Exemption order under regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of Rossell India Limited

WTM/GM/CFD/22/2019–20 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 ROSSELL INDIA LIMITED ACQUIRERS HARSH MOHAN GUPTA PROMOTERS FAMILY TRUST

BACKGROUND –

1. Rossell India Limited (“Target Company”) was incorporated under the Companies Act, 1956. The Registered Office of the Target Company is at 21/1A/3, Jindal Towers, Block B, 4th Floor, Darga Road, Kolkata–700017, West Bengal. The shares of the Target Company are listed on Calcutta Stock Exchange (“CSE”) (Listing date – October 8, 1996), BSE Limited (“BSE”) (Listing date – March 16, 2010) and National Stock Exchange of India Limited (“NSE”) (Listing date – September 25, 2012).

2. An Application dated March 25, 2019 (“Application”) read with letter dated June 10, 2019, seeking exemption from the applicability of inter alia Regulations 3(1), 4 and 5 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 Vinita Gupta on behalf of Harsh Mohan Gupta Promoters Family Trust (“Acquirer Trust/Proposed Acquirer”).

3. Regulation 3(1), 4 and 5 of the Takeover Regulations 2011 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.

Order in the matter of Rossell India Limited

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 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. HARSH MOHAN GUPTA 18,72,751 5.10 2. VINITA GUPTA 6,93,670 1.89 3. RISHAB MOHAN GUPTA 7,69,203 2.10 4. BMG ENTERPRISES LTD 2,31,13,795 62.99 5. HARVIN ESTATES PVT. LTD 4,71,045 1.28 6. BMG INVESTMENTS PVT. LTD. 5,49,769 1.50 TOTAL 2,74,70,233 74.86 B. PUBLIC SHAREHOLDING 92,26,242 25.14 C. TOTAL (A + B + C) 3,66,96,475 100.00

B. As per the Application, i. Harsh Mohan Gupta [Promoter who holds 18,72,751 (5.10%) equity shares in the Target Company] has settled a Family Trust, viz. Harsh Mohan Gupta Promoters Family Trust, by executing a Trust Deed dated March 13, 2019 read with an Addendum to the Trust Deed dated May 31, 2019.

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

ACQUIRER TRUST – HARSH MOHAN GUPTA PROMOTERS FAMILY TRUST SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP Harsh Mohan Vinita Gupta (Wife of the Settlor); Vinita Gupta, The Trustees and beneficiaries are immediate Gupta Rishab Gupta (Son of the Settlor); Rishab Gupta and relatives/lineal descendants of the Samara Gupta (Daughter of the Settlor). Samara Gupta Promoter/Settlor. Vinita Gupta and Rishab and the lineal Gupta are also Promoters of the Target descendants. Company. D. The proposed acquisition involves:

i. Harsh Mohan Gupta (entity at serial no. 1 of Table I), shall transfer 18,72,751 (5.10%) equity shares to Harsh Mohan Gupta Promoters Family Trust (“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. HARSH MOHAN GUPTA PROMOTERS FAMILY TRUST 18,72,751 5.10 2. VINITA GUPTA 6,93,670 1.89 3. RISHAB MOHAN GUPTA 7,69,203 2.10 4. BMG ENTERPRISES LTD 2,31,13,795 62.99 5. HARVIN ESTATES PVT. LTD 4,71,045 1.28 6. BMG INVESTMENTS PVT. LTD. 5,49,769 1.50 TOTAL 2,74,70,233 74.86 B. PUBLIC SHAREHOLDING 92,26,242 25.14 C. TOTAL (A + B + C) 3,66,96,475 100.00

E. Presently, Harsh Mohan Gupta holds 48,572 (52.60%) in BMG Enterprises Limited, a Promoter Company. Harsh Mohan Gupta and his wife, Vinita Gupta are also Directors in the aforementioned Promoter Company. In addition to the Direct Acquisition, the Acquirer Trust will acquire shares in the aforesaid Promoter Company resulting in an indirect acquisition of shares in the Target Company as under:

i. Transfer of 48,572 (52.60%) equity shares in BMG Enterprises Limited from one of the existing Promoters to Harsh Mohan Gupta Promoters Family Trust (“Indirect Acquisition”).

TABLE III – SHAREHOLDING IN BMG ENTERPRISES LIMITED (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. HARSH MOHAN GUPTA 48,572 52.60 2. VINITA GUPTA 11,002 11.92 3. SAMARA GUPTA 2 0.00 4. RISHAB MOHAN GUPTA 22,002 23.83 5. H. M. GUPTA AND SON (HUF) 10,734 11.63 6. HARVIN ESTATES PVT. LTD 10 0.01 7. BMG INVESTMENTS PVT. LTD. 10 0.01 TOTAL 92,332 100.00 ii. The aforementioned transactions will result in an indirect acquisition of shares in the Target Company attracting Regulation 3(1) read with Regulation 5 of the Takeover Regulations 2011 (“Indirect Acquisition”). The shareholding in the Promoter Companies being acquired by Harsh Mohan Gupta Promoters Family Trust along with the Indirect Acquisition in the Target Company will be as under:

TABLE IV – SHAREHOLDING IN THE PROMOTER COMPANY BEING ACQUIRED BY HARSH MOHAN GUPTA PROMOTERS FAMILY TRUST (SOURCE: APPLICATION) % OF SHARES OF TRANSFEREE NAME OF PROMOTER SUCH % OF SHARES HELD BY COMPANY PROMOTER RESPECTIVE PROMOTER TRANSFEROR COMPANY COMPANY IN THE TARGET BEING COMPANY TRANSFERRED HARSH MOHAN BMG ENTERPRISES 52.60 62.99 HARSH GUPTA LIMITED MOHAN PROMOTERS GUPTA FAMILY TRUST

F. Grounds for seeking exemption – a. The equity shares of the Target Company held by Mr. Harsh Mohan Gupta represent a considerable proportion of the Promoter and Promoter Group shareholding of the Target Company. b. The overall Promoter/ Promoter Group shareholding in the company as on the date of the Application is 74.86% and post the proposed acquisition, the shareholding of the Promoter/ Promoter Group would remain the same at 74.86%. c. The beneficiaries and the Settlor of the Acquirer Trust belong to the Promoter Group of the Target Company and / or are immediate relatives of the Promoters of the Target Company and hence the Acquirer Trust, post– acquisition, would become PACs within the meaning of Regulation 2(1)(q)(2)(iv) of the Takeover Regulations 2011 for the Target Company. d. The proposed transaction is intended to streamline succession and welfare of the members of the Harsh Mohan Gupta Family being members of the promoter group of the Target Company and / or their immediate relatives. Moreover, the members of Harsh Mohan Gupta Family are the only beneficiaries of the Acquirer Trust. e. Further, vide a letter dated May 6, 2019, the Acquirer Trust had informed SEBI that Rahul Jain (Proposed Trustee – nephew of the Settlor, who did not fall within the definition of ‘immediate relative’ under the Takeover Regulations 2011) had resigned vide letter dated April 18, 2019 and the Board of Trustees in its meeting held on April 20, 2019 accepted the resignation with effect from the date of resignation.

5. The Acquirer Trust (vide the Application read with letters dated April 10, 2019 and June 10, 2019) has confirmed its 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 Vinita Gupta 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. Rossell India Limited. The proposed acquisitions as detailed at paragraphs 4D and 4E, which are to be made by Harsh Mohan Gupta Promoters Family Trust i.e. the Proposed Acquirer, will attract the provisions of Regulations 3(1), 4 and 5 of the Takeover Regulations 2011.

B. Pursuant to the proposed acquisitions, the Proposed Acquirer will hold an aggregate of 68.09% of the paid up equity capital in the Target 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, 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 Direct 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 (“SCRR”) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

H. The Proposed Acquirer has also confirmed that it is in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 (as reproduced at paragraph 5). The Acquirer Trust has also incorporated the Guidelines in the aforementioned Circular as a non–obstante clause in the Trust Deed i.e. Clause 4 – Core Provisions.

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 Acquirer, viz. Harsh Mohan Gupta Promoters Family Trust, from complying with the requirements of Regulations 3(1), 4 and 5 of the Takeover Regulations 2011 with respect to the proposed acquisitions in the Target Company, viz. Rossell India 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 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.

iii. The statements/averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirer are true and correct. iv. 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. v. The Proposed Acquirer 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.

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 March 25, 2019 read with letter dated June 10, 2019, filed by Vinita Gupta on behalf of Harsh Mohan Gupta Promoters Family Trust is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: July 9, 2019 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA