Exemption order under regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of " SOMANY CERAMICS LIMITED "

ORDER UNDER SECTION 11(1) AND 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 ACQUISITON OF SHARES AND TAKEOVERS) REGULATIONS, 2011.

IN THE MATTER OF THE PROPOSED ACQUSITON OF SHARES AND VOTING RIGHTS IN-

TARGET COMPANY SOMANY CERAMICS LIMITED ACQUIRERS SRIJAN FAMILY TRUST, SANRAKSHITH FAMILY TRUST AND SHAKTHI FAMILY TRUST

BACKGROUND –

1. Somany Ceramics Limited (“SCL / Target Company”) was incorporated under the Companies Act, 1956 on January 20, 1968. The Registered Office of the Target Company is at 2, Red Cross Place, Kolkata - 700001. The shares of the Target Company are listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”).

2. An Application dated December 07, 2018 read with e–mails and letters dated March 29, 2019, April 07, 2019, May 21, 2019, July 03, 2019, November 06, 2019 and November 14, 2019 (“Application”) seeking exemption from the applicability of 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 Sanrakshith Family Trust, Shakthi Family Trust and Srijan Family Trust (“Applicants / Acquirer Trusts”). Order in the matter of Somany Ceramics Limited

3. Regulation 3, 4 and 5 of the Takeover Regulations state as follows – “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.

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 shareholding pattern of the Target Company was as under: TABLE I – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: BSE WEBSITE) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. SHRIVATSA SOMANY 13,21,370 3.12 2. SHREEKANT SOMANY 4,29,740 1.01 3. ANJANA SOMANY 94,150 0.22 4. ABHISHEK SOMANY 85,500 0.20 5. MINAL SOMANY 6,25,900 1.48 6. ANUSHREE CHOPRA 1,50,000 0.35 7. SHREEKANT SOMANY (HUF) 45,500 0.11 8. ABHISHEK SOMANY (HUF) - - 9. BHILWARA HOLDINGS LIMITED 92,02,200 21.71 10. S ARVOTTAM VANIJYA LIMITED 63,32,500 14.94 11. S COPE VINIMOY PRIVATE LIMITED 35,52,500 8.38 TOTAL 2,18,39,360 51.53 B. PUBLIC SHAREHOLDING 2,05,40,066 48.47 C. TOTAL (A + B) 4,23,79,426 100

B. The shareholding pattern of the Target Company, after amalgamation of promoter group companies and subsequent arrangements / inter-se transfers among family members, would be as under:

TABLE II – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. SHREEKANT SOMANY 1,44,17,927 34.02 2. ANJANA SOMANY 54,22,340 12.79 3. ANUSHREE CHOPRA 1,50,000 0.35 4. ABHISHEK SOMANY (HUF) 18,49,093 4.36 TOTAL 2,18,39,360 51.53 B. PUBLIC SHAREHOLDING 2,05,40,066 48.47 C. TOTAL (A + B) 4,23,79,426 100

C. As per the Application, i. Mr. Shreekant Somany has settled two Family Trusts, viz. Sanrakshith Family Trust and Shakthi Family Trust, by executing Trust Deeds dated November 4, 2019. ii. Ms. Anjana Somany has settled a Family Trust viz. Srijan Family Trust by executing a Trust Deed dated November 4, 2019.

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

TABLE III – DETAILS OF THE ACQUIRER TRUSTS (SOURCE: APPLICATION) SANRAKSHITH FAMILY TRUST SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP Shreekant 1. Shrivatsa 1. Shrivatsa Somany (Son of The Trustees and Somany Somany Shreekant Somany) beneficiaries are either 2. Abhishek 2. Children and lineal descendants Promoters or their Somany of Shrivatsa Somany immediate relatives. 3. Shreekant 3. Special beneficiaries (only Somany immediate relatives or lineal descendants of Shrivatsa Somany)

SHAKTHI FAMILY TRUST SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP Shreekant 1. Abhishek 1. Abhishek Somany (Son of The Trustees and Somany Somany Shreekant Somany) beneficiaries are either 2. Shreekant 2. Children and lineal descendants Promoters or their Somany of Abhishek Somany immediate relatives. 3. Anjana Somany 3. Special beneficiaries (only 4. Minal Somany immediate relatives or lineal descendants of Abhishek Somany) SRIJAN FAMILY TRUST SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP Anjana 1. Shreekant 1. Shreekant Somany The Trustees and Somany Somany 2. Abhishek Somany beneficiaries are either 2. Abhishek 3. Shrivatsa Somany Promoters or their Somany 4. Children and lineal immediate relatives. 3. Shrivatsa descendants of Abhishek Somany Somany and Shrivatsa 4. Anjana Somany Somany 5. Special beneficiaries (only immediate relatives or lineal descendants of Shreekant Somany)

E. The proposed acquisition covered under the extant application involves:

i. Transfer of 43,37,872 (10.24%) equity shares from Mr. Shreekant Somany to Sanrakshith Family Trust. ii. Transfer of 1,00,80,055 (23.78%) equity shares from Mr. Shreekant Somany to Shakthi Family Trust. iii. Transfer of 43,37,872 (10.24%) equity shares from Ms. Anjana Somany to Srijan Family Trust.

F. The aforementioned transaction will result in a direct acquisition of shares by the Acquirer Trust 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 IV – PROPOSED SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHO LDING A. PROMOTER/ PROMOTER GROUP 1. SANRAKSHITH FAMILY TRUST 43,37,872 10.24 2. SHAKTHI FAMILY TRUST 1,00,80,055 23.78 3. SRIJAN FAMILY TRUST 43,37,872 10.24 4. PROMOTER AND PROMOTER GROUP OTHER THAN ACQUIRERS 30,83,561 7.27 TOTAL (A) 2,18,39,360 51.53 B. PUBLIC SHAREHOLDING 2,05,40,066 48.47 C. TOTAL (A + B) 4,23,79,426 100

G. Grounds for seeking exemption – a. The proposed acquisition is only a private family arrangement, for smooth succession planning of the family and to streamline the Family’s assets and businesses. b. The proposed acquisition will not prejudice the interests of the public shareholders of the Target Company in any manner. c. The beneficiaries of the Acquirer Trusts are the family members of the Somany Group Family d. There will not be any change in the shareholding of the Target Company pursuant to the proposed acquisition and pre-acquisition and post-acquisition shareholding of promoter / promoter group would remain the same. e. There would not be effective change in the exercise of the voting power or control or management of the Target Company. f. The Target Company shall continue to be in compliance with Minimum Public Shareholding (MPS) requirements.

H. The Acquirer Trusts (vide an e–mail dated April 07, 2019 and letters dated May 21, 2019 and July 3, 2019) have confirmed their compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 – i. The Acquirer Trusts are in substance, only mirror images 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 Acquirer 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 Acquirer 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 the Acquirer 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 Acquirer Trusts. ix. The Acquirer 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 Acquirer 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 transfer (except for holding on account of inheritance). xiii. There is no layering in terms of trustees / beneficiaries in case of the Acquirer 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.

The Acquirer Trusts have also submitted the amended Trust Deeds executed on November 04, 2019, incorporating changes to the Trust Deed to ensure its compliance with the requirements specified in SEBI Circular dated December 22, 2017.

CONSIDERATION –

5. I have considered the Application submitted by the Applicants and other material available on record. Without reiterating the facts as stated above, the following are noted:

A. The Application submitted is in respect of the proposed acquisitions of shares and voting rights in the Target Company i.e. Somany Ceramics Limited. The proposed acquisitions as detailed at paragraph 4E above, which are to be made by Acquirer Trusts, will attract the provisions of Regulations 3 and 4 of the Takeover Regulations.

B. Pursuant to the proposed acquisitions, the Acquirer Trusts will hold an aggregate of 44.26% of the paid up equity capital in the Target Company on account of the proposed acquisitions in such Company.

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

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

E. The total pre–acquisition and post–acquisition shareholding of the Promoters in the Target Company will remain the same.

F. There will not be 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 (“SCRR”) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

6. Upon perusal of the amended Trust Deeds executed on November 04, 2019, it is observed that the terms therein are in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017. Accordingly, the Applicant Trusts are eligible for exemption as sought and the same is being granted subject to certain conditions imposed in the interest of investors, as ordered herein below.

ORDER –

7. 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 Acquirer Trusts, viz. Sanrakshith Family Trust, Shakthi Family Trust and Srijan Family Trust, 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. Somany Ceramics Limited, by way of proposed transactions as mentioned in the Application.

8. 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 Acquirer Trusts 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 Acquirer Trusts are true and correct. iv. The Acquirer Trusts shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Acquirer Trusts shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017.

v. The Acquirer Trusts 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.

9. 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.

10. The Applications dated December 07, 2018 and related correspondences filed by the Acquirer Trusts, are accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: December 10, 2019 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA