Deepak Jain UG Pushpa Jain 3,89,150 0.26 12. Gulshan Malhotra 1,97,800 0.13 13. Gopal Sharma 4,300 0.00 14. Jitendra Bhanot 4,300 0.00 15. Dinesh Kumar 4,300 0.00 16. Jeevan Naryal 4,300 0.00 17. Alpine Capital Services Ltd 52,83,100 3.49 18. Saurabh Portfolios Pvt Ltd 24,11,400 1.59 19. Jagan Irrigation Systems Pvt Ltd 23,06,800 1.53 20. Patriot Pipes Pvt Ltd 19,97,000 1.32 21. Worthwhile Finacial Serevice P Ltd 12,47,000 0.82 22. Shree Ambay Forging Private Limited 10,00,000 0.66 23. Ambey Vaishno Steel Private Limited 10,00,000 0.66 24. Jai Ambey Iron And Steel Limited 10,00,000 0.66 25. Vats Plastic Pipes Pvt Ltd 6,29,500 0.42 26. Jagan Credir Pvt. Ltd. 5,59,000 0.37 27. Patriot Hire Purchase Ltd. 5,18,150 0.34 28. Saurav Phot Folio P Ltd. 5,16,000 0.34 29. Sahyog Credits Limited 2,15,000 0.14 30. Baddi Steels Pvt. Ltd. 1,72,000 0.11 31. Pallavi Hire Purchase Pvt.Ltd. 86,000 0.06 32. Vats Credit Pvt Ltd. 3,05,300 0.20

B. PUBLIC SHAREHOLDING 11,41,42,677 24.54 C. TOTAL (A + B) 15,12,53,694 100.00

B. As per the Application, the details related to the proposed acquisition are as under:

i. The Target Company was incorporated on July 27, 1989 as a Private Limited Company under the name Sturdy Polymers Private Limited. The Target Company was converted into a Public Limited Company on May 05, 1994. On May 02, 2003, the name of the Target Company was changed to Sturdy Industries Limited. ii. The Target Company is engaged in manufacturing and supply of PVC and HDPE pipes, Permanent Lubricant HDPE Ducts, Plastic Water Storage Tanks, Aluminium Conductors, Ariel Bunched Cables, etc. iii. Punjab National Bank and Allahabad Bank had, in pursuance of the Strategic Debt Restructuring (“SDR”) Scheme of the Reserve Bank of India (“RBI”), acquired 51% of the equity share capital of the Target Company. iv. Punjab National Bank along with Allahabad Bank, the other lender and part of the consortium, in accordance with the requirements of the SDR Scheme which required the lender banks to disinvest at least 26% of the equity shares held by them, before 18 months from the reference date, i.e., by September 27, 2017, approved the sale of sale of 3,93,25,960 equity shares (26%) of face value of Rs. 2 each to the Acquirer.

Such acquisition by the acquirer was to be by way of transfer of shares by Punjab National Bank and Allahabad Bank in favour of the Acquirer. v. The investment by the Acquirer requires the lenders of the Target Company to carve out a sustainable amount of debt out of the aggregate debt of the Target Company. Such sustainable amount has to be refinanced by the said lenders, and serviced by the Target Company, and the proposal for the same would have to be agreeable to the Acquirer. vi. The Acquirer is acquiring the equity shares in terms of sanction of the lenders of the Target Company whereby lenders had approved restructuring of debts of the Target Company under SDR Scheme of the RBI, and accordingly, the management of the Target Company, after the said acquisition, will vest in the Acquirer. vii. The Acquirer, as Strategic Investor of the Target Company, is expected to appoint nominee/s to the board of directors of the Target Company, to be given effect to after transfer of 26% of shareholding of Target Company is effected in the name of the Acquirer and the debts of the Target Company are restructured to sustainable levels. viii.

The Acquirer on September 27, 2017 had made a payment of Rs. 2,16,29,278/- to Punjab National Bank for purchase of 3,93,25,960 equity shares of the Target Company. The said 3,93,25,960 equity shares included 2,31,32,918 equity shares comprising 15.29% of the total equity share capital of the Target Company held by Punjab National Bank and 1,61,93,042 equity shares comprising 10.71% of the total equity share capital of the Target Company held by Allahabad Bank. ix. The abovementioned payment had been released by the Acquirer for the limited purpose of meeting the requirements of Punjab National Bank for divesting part of its stake in the Target Company within the time frame set out in the SDR Scheme. x. The Acquirer received duly signed transfer deed from Punjab National Bank, along with physical share certificate, for 2,31,32,918 equity shares, comprising

15.29% of the total equity share capital of the Target Company which the Acquirer sent to the Registrar and Transfer Agent of the Target Company and the shares were transferred in favour of the Acquirer on October 31, 2017. xi. The Acquirer had, on April 5, 2018, received a transfer deed, accompanied by the relevant share certificate, from Allahabad Bank for transfer of 161,93,042 equity shares of the Target Company. However, as the transfer deed was deficient to the extent that it was not accompanied with other documents required to effectuate the transfer. The Acquirer sent a letter to Allahabad Bank seeking such other documents. The Acquirer sent letters dated June 12, 2018, July 18, 2018 and November 12, 2018 requesting to complete the pending documentation for transfer of shares. xii. The debt restructuring of the Target Company is linked to viability of the Target Company being confirmed in terms of Techno Economic Viability study of the Target Company, which was completed in December 2017 and other formalities for giving effect to the aforesaid restructuring are under completion. xiii. In terms of the circular no. RBI/2017-18/131 dated February 12,2018, issued by RBI, the extant instructions on resolution of stressed assets including SDR scheme, amongst others, stood withdrawn with immediate effect and all accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall be governed by the revised framework.

C. Proposed Transaction in respect of which exemption is being sought: – i. The Acquirer proposes to acquire 16,193,042 equity shares constituting 10.71% of total equity shares of Target Company held by the Allahabad Bank. The Acquirer has already acquired 23,132,918 shares constituting 15.29% of the total equity share capital of the Target Company earlier held by the Punjab National Bank and the proposed acquisition, together with the shares already acquired by the Acquirer, will vest in the Acquirer 26% of the total equity share capital of the Target Company. The Acquirer had made payment of entire acquisition price for acquiring 26% of the total equity capital of the Target Company to Punjab National Bank, the lead banker of the Target Company in accordance with the guidelines of Strategic Debt Restructuring (“SDR”) Scheme of the Reserve Bank of India (“RBI”). The payment was received by Punjab National Bank for itself and for Allahabad Bank, the other lender to the Target Company. ii. The equity shares of the target company held by Allahabad Bank, to the extent they were subject matter of transfer to the Acquirer, i.e., 10.71% of total equity shares of the Target Company, which is equal to 161,93,042 equity shares, have not yet been transferred to the Acquirer. iii. Since the abovementioned acquisition of 10.71% of equity shares would take the total shareholding of the Acquirer in the Target Company to 26% and the management and control of the Target Company, after the said acquisition, shall vest in the Acquirer, the same would trigger open offer obligations under Regulation 3 read with Regulation 4 of the Takeover Regulations. The Acquirer seeks exemption from the open offer obligations from SEBI in respect of the proposed acquisition.

D. Grounds for seeking exemption – i. That the proposed acquisition of shares was pursuant to the SDR Scheme of the Reserve Bank of India and acquisition in terms thereof was exempt from the provisions of the SAST Regulations. The delay by Allahabad Bank in providing the documents for transfer of 161,93,042 equity shares to the Acquirer after the expiry of the time within which disinvestment by the Bank should have been achieved as per the provisions of the SDR Scheme, should not hold back the transfer of subject shares in the name of Acquirer. ii. That the Acquirer had agreed to acquire 393,25,960 equity shares of the Target Company, being 26% of the equity share capital of the Target Company from the lender banks, on the specific understanding that provisions of the SAST Regulations shall not be applicable to the proposed acquisition. iii. That the Acquirer had made payment of full amount of consideration for purchasing 393,25,960 equity shares of the Target Company, equivalent to 26% of the equity share capital of the Target Company, within the time allotted for the purposes as well as within the period during which the exemption from SAST Regulation was available to the Acquirer, i.e., prior to September 27, 2017. iv. That the acquisition by Acquirer has been approved by the lender banks for the limited purposes of fulfilling intents of the SDR Scheme. No further acquisition of shares by the Acquirer is proposed in addition to the shares for which payment has been made by the Acquirer under the SDR Scheme, the said SDR scheme having been fully implemented qua the Target Company.

RECOMMENDATIONS OF THE TAKEOVER PANEL

5. The Application along with the further submissions were forwarded to the Takeover Panel in terms of the proviso to Regulation 11(5) of the Takeover Regulations and deliberated by the Takeover Panel in its meeting held on February 25, 2020. After deliberations, the Takeover Panel made the following observations –“Panel deliberated on the exemption application filed by Greenway Advisors Pvt. Ltd. (Acquirer). Panel is of the view that the acquirer paid the consideration amount for acquiring 26% of the equity shares of the Target Company within the stipulated timelines under Strategic Debt Restructuring Scheme (SDR) of RBI. The transfer of 15.29% of shares was completed from Punjab National Bank to the acquirer within the SDR framework. However, the transfer of 10.71% of shares of the Target Company from Allahabad Bank was not completed within the SDR framework only due to the documentation delay at the end of Allahabad Bank. Therefore, the Panel recommended granting the exemption.”

CONSIDERATION –

6. I have examined the Application, the Addendum and various other submissions made by the Acquirers and other material available on record. After examination of all the relevant material, I note the following: a. On March 28, 2016, it was decided in a Joint Lenders Forum (JLF) meeting with Punjab National Bank and Allahabad Bank as its constituent members to invoke the SDR and decided that the date of the JLF meeting should be referred as reference date for invocation of SDR.

b. Thereafter, Punjab National Bank and Allahabad Bank had, in pursuance of the SDR Scheme of the RBI acquired 51% of the equity share capital of the Target Company.

c. Punjab National Bank along with Allahabad Bank, the other lender and part of the consortium, in accordance with the requirements of the SDR Scheme which required the lender banks to disinvest at least 26% of the equity shares held by them, before 18 months from the reference date, i.e., by September 27, 2017, approved the sale of 3,93,25,960 equity shares (26%) of face value of Rs. 2 each to the Acquirer. Such acquisition by the acquirer was to be by way of transfer of shares by Punjab National Bank and Allahabad Bank in favour of the Acquirer.

d. The Acquirer on September 27, 2017 had made a payment of Rs. 2,16,29,278 to Punjab National Bank for purchase of 3,93,25,960 (26%) equity shares of the Target Company, which was within the stipulated time under SDR framework.

e. Punjab National Bank transferred 2,31,32,918 (15.27%) equity shares to the Acquirer, comprising 15.29% of the total equity share capital of the Target Company. The equity shares of the target company held by Allahabad Bank, to the extent they were subject matter of transfer to the Acquirer, i.e., 10.71% of total equity shares of the Target Company, which is equal to 161,93,042 equity shares have yet not been transferred to the Acquirer.

f. In terms of the RBI circular no. RBI/2017-18/131 dated February 12,2018, the extant instructions on resolution of stressed assets including SDR scheme, stand withdrawn with immediate effect and all accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall be governed by the revised framework.

7. I note that the proposed acquisition by the Acquirer is being undertaken in terms of the SDR framework of the RBI which was in force prior to February 12, 2018. I note that in terms of the RBI circular no. RBI/2017-18/131 dated February 12, 2018, the extant instructions on resolution of stressed assets including SDR scheme, stood withdrawn with immediate effect and all accounts, including such accounts where any of the schemes had been invoked but not yet implemented, are be governed by the revised framework. However, I further note that before the coming into the said circular, the Acquirer had already made a payment of Rs. 2,16,29,278 for purchase of 3,93,25,960 (26%) equity shares of the Target Company on September 27,2017 which was within the stipulated guideline under the then existing SDR framework. I note that, as recorded by the Takeover Panel, in spite of the payment having been made by the Acquirer to Punjab National Bank, the transfer of 1,61,93,042 shares (10.71%) of the Target Company from Allahabad Bank could not be completed within the SDR framework only due to the documentation delay at the end of Allahabad Bank. Further, I note that as per the Acquirer’s submissions made vide emails dated April 3, 2020 and April 7, 2020, the pre-conditions for grant of exemption specified under the erstwhile Regulation 10(1)(ia) of the Takeover Regulation, which was in force at the time when the payment for shares was made to Punjab National Bank (i.e. on September 27, 2017) were met and the proposed acquisition qualified for exemption under the said clause. The Acquirer has also provided a certified copy of resolution passed by the shareholders of the Target Company in the AGM held on September 20, 2017 endorsing the transfer of shares to the Acquirer, as required under erstwhile Regulation 10(1)(ia) of the Takeover Regulations, which was in force at that time. Considering all these factors, I am in agreement with the recommendations of the Takeover Panel that the Acquirer be exempted from public offer obligations arising out of the proposed acquisition, under the Takeover Regulations.

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 Acquirer, viz. Greenway Advisors Private Limited, from complying with the requirements of Regulations 3 and 4 of the Takeover Regulations with respect to the proposed acquisitions in the Target Company, viz. Sturdy Industries Limited, by way of proposed transaction 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 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. iii. The statements/averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirer are true and correct.

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 May 20, 2019 (“Application”), filed by Greenway Advisors Private Limited is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: April 16, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA