Final Order in the matter of Mindvision Capital Ltd.

Under Sections 11(4) and 11B of the Securities and Exchange Board of India Act, 1992

Noticee no. Name of the Noticee PAN 1. Basiz Fund Service Pvt. Ltd. AACCB8229K 2. Dash Pharmaceuticals Pvt. Ltd. AAACD1675P 3. Mandvi Dyes & Chemicals Co. Pvt. Ltd. AAACM3248D 4. Maxilla Financial Services Pvt. Ltd. AADCM9154D 5. Parachit Sales & Marketing (I) Pvt. Ltd. AAACP2501Q 6. Prime Dyes and Chemical Company Pvt. Ltd. AACCP1840N 7. Rajratan Trading Pvt. Ltd. AACCR7367Q 8. Shingar Dyes & Chemicals Pvt. Ltd. AAACS6370E 9. Sparkle Tooth Brush Mfg. Co. Pvt. Ltd. AAACS6369M 10. Tutis Technologies Ltd. AAACA7948L 11. Vishal Information Technologies Ltd. AAACS7326Q (The aforesaid entities are hereinafter referred to individually, by their respective names/ Noticee numbers and collectively as “the Noticees”) In the matter of Mindvision Capital Limited 1. The present proceedings have emanated from a show cause notice dated October 30, 2017 (hereinafter referred to as “SCN”) issued by Securities and Exchange Board of India (hereinafter referred to as “SEBI”), to the Noticees under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”). The SCN alleged that the Noticees who were ‘Persons Acting in Concert’ (hereinafter referred to as “PAC”) failed to make public announcement for open offer, as required under Regulation 10, 11(1) and 11(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as “Takeover Regulations, 1997”) on several occasions with respect to their acquisition of shares in the company Mindvision Capital Ltd. (hereinafter referred to as “the target company” or “MCL” or “Mindvision”) during the period from July 01, 2008 to September 30, 2010 (hereinafter referred to as the “investigation period”).

2. The brief of the allegations made against the Noticees in the SCN is as under: The SCN, which identified the Noticees collectively as “Tutis Group” alleged that the eleven (11) Noticees comprising the Tutis Group had informal understanding with a common objective/ interest and had acted as Person Acting in Concert (PAC) while acquiring shares in the scrip of MCL during the Investigation Period. The relation/connection among the 11 Noticees are established in the SCN as follows:

A. Connection established through Off-market transfers amongst the Noticees: The following off-market transfers was observed amongst the Noticees except Basiz Fund Service Pvt Ltd. and Vishal Information Technologies Ltd.

Date of Share transferred by Share Received No. of Transactions (Name of Entity) (Name of Entity) Shares 12-03-2010 Tutis Technologies Ltd. Mandvi Dyes & Chemicals 2,40,216 26-04-2010 Maxilla Financial Services Pvt Shingar Dyes and 50,000 Co. Pvt Ltd 24-06-2010 Prime Dyes & Chemicals Co Pvt Sparkle Tooth Brush Mfg 50,000 Ltd Chemicals Ltd 24-06-2010 Parachit Sales and Marketing (I) Sparkle Tooth Brush Mfg 50,000 Ltd Co Pvt Ltd 16-07-2010 Mandvi Dyes & Chemicals Co. Tutis Technologies Ltd. 2,23,000 Pvt Ltd Co Pvt Ltd 16-07-2010 Mandvi Dyes & Chemicals Co. Tutis Technologies Ltd. 2,00,000 Pvt Ltd 17-08-2010 Sparkle Tooth Brush Mfg Co Pvt Tutis Technologies Ltd. 80,000 Pvt Ltd 17-08-2010 Rajratan Trading Pvt. Ltd. Parachit Sales and 80,000 Ltd 17-08-2010 Maxilla Financial Services Pvt Dash Pharmaceuticals Pvt. 80,000 Marketing (I) Pvt Ltd 17-08-2010 Prime Dyes & Chemicals Co Pvt Parachit Sales and 18,889 Ltd Ltd. Ltd. Marketing (I) Pvt Ltd

Date of Share transferred by Share Received No. of Transactions (Name of Entity) (Name of Entity) Shares 17-08-2010 Rajratan Trading Pvt. Ltd. Parachit Sales and 80,000 17-08-2010 Prime Dyes & Chemicals Co Pvt Tutis Technologies Ltd 31,111 Marketing (I) Pvt Ltd 21-09-2010 Sparkle Tooth Brush Mfg Co Pvt Tutis Technologies Ltd. 20,000 Ltd 21-09-2010 Shingar Dyes and Chemicals Tutis Technologies Ltd. 1,56,000 Ltd Ltd The same has been provided in detail in Annexure 1 of the SCN.

B. Connection established through fund transfer amongst the Noticees: The SCN alleged that the Tutis Group entities have their bank account with Sakinaka, Mumbai branch of The Saraswat Co-op Bank Ltd. The SCN alleged that Tutis Group entities used their bank accounts with Saraswat Co-op Bank for payment among themselves and for payment to the brokers for pay in obligation on acquiring shares in the scrip. The relation among Tutis Group entities is also established through transfer of funds one to another. Few transactions of Tutis Group entities who bought shares in the market through the broker Religare Securities Ltd and the same is funded by other entities of Tutis Group were also provided in Annexure 2 of the SCN. The SCN also observed that Tutis Technologies Ltd., Vishal Information Technologies Ltd. and Dash Pharmaceuticals Pvt. Ltd. have provided funds to other 6 entities namely Mandvi Dyes and Chemicals Pvt Ltd., Parachit Sales and Marketing (I) Pvt Ltd., Shingar Dyes and Chemicals Ltd., Prime Dyes & Chemicals Co.Pvt. Ltd., Rajratan Trading Pvt Ltd. and Maxilla Financial Services Pvt Ltd. for acquiring shares in the scrip of Mindvision. Thus, on analyzing the acquisition of shares, payment obligation to broker and bank statement of Tutis Group entities, the SCN alleged that that the Tutis Group entities had acquired shares in the scrip at BSE and their payment obligation to the broker arisen from such acquisition of shares were met out of the funds received from the other entities forming part of Tutis Group. Thus, it appears that they have common objective and interest while acquiring shares in the scrip.

C. Connections based on replies of certain entities The SCN has referred to the reply of the following entities, namely: i) Shri Dilip Kherade, who was the common director Mandvi Dyes & Chemicals Co. Pvt. Ltd. (Noticee no. 3), Parachit Sales & Marketing (I) Pvt. Ltd. (Noticee no. 5), Shingar Dyes & Chemicals Pvt. Ltd. (Noticee no. 8), Sparkle Tooth Brush Mfg. Co. Pvt. Ltd. (Noticee no. 9), Dash Pharmaceuticals Pvt. Ltd. (Noticee no. 2) and Rajratan Trading Pvt. Ltd. (Noticee no. 7), ii) Shri Anthony Francis Lopes who was the director of Dash Pharmaceuticals Pvt Ltd. ( Noticee no.2) and Rajratan Trading Pvt Ltd.( Noticee no. 7 and iii) Shri Hemant Kurtukade who was the director of Mandvi Dyes & Chemicals Co. Pvt. Ltd.( Noticee no. 3), Maxilla Financial Services Pvt. Ltd.(Noticee no. 4), Parachit Sales & Marketing (I) Pvt. Ltd.( Noticee no. 5) and Sparkle Tooth Brush Mfg. Co. Pvt. Ltd.( Noticee no. 9). All of them have submitted that they were employees of Tutis Technologies Ltd. and that Shri. G S Chandrasekhar and Shri Dilip Parekh were CMD and director respectively of Tutis Technologies Ltd. who made them director of the above mentioned companies on paper. The companies were promoted by Mr Dilip Parekh and his family members and were the group companies of Tutis Technologies Ltd and Vishal Information Technologies Ltd. All the transactions of the companies were carried out on the instructions/directions of Shri G S Chandrasekhar and Shri Dilip Parekh. Prior to his joining along with others as director of the companies, the family members of Mr Dilip Parekh were the directors of the abovementioned companies. They have aklso submitted that Basiz Fund Service Pvt. Ltd. (Noticee no. 1) was a subsidiary of Vishal Information Technologies Ltd. Further, Tutis Technologies Ltd. is a promoter company of Vishal Information Technologies Ltd. iv) Religare Securities Ltd. is the stock broker through whose sub broker Stock Planet Pvt. Ltd. all the noitcees have traded at BSE The SCN states that Shri

Dilip C. Parekh and Shri. Chirag Parekh are the directors of Stock Planet Pvt. Ltd. The SCN observes that Stock Planet Pvt Ltd. alongwith 2 entities of Tutis Group namely Parachit Sales and Marketing (I) Pvt Ltd., and Mandvi Dyes and Chemicals Pvt Ltd. share common address. Further, Mr Dilip C Parekh is also common director of Tutis Technologies Ltd., Vishal Information Technologies Ltd. and Dash Pharmaceuticals Pvt. Ltd. These three entities have funded other entities of Tutis Group for acquiring shares in the scrip.

3. The SCN has alleged that the Noticees have violated the following provisions of law while acquiring shares of the target company: a. Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as “Takeover Regulations”) when the consolidated shareholding of the Noticees crossed the threshold limit of 15% and became 18.15% (i.e. 19,24,228 shares) on November 19, 2008. b. Regulation 11(1) of Takeover Regulations, since the consolidated shareholding of the Noticees in the target company was more than 15% and less than 55% and they acquired additional shares in excess of the permissible creeping limit of 5% per financial year without making a public announcement for open offer, on November 27, 2008, December 11, 2008, March 12, 2010, March 23, 2010, March 29,2010, April 22, 2010 and May 18, 2010. c. Regulation 11(2) of SEBI Takeover Regulation, 1997, since the consolidated shareholding of the Noticees in the target company was more than 55% and they acquired additional shares beyond 55% on May 25, 2010, June 07, 2010, June 09, 2010 and July 01, 2010 but failed to make the mandatory public announcement for open offer.

Replies and Personal Hearing:

4. Replies were received from Noticee no. 1, Basiz Fund Service Pvt. Ltd. (hereinafter referred to as “Basiz”) dated November 27, 2017. Reply was also received from two persons namely Shri Kantilal Mehta and Smt. Kumud Kantilal Mehta dated November 16, 2017 stating that they were directors of Noticee no. 6, Prime Dyes and Chemical Company Pvt. Ltd. for a limited time and had no knowledge of the transactions of the Noticee no. 6 and that they were never signatories to bank account of Noticee no. 6 held with The Saraswat Co-op Bank Ltd. nor the demat accounts of Noticee no. 6.

5. Subsequent to the SCN, an opportunity of hearing was granted to all the Noticees on March 01, 2019 which was later rescheduled to March 12, 2019. However, all the hearing notices returned undelivered. In view of the same, the hearing notices were served through affixture to Noticee no. 1, 8, 10 and 11 and since affixture could not be effected to the remaining Noticees, the hearing Noticees with respect to Noticee no. 2, 3, 4, 5, 6, 7 and 9 were served through newspaper publication on March 05, 2019. On the scheduled date of hearing on March 12, 2019, Shri Hemant Kurtukade, Shri Anthony Francis Lopes and Shri Dilip Kherade, directors of the Noticee companies (Noticee no. 2 to 9) appeared on their own behalf. The directors submitted that they had been made directors of the Noticee companies by one Shri G S Chandrasekhar and Shri Dilip Parekh. It was also submitted that they had resigned from the companies in 2011.

6. Vide email dated April 03, 2019, Shri Anthony Lopez and Shri Dilip Kherade, and vide email dated April 04, 2019, Shri Hemant Kurtukade, reiterated the submissions made by them during the personal hearing. Noticee no.1, Basiz, vide letter dated February 26, 2019 had sought an adjournment to the hearing and in view of the same, the hearing qua Noticee no. 1 was rescheduled to April 05, 2019 on which date the Authorized Representative of Noticee no. 1 appeared and made submissions and hearing was concluded.

7. Vide its reply dated November 27, 2017, Noticee no.1, Basiz has submitted the following:

a. Basiz has been erroneously clubbed with the Tutis Group on a wrong presumption that it was a subsidiary of Vishal Information Technologies Ltd. (Noticee no. 11) and Tutis Technologies Ltd. (Noticee no. 10) during the Investigation Period. However, the SCN has ignored the fact that with effect from June 16, 2008, Basiz had already ceased to be a subsidiary of VITL and thus, was not a step-down subsidiary of Tutis either.

b. On March 26, 2007, Coral Hub Limited, formerly known as Vishal Information Technologies Limited (VITL) acquired certain shares of Basiz whereby Basiz became a subsidiary of VITL. Further, it is also relevant to note that VITL was a subsidiary of Tutis Technologies Limited (Tutis). On June 16, 2008, New Enterprise Associates, an independent US based Indo-US venture fund (NEA) invested certain funds in Basiz and acquired 47.95% of the total share capital of Basiz. With this, VITL ceased to be a holding company of Basiz and it no longer remained the largest shareholder of Basiz. Also, it is pertinent to note that on August 11, 2008, the shareholding of Tutis in VITL also reduced below 50% and VITL ceased to hold the status of a subsidiary of Tutis.

c. On acquisition by NEA, in 2008, the Articles of Association of Basiz were amended and NEA was given a representation on the Board of Directors of Basiz in the form of power to appoint nominee on the Board. Besides this, under Article 16 of the • Articles of Association, the nominee director appointed by NEA was also given an affirmative vote in certain important decisions in Basiz, such as, entering into related party transactions with the founders of Basiz or its directors, acquisition of other businesses, amendments to Memorandum of Association or Articles, appointment/removal/dismissal of directors, approval of annual accounts of Basiz, change in size of board of directors, etc. The Articles further provided that powers to make investments from the profits earned by Basiz would be decided upon by the Board, on an affirmative vote of NEA through its nominee.

d. As demonstrated above, during the Investigation Period, Basiz was not a subsidiary of VITL or Tutis nor was it under the control and management of VITL or Tutis. Basiz was governed by an independent Board which was bound by the provisions of its Articles.

e. Basiz had acquired a mere 1.57% of the total shareholding of Mindvision from the open market during the investigation period. Such a decision to invest in the shares of Mindvision was an independent business decision taken in the ordinary course of business. Basiz had no information regarding the acquisitions/sales made by the Tutis Group. It is submitted that it was a mere coincidence that the acquisition of Basiz fell under the same time period as that of the entities forming a part of the Tutis Group.

f. Basiz never acquired shares of Mindvision along with the Tutis Group and it did not even share any common intent/object with the Tutis Group while transacting in the scrip of Mindvision. Therefore, Basiz was not connected with the Tutis Group. Moreover, the SCN has failed to provide any evidence of common connection between Basiz and Tutis Group which may establish any of the allegations of violation of SEBI regulations by Basiz. Basiz never undertook any off-market trades in the securities of Mindvision during the Investigation period, Basiz did not have a bank account in the Saraswat Bank nor did it transfer or receive any funds from any of the entities belonging to the Tutis group.

g. With respect to Shri G.S. Chandrashekar (GSC) being a common director between various entities, GSC had been director of Basiz since July 7, 2007 and under the Articles of Association the founders of Basiz were allowed to nominate two directors on the board Therefore, GSC continued to be a director of Basiz even after acquisition by NEA. However, in light of the special powers given to NEA under Article

16.5 of the Articles of Basiz, GSC did neither have any control over the management, appointment/removal or change in composition of the Board, nor did have any control over the operations of the Board h. Due to a historical relationship between Basiz and VITL as a parent-subsidiary, the companies were located in the same building, however, on different floors. Moreover, with effect from November 16, 2012 they did not share a common address.

i. With respect to a common authorized person for placing of orders, it is sta•t ed that GSC being a Chartered Accountant by profession and an expert in financial markets, had always taken care of execution of the financial transactions, as per the decisions of the Board and was therefore, also an authorized signatory to the said purchase of shares of Mindvision. However, GSC was not an authorized signatory for any other entity forming a part of Tutis Group.

j. Basiz has acquired only 1.57% of shares of Mindvision in the open market, in the entire Investigation Period. Moreover, even post the Investigation Period, Basiz has never traded in the scrip of Mindvision.

k. During the Investigation Period, Basiz did neither share any common object or intent with the Tutis Group while purchasing shares of Mindvision, nor did it share a relation of holding-subsidiary or was under the same management with any of the Tutis Group entities. Hence, it was not connected to or acting as a PAC with Tutis Group.

l. It is submitted that Regulation 2(1)(e)(2) of the Takeover Regulations, 1997 is a deeming provision and provides a list of entities which are deemed to be PACs. However, the provision is supplied with the words - "unless the contrary is established’. This implies that it is a rebuttable presumption that the entities falling under the list provided under Regulation 2(1)(e)(2) may not be PAC, if proved otherwise. From the facts of the matter, if the parties can prove that there was no • meeting of mind or common objective, then such persons will not be treated as PAC for the matter. It is submitted that for Basiz to be a PAC under Regulation 2(1)(e)(2)(i) of the Takeover Regulations, it has to be either a subsidiary/holding company of the acquirer; or, it has to be under the same management as that of the acquirer. However, during the Investigation Period, Basiz did not share any such relation with Tutis and hence, was not a PAC.

m. Although GSC was a common director between Basiz, VITL and Tutis, however, GSC was not given any exclusive rights/powers under the Articles. GSC did not have any power to control the management or operations of Basiz. There were affirmative • voting rights in favour of NEA and hence, GSC could not have solely taken any decision for Basiz.

n. Regulation 11(1) is applicable only on acquisition of 5% or more shares in one financial year, after acquisition of at least 15% of shares in the target company by an acquirer together with its PACs. Similarly, Regulation 11(2) is applicable on acquisition of 5% or more shares in one financial year after acquisition of at least 55% of the total shareholding of the target company by an acquirer together with its PACs. Basiz held merely 1.57% of the total shareholding of Mindvision in its lifetime. Further, as stated above, Basiz did not form a PAC with the Tutis Group or VITL. Thus, the shareholding of Basiz cannot be clubbed with Tutis Group to conclude that the thresholds prescribed under Regulation 11(1) or 11(2) were breached by Basiz. Therefore, based on these facts, Basiz has not violated Regulation 11 of Takeover Regulations, 1997.

o. It was with an intention to make long term investment that Basiz decided to acquire the shares of Mindvision. This is also visible from the fact that Basiz never traded in the scrip of Mindvision. After buying 1,66,218 shares in 2009 - 2010, it was only in December 2014 that the entire shareholding was sold by it.

p. Basiz had no knowledge of transactions by Tutis Group in the scrip of Mindvision.

q. Imposing harsh financial obligations on Basiz, by compelling it to make an open offer on behalf of the Tutis Group, even when Basiz was not acting in concert with the Tutis Group, will create financial difficulties for Basiz. Basiz will not be able to pay such a huge sum to the shareholders of Mindvision and it may also lead to closure of Basiz’ business which may render its employees unemployed.

8. Vide email dated November 19, 2019 and December 18, 2019, further reply was sought from the entities who appeared for the personal hearing. Basiz did not make further submissions. Emails were received from Shri Anthony Lopez, Shri Hemant Kurtukade and Shri Dilip Kherade inter alia stating that they were made to sign the various papers on behalf of the Noticee companies where they were the directors. They also submitted that they did not have any background in stock markets and were not aware of any violation of law by the Noticee companies. They were only following the directions of their bosses.

Consideration of submissions and findings:

9. I have considered the show cause notice, replies submitted by the Noticees, submissions made during the hearing and evidence available on record. Before dealing with allegations levelled against Noticees in the SCN and the replies of the Noticees thereto, it would be appropriate to refer to the provisions of law which are alleged to have been violated by the Noticees and also those which are pertinent for the present determination. These provisions are reproduced hereunder:

Relevant provisions of the Takeover Regulations, 1997: “2. Definitions. (1) In these Regulations, unless the context otherwise requires:- “(a)……… (e) person acting in concert" comprises, - (1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company. (2) Without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established:

(i) a company, its holding company, or subsidiary of such company or company under the same management either individually or together with each other;

(ii) a company with any of its directors, or any person entrusted with the management of the funds of the company;

(iii) directors of companies referred to in sub-clause(i) of clause (2) and their associates;

(iv) mutual fund with sponsor or trustee or asset management company;

(v) foreign institutional investors with sub account(s);

(vi) merchant bankers with their client(s) as acquirer;

(vii) portfolio managers with their client(s) as acquirer;

(viii) venture capital funds with sponsors;

(ix) banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer.

Provided that sub-clause (ix) shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work.

(x) any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2% of the paid-up capital of that company or with any other investment company in which such person or his associate holds not less than 2% of the paid up capital of the latter company.

Note: For the purposes of this clause `associate' means:

(a) any relative of that person within the meaning of section 6 of theCompanies Act, 1956 (1 of 1956); and (b) family trusts and Hindu Undivided Families.

Acquisition of fifteen or more of the shares or voting rights of any company. 10. No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen percent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations.”

Consolidation of holdings 11. (1) No acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, 15 per cent or more but less than fifty five per cent.(55%) of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him to exercise more than 5% of the voting rights, in any financial year ending on 31st March, unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations. (2) No acquirer, who together with persons acting in concert with him holds, fifty five per cent (55%) or more but less than seventy five per cent. (75%) of the of the shares or voting rights in a target company, shall acquire either by himself or through persons acting in concert with him any additional shares or voting rights therein, unless he makes a public announcement to acquire shares in accordance with these Regulations: Provided that in a case where the target company had obtained listing of its shares by making an offer of at least ten per cent (10%) of issue size to the public in terms of clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, or in terms of any relaxation granted from strict enforcement of the said rule, this sub-regulation shall apply as if for the words and figures seventy five per cent (75%) the words and figures ninety per cent (90%) were substituted.”

Directions by the Board. 44. Without prejudice to its right to initiate action under Chapter VIA and section 24 of the Act, the Board may, in the interest of securities market or for protection of interest of investors, issue such directions as it deems fit including: - (a) directing appointment of a merchant banker for the purpose of causing disinvestment of shares acquired in breach of regulations 10, 11 or 12 either through public auction or market mechanism, in its entirety or in small lots or through offer for sale;

(b) directing transfer of any proceeds or securities to the investors protection Fund of a recognised stock exchange;

(c) directing the target company or depository to cancel the shares where an acquisition of shares pursuant to an allotment is in breach ofregulations10,11 or 12;

(d) directing the target company or the depository not to give effect to transfer or further freeze the transfer of any such shares and not to permit the acquirer or any nominee or any proxy of the acquirer to exercise any voting or other rights attached to such shares acquired in violation of regulations 10, 11or 12;

(e) debarring any person concerned from accessing the capital market or dealing in securities for such period as may be determined by the Board;

(f) directing the person concerned to make public offer to the shareholders of the target company to acquire such number of shares at such offer price as determined by the Board;

(g) directing disinvestment of such shares as are in excess of the percentage of the shareholding or voting rights specified for disclosure requirement under the regulations 6,7 or 8;

(h) directing the person concerned not to dispose of assets of the target company contrary to the undertaking given in the letter of offer;

(i) directing the person concerned, who has failed to make a public offer or delayed the making of a public offer in terms of these Regulations, to pay to the shareholders, whose shares have been accepted in the public offer made after the delay, the consideration amount along with interest at the rate not less than the applicable rate of interest payable by banks on fixed deposits.”

10. I note that the Takeover Regulations, 1997 have been repealed and replaced by SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as “Takeover Regulations, 2011”). Regulation 35 of Takeover Regulations, 2011, provides as under:

“Repeal and Savings 35 (1) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, stands repealed from the date on which these regulations come into force. (2) Notwithstanding such repeal, -(a) anything done or any action taken or purported to have been done or taken including comments on any letter of offer, exemption granted by the Board, fees collected, any adjudication, enquiry or investigation commenced or show-cause notice issued under the repealed regulations, prior to such repeal, shall be deemed to have been done or taken under the corresponding provisions of these regulations; …” Therefore, the present proceedings under the Takeover Regulations, 1997 are saved under Regulation 35 of Takeover Regulations, 2011.

11. The crux of the allegations levelled against the Noticees in the SCN is that, the Noticees, identified as Tutis Group in the SCN, while acting with a common objective, had acquired the shares of the target company beyond the limits prescribed under Regulations 10, 11(1) and 11(2) of the Takeover Regulations, 1997 on several occasions during the investigation period without making the public announcement for open offer, as required under these regulations. Details of these acquisitions along with my findings thereon are provided in the following paragraphs.

12. Violation of Regulation 10 of SEBI (SAST) Regulations, 1997 on November 19, 2008:

12.1. The SCN alleges that the consolidated shareholding of four Noticees i.e. Noticee no. 2, 3, 5 and 10, in the target company crossed the threshold limit of 15% when Noticee no. 2 acquired additional 3.17% share capital (i.e. 3,35,650 shares) of the target company on November 19, 2008. The SCN alleges that, for this acquisition of 3.17% of the share capital of the target company, Noticee no. 2 was the acquirer and Notice nos. 3, 5 ad 10 were PAC. As a result of the said acquisition by Noticee no. 2, their consolidated shareholding increased from 14.99% (i.e. 15,88,578 shares, as on November 11, 2008) to 18.15% (i.e. 19,24,228 shares) on November 19, 2008. A tabular representation of the same is as follows: Table I Pre acquisition Post-Acquisition Acquired on Change in holding holding (i.e. Acquire 19/11/08 holding Names of the entities (As on 11/11/08) 19/11/08) r/ PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Tutis Technologies PAC 945216 8.92 0 0.00 945216 8.92 0 0.00 Ltd. Dash Acquire Pharmaceuticals Pvt 500500 4.72 335650 3.17 836150 7.89 335650 3.17 r Ltd. Mandvi Dyes & Chemicals Co. Pvt. PAC 42862 0.40 0 0.00 42862 0.40 0 0.00 Ltd Parachit Sales & PAC 100000 0.94 0 0.00 100000 0.94 0 0.00 Marketing (I) Pvt. Ltd. Grand Total 1588578 14.99 335650 3.17 1924228 18.15 335650 3.17 Total no. of shares 1060000 1060000 1060000 100 10600000 100 100 100 (TNS) 0 0 0

12.2. The SCN alleges that as a result of the increase in their consolidated shareholding, the acquirer, Dash Pharmaceuticals Pvt. Ltd.( Noticee no. 2), along with PAC namely, Tutis Technologies Ltd. (Noticee no. 10), Mandvi Dyes & Chemicals Co. Pvt. Ltd. (Noticee no.3) and Parachit Sales & Marketing (I) Pvt. Ltd. ( Noticee no. 5), have violated Regulation 10 of Takeover Regulations, 1997 on November 19, 2008, by crossing the threshold limit of 15%, without making the mandatory public announcement for open offer.

12.3. I note that the SCN alleges that Noticee no. 2, 3 and 5 are companies under the same management. Consequently, Noticee no. 2, 3 and 5 are deemed PACs under Regulation 2(1)(e) (2) (i) of the Takeover Regulations, 1997. Regulation 2(1)(e)(2) enumerates certain categories of persons who are deemed to be acting in concert with each other unless the contrary is proved. I note that, Noticee no. 3 and 5 have the same directors while Noticee no. 2 also had a common director (out of a total of two directors) with Noticee nos. 3 and 5. As mentioned above, Noticee no. 2, 3 and 5 falls under Regulation 2(1)(e)(1)(i), being companies under the same management, and hence Noticee nos. 3 and 5 are deemed to be acting in concert with Noticee no. 2 for the acquisition of 3.17% shares of the target company made by Noticee no. 2. In the present case, I find that no reply has been filed on behalf of these Noticees including to rebut the presumption that they are deemed to be acting in concert. Further, SCN alleges that Shri Dilip Kherade (director of Noticee no. 2, 3 ad 5) and Shri Hemant Kurtukade (director of Noticee no. 3 and 5) were both employees of Tutis Technologies Ltd. (Noticee no. 10) and that all these four Noticees were placing their orders through the same sub broker Stock Planet Pvt. Ltd. Moreover, there were off-market transfers of shares amongst Noticee no. 3 and 10on March 12,2010 for 1,40,216 shares and on July 16, 2010 for 2,23,000 and 2,00,000 shares of MCL respectively, as detailed in para 4A of the SCN.

I also note that Vishal Information Technologies Ltd. (which was a subsidiary of Noticee no. 10) had transferred funds to Noticee nos. 2, 3 and 5, all of them had accounts in the The Saraswat Co-operative Bank Ltd., Sakinaka Branch, which they had utilized for the purpose of buying shares of the target company in the year 2010. Based on this connection and coupled with the fact that one of these four Noticees i.e. Noticee no. 2 was acquiring further shares amounting to 3.17% of the target company, I find that Noticee nos. 3, 5 and 10 were having a common objective and purpose of acquiring shares of the target company and thus acting in concert with Noticee no. 2 for acquisition of 3.17% shares of the target on November 19, 2008. On acquisition of said 3.17% shares, shareholding of Noticee no. 2 along with shareholding of Noticee no. 3, 5 and 10 i.e. persons acting in concert with him, in the target company, increased from 14.99% to 18.15% i.e. more than 15%, on November 19, 2008 triggering Regulation 10 of the Takeover Regulations. In this regard, Regulation 10 of the Takeover Regulations, 1997 provides that no acquirer shall acquire shares or voting rights which taken together with shares or voting rights, if any, held by him or by persons acting in concert with him, entitle such acquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations.

Thus, Noticee no. 2, 3, 5 and 10 were required to make a public announcement for open offer in terms of Regulation 10 of the Takeover Regulations, 1997 which they failed to make. Thus, I find that Noticee no. 2, 3, 5 and 10 have violated Regulation 10 of Takeover Regulations, 1997 by breaching 15% of the shareholding of the target company.

Violations of Regulation 11(1) of Takeover Regulations, 1997:

13. It is observed that the SCN also alleges violations of Regulation 11(1) of Takeover Regulations, 1997 by the Noticees, as detailed below. Each of such violation of Regulation 11(1) of Takeover Regulations is examined in the following paras.

14. First Trigger on November 27, 2008:

14.1. The SCN alleges that the consolidated shareholding of Noticee nos. 2, 3, 5 and 10 in the target company increased from 18.15% (i.e. 19,24,228 shares) as on November 19, 2008 to 25.54% (i.e. 27,07,428 shares) on November 27, 2008. The details of pre and post-acquisition shareholding of these Noticees in the target company along with change in shareholding of these Noticees in the target company, on November 27, 2008 is provided in a tabular form in the SCN which is reproduced below:

Table II Pre acquisition Post-Acquisition Acquired on Change in holding (As on holding (i.e. Names of the Acquirer/ 27/11/08 holding 26/11/08) 27/11/08) entities PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Tutis Technologies PAC 945216 8.92 0 0.00 945216 8.92 0 0.00 Ltd. Dash 121935 Pharmaceuticals PAC 11.50 0 0.00 1219350 11.50 0 0.00 0 Pvt Ltd. Mandvi Dyes & Chemicals Co. Pvt. Acquirer 42862 0.40 400000 3.77 442862 4.18 400000 3.77 Ltd Parachit Sales & Marketing (I) Pvt. PAC 100000 0.94 0 0.00 100000 0.94 0 0.00 Ltd. 230742 Grand Total 21.77 400000 3.77 2707428 25.54 400000 3.77 8 Total no. of shares 106000 106000 1060000 106000 100 100 100 100 (TNS) 00 00 0 00

14.2. The SCN has alleged that since these Noticees were together holding more tan 15 % of the share capital of the target company and further acquired more than 5% of the share capital of the target company during the financial year 2008-09 and failed to make a public announcement for open offer, they have violated regulation 11(1) of the Takeover Regulations.

14.3. From an analysis of the demat statements and trading details of these Noticees i.e. Noticee nos. 2,3,5, and 10, as annexed with SCN as Annexure 9, I note the following:

- Noticee no. 2, Dash Pharmaceuitcals Pvt. Ltd. acquired 0.70% share capital of the target company (i.e. 74,400 shares) on November 20, 2008. - Noticee no. 2 further acquired 2.91% (i.e. 3,08,800 shares) of the target company on November 21, 2008. - Noticee no.3, Mandvi Dyes and Chemicals Co. Pvt. Ltd. acquired 3.77% (i.e. 4,00,000 shares) of the target company on November 27, 2008.

Therefore, on November 27, 2008, the consolidated shareholding of Noticee nos. 2, 3, 5 and 10 in the target company reached 25.53% (i.e. 27,07,428 shares), i.e. an increase of 7.38% from 18.15% i.e. the pre-acquisition shareholding of these Noticees on November 19, 2008.

14.4. As discussed above, Noticee no. 2, 3, 5 and 10 while acting in concert acquired shares of the target company on November 19, 2008 in breach of Regulation 10 of the Takeover Regulations when their consolidated shareholding in the target company increased from 14.99% to 18.15%. Subsequently, Noticee no. 2 acquired 0.70% and 2.91% of the share capital target company on November 20, 2008 and November 21, 2008, respectively and Noticee no. 3 acquired 3.77% of the share capital of the target company on November 27, 2008. These acquisition of further shares of the target company on November 20, November 21 and November 27 which alleged triggered 11(1) of the Takeover Regulations, by Noticee no. 2 and 3 who previously acting in concert with Noticee 5 and 10 had acquired shares in breach of Regulation 10 of the Takeover Regulations, 1997 shows that these acquisitions were also made by the Noticee no. 2 and 3 while acting in concert, with each other and with Noticee no. 5 and 10, with a common objective/purpose of acquisition of shares of the target company. In this regard, I note that Regulation 11(1) of the Takeover Regulations provides that no acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, 15% or more but less than 55% of the shares or voting rights in a company, shall acquire, either by himself or through persons acting in concert with him, additional shares or voting rights entitling him to exercise more than 5% of the voting rights, in any financial year ending on 31st March, unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations. I also note that, on November 19, 2008 the consolidated shareholding of Noticee nos. 2, 3, 5 and 10 was 18.15% which increased to 25.53% on November 27, 2008 i.e. an increase of 7.38% in the financial year 2008-09. Thus, Noticee no. 2, 3, 5 and 10 were required to make a public announcement for open offer in terms of Regulation 11(1) of the Takeover Regulations, 1997 which they failed to make. Therefore, I find that they have violated Regulation 11(1) of Takeover Regulations, 1997 on November 27, 2008.

15. Second Trigger on December 11, 2008:

15.1. The SCN alleges that pursuant to further acquisitions by Noticee nos. 4 and 5, the consolidated shareholding of Noticee nos. 2, 3, 4, 5 and 10 in the target company has increased to 33.21% (35,20,738 shares) on December 11, 2008 which is an increase by 7.67% (8,13,310 shares) from their previous holding of 25.54% (27,07,428 shares) on November 27, 2008. The details of pre and post-acquisition shareholdings of these Noticee in the target company and change in holding of these Noticees as on December 11, 2008 is provided in a tabular form in the SCN is reproduced under: Table III Pre acquisition Post-Acquisition Names of the Acquirer/ Acquired on Change in holding (As on holding (i.e. entities PAC 11/12/08 holding 10/12/08) 11/12/08)

No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Tutis Technologies 94521 PAC 945216 8.92 0 0.00 8.92 0 0.00 Ltd. 6 Dash 121935 12193 Pharmaceuticals PAC 11.50 0 0.00 11.50 0 0.00 0 50 Pvt Ltd. Mandvi Dyes & Chemicals Co. Pvt. PAC 71172 0.67 0 0.00 71172 0.67 0 0.00 Ltd Maxilla Financial 19900 Acquirer 0 0.00 199000 1.88 1.88 199000 1.88 Services Pvt. Ltd. 0 Parachit Sales & 44600 Marketing (I) Pvt. Acquirer 200000 1.89 246000 2.32 4.21 246000 2.32 0 Ltd. 243573 28807 Grand Total 22.98 445000 4.20 27.18 445000 4.20 8 38 Total no. of shares 106000 106000 10600 106000 100 100 100 100 (TNS) 00 00 000 00

15.2. The SCN alleges that Noticee nos. 2, 3, 4, 5 and 10 have violated Regulation 11(1) of Takeover Regulations, 1997 on December 11, 2008, by acquiring shares in excess of the permissible creeping limit of 5% during the financial year, without making the mandatory public announcement for open offer.

15.3. From an analysis of the acquisitions by these Noticees during this period I note the following:

- Noticee no. 3, Mandvi Dyes and Chemicals Co. Pvt. Ltd. acquired 2.53% (2,68,310 shares) of the target company on December 02, 2008 - Noticee no. 5, Parachit Sales and Marketing (I) Pvt. Ltd. acquired 0.94% (1,00,000 shares) on December 10, 2008 - Noticee no. 4, Maxilla Financial Services Pvt. Ltd. and Noticee no. 5, Parachit Sales and Marketing (I) Pvt. Ltd. acquired 1,99,000 shares and 2,46,000 shares respectively totaling 4.20% (4,45,000 shares) on December 11, 2008

Therefore, the consolidated acquisition by these Noticees crossed 5% amounting to 7.67% on December 11, 2008.

15.4. As discussed above, Noticee nos. 2, 3, 5 and 10 are connected and it has been established that they were acquiring shares of the target company in concert with each other on November 27, 2008 in violation of Regulation 1191) of the Takeover Regulations, and their common objective of acquiring shares of the target company is further established by the fact that Noticee no. 3 and 5 continued to acquire shares of the target company on December 02, 10 and 11. With regard to Noticee no. 4, Maxilla Financial Services Pvt. Ltd., I note that SCN alleges that it is a company with common management with Noticee nos. 2, 3 and 5 (since one out of its two directors were common with these Noticees) and therefore, deemed to be PAC. Noticee no.4 has not filed any reply to rebut the presumption of it acting in concert with Noticee nos.2,3,5 and 10. Noticee no.4 has off market transactions with Noticee no. 2 on August 17, 2010 for 80,000 shares of MCL and received Rs. 10,60,000/- from Tutis Technologies Ltd. (Noticee no. 10) on March 11, 2010 in its account with the Sakinaka branch of the Saraswat Co-operative Bank and Noticee no. 4 also acquired shares of the target company around the same time, which establishes that Noticee no. 4 also acquired the shares of the target company with a common objective/purpose with Noticee nos. 2, 3, 5 and 10, for acquiring shares in the target company.

Therefore, I find that Noticee Nos. 2, 3, 4, 5 and 10 were acting with a common objective/purpose of acquiring shares of the target company. In this regard, I note that Regulation 11(1) of the Takeover Regulations provides that no acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, 15% or more but less than 55% of the shares or voting rights in a company, shall acquire, either by himself or through persons acting in concert with him, additional shares or voting rights entitling him to exercise more than 5% of the voting rights, in any financial year ending on 31st March, unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations. I note that, the consolidated holding of these Noticees in the target company was more than 15% and less than 55% and the consolidated acquisition by these Noticees in the target company again crossed the permissible creeping limit of 5% during the financial year because of which their shareholding increased by 7.67.% in the target company in the financial year 2008-09.

Thus, Noticee no. 2, 3, 4, 5 and 10 were required to make a public announcement for open offer in terms of Regulation 11(1) of the Takeover Regulations, 1997 which they failed to make. Therefore, I find that these Noticees have violated Regulation 11(1) of Takeover Regulations, 1997 on December 11, 2008.

16. Third Trigger on March 12, 2010: 16.1. The SCN states that Noticee nos. 1,2,3,4,5,6,7 and 10 held 36,47,856 shares (34.41% of share capital) of the target company as on April 1, 2009. The SCN alleges that the consolidated shareholding of Noticee nos. 1,2,3,4,5,6,7 and 10 in the target company went up from 29.51% (i.e. 31,27,856 shares) as on February 25, 2010 to 37.20% (i.e. 39,42,856 shares) on March 12, 2010, i.e. an increase of 7.79%. The details of pre and post-acquisition shareholdings of these Noticee in the target company and change in holding of these Noticees as on March 12, 2010 is provided in a tabular form in the SCN is reproduced under: Table IV

Pre acquisition Post-Acquisition Acquired on holding (As on holding (i.e. Change in holding Acquirer/ 12/03/10 Names of the entities 11/03/10) 12/03/10) PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS (240216 Tutis Technologies Ltd. PAC 240216 2.27 -2.27 0 0.00 -240216 -2.27 ) Basiz Fund Service Pvt PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Ltd. Dash Pharmaceuticals PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Pvt Ltd. Mandvi Dyes & Acquirer 671172 6.33 240216 2.27 911388 8.60 240216 2.27 Chemicals Co. Pvt. Ltd

Maxilla Financial Acquirer 302500 2.85 110000 1.04 412500 3.89 110000 1.04 Services Pvt. Ltd. Parachit Sales & Acquirer 475000 4.48 50000 0.47 525000 4.95 50000 0.47 Marketing (I) Pvt. Ltd. Prime Dyes & Acquirer 222500 2.10 150000 1.42 372500 3.51 150000 1.42 Chemicals Co Pvt Ltd. Rajratan Trading Pvt Acquirer 221900 2.09 110000 1.04 331900 3.13 110000 1.04 Ltd Grand Total 3522856 33.23 420000 3.96 3942856 37.20 420000 3.96 Total no. of shares 1060000 106000 1060000 106000 100 100 100 100 (TNS) 0 00 0 00

16.2. The SCN alleges that the acquirers, (Noticee nos.3,4,5,6 and 7) along with PACs (Noticee nos.1,2 and 10) have violated Regulation 11(1) of Takeover Regulations, 1997 on March 12, 2010, since they failed to make the mandatory public announcement for open offer after acquiring more than 5% of the share capital of the target company in the financial year.

16.3. On analyzing the acquisitions by these Noticees during this period I note the following:

- Noticee no. 10 acquired 1.70% share capital (i.e. 1,80,000 shares) of the target company on March 9, 2010. - Noticee nos. 4,6 and 7 acquired 82,500, 1,07,500 and 25,000 shares totalling 215,000 share (2.02%) on March 11, 2010. - Noticee nos 3,4,5,6, and 7 acquired 2,40,216, 1,10,000, 50,000, 1,50,000 an 1,10,000 shares respectively totaling 4,20,000 on March 12, 2010.

Therefore, the consolidated acquisitions of these Noticees amounted to 7.79% of the share capital of target company on March 12, 2010.

16.4. As discussed above, Noticee no. 2, 3,4,5 and 10 had acquired shares of the target company on December 11, 2008, wherein Noticee no. 3,4 and 5 were the acquirers and Noticee nos. 2 and 10 were PAC, in violation of Regulation 11(1) of the Takeover Regulations. Thereafter, Noticee no.10 acquired further 1.70% on March 09, 2010 and Noticee no. 4 acquired further shares of the target company on March 11, 2010 and there were further acquisitions of shares of the target company by Noticee nos.3,4 and 5 on March 12,2010. The act of these Noticee nos. 3, 4, 5 and 10 of further acquiring shares of the target company at around the same time establishes that these acquisitions by Noticee nos. 3, 4, 5 and 10 were also with a common objective and Noticee no. 2 was acting as their PAC. I also note that Noticee no. 2 and 7 had the same two directors which neither of them have denied and therefore they will be deemed to be PAC. Moreover, I note that Noticee no. 6 acquired shares of the target company on the same date as Noticee nos. 4 and 7. Noticee no.6 also had fund transfers with the other Noticees: it acquired 15,000 shares for Rs. 11,88,750/- on January 08, 2010 and it received funds of Rs. 11,95,100/- from Vishal Information Technologies Ltd. (Noticee no. 11) around the same time.

Rajratan Trading Pvt Ltd. (Noticee no. 7) acquired 50,000 shares on January 25, 2010 and the total cost of 50,000 shares was Rs. 39,87,500/- and it received Rs. 40,15,000/- from Vishal Information Technologies Ltd.(Noticee no. 11) around the same time. Maxilla Financial Services Pvt Ltd. (Noticee no. 4) acquired 1,10,000 shares for Rs. 30,41,500/- on March 08, 2010 and received funds of Rs. 15,00,000 from Vishal Information Technologies Ltd.( Noticee no. 11) and Rs. 5,00,000 from Dash Pharmaceuticals Pvt Ltd.( Noticee no. 2) and Rs. 10,60,000/-from Tutis Technologies Ltd. (Noticee no. 10) around the same time. Thus it altogether received Rs. 30,60,000/- from these three entities. All these fund transfers took place from and were received in the bank accounts of these Noticees held in the Sakinaka Branch of the Saraswat Co-operative Bank. I note that Vishal Information Technologies Ltd. (Noticee no. 11) is a subsidiary of Noticee no. 10. These facts demonstrate that Noticee nos. 2, 3,4,5,6,7 and 10 were all connected to each other and this, coupled with the act of Noticee nos. 3,4,5,6 7 and 10 of acquiring shares of the target company around the same time points to the conclusion that Noticee nos. 2 to7 and 10 were acting with a common objective of acquiring the shares of MCL.

16.5. In reply to the allegations in the SCN Noticee no.1, Basiz has denied that it is a PAC with the remaining Noticees and has submitted that from June 16, 2008, Basiz had already ceased to be a subsidiary of Noticee no. 11 and thus, was not a step-down • subsidiary of Tutis Technologies (Noticee no. 10) either. Basiz has submitted a copy of the share subscription agreement inter alia between Vishal Information Technologies Ltd. (Noticee no. 11), Basiz (Noticee no.1) and NEA Indo US Venture Capital LLC to show that NEA Indo US Venture Capital LLC invested funds in Noticee no. 1 and was thus allotted certain shares of Noticee no. 1 and that as on July 01, 2008 it held the majority of shares in Noticee no. 1 and therefore Vishal Information Technologies Ltd. (Noticee no. 11) was not the holding company of Basiz. Moreover, Noticee no. 1 has also stated that it did not have any fund flow with any of the other Noticees, nor did it have any off market transactions with any of them. It has also stated that as per its amended Articles of Association, the nominee director appointed by NEA was also given an affirmative vote in certain important decisions in Basiz, such as, entering into related party transactions with the founders of Basiz or its directors and that powers to make investments from the profits earned by Basiz would be decided upon by the Board, on an affirmative vote of NEA through its nominee. Therefore, Basiz has submitted that although Shri G.S Chadrashekar was a director of Noticee no.1, as also the authorized person to place orders with its stock broker, along with being a director of Noticee nos. 10, 11, however he did not have control over the operations of the board of Noticee no. 1 (Basiz).

16.6. I have perused the reply of Noticee no. 1 (Basiz) and the share subscription agreement and amended Articles of Association. From these records, it appears that from July 01, 2008 onwards Basiz (Noticee no. 1) ceased to be a subsidiary of Vishal

Information Technologies Ltd. (Noticee no. 11) which is previous to the date of the first alleged trigger i.e. November 19, 2008. Moreover, it also appears that apart from Shri G.S Chandrashekar, Basiz did not have any director common with the other Noticees. I also note that the amended Articles of Association of Basiz has made the presence of the nominee director of NEA mandatory for board meetings and it also states that the affirmative vote of the investor (NEA) will be required for entering into any related party transactions between Basiz and its founders as well as acquisition of other businesses including by way of share purchase. Therefore, I am unable to conclude that Basiz (Noticee no.1) was under the same management as Noticee nos. 10 and 11 and I note that it has ceased to be a subsidiary of Noticee no. 11 and had become a subsidiary of NEA and was under the management of NEA. Moreover, I also note that there was no flow of funds from the Noticee no.1 to or from any of the other Noticees nor did it have off market transaction of shares with the other Noticees. In view of the same along with the fact the Noticee No. 1 did not acquire any shares in the FY2009-10, I find that the Noticee no. 1 cannot be considered a PAC with Noticee no. 2, 3,4,5, 6, 7 and 10 for this particular transaction.

16.7. I note that even without considering the Noticee no. 1 as PAC, the pre-acquisition holding of the remaining Noticee nos. 2 to 7 and 10 was well beyond 15 % (27.94%) as stipulated under Regulation 11 (1) of the Takeover Regulations and since Noticee nos. 3 to 7 and 10 acquired a further 7.79% of the issued share capital of MCL on March 12, 2010, which is beyond the creeping acquisition limit of 5%, they, along with their PAC Noticee no. 2, were liable to make a public announcement for open offer under Regulation 11(1) of the Takeover Regulations, 1997 which they failed to do. In view of the above, I find that these Noticees have violated Regulation 11(1) of Takeover Regulations, 1997.

17. Fourth Trigger on March 23, 2010:

17.1. The SCN alleges that pursuant to further acquisitions, the consolidated shareholding of Noticee nos.1, 2, 3,4,5, 6, 7 and 11 in the target company increased by 5.28% (5,60,100 shares) on March 26, 2010 going up to 42.96% (45,53,856 shares) from their previous holding of 37.20% (39,42,756 shares) as on March 12, 2010. The details of pre and post-acquisition shareholdings of these Noticees in the target company and change in holding of these Noticees as on March 23, 2010 is provided in a tabular form in the SCN is reproduced under:

Table V Pre acquisition Post-Acquisition Acquired on Change in holding (As on holding (i.e. Acquire 26/03/10 holding Names of the entities 25/03/10) 26/03/10) r/ PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service Pvt PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Ltd. Dash Pharmaceuticals Pvt 122335 PAC 11.54 0 0.00 1223350 11.54 0 0.00 Ltd. 0 Mandvi Dyes & Chemicals PAC 782388 7.38 0 0.00 782388 7.38 0 0.00 Co. Pvt. Ltd Maxilla Financial Services PAC 412500 3.89 0 0.00 412500 3.89 0 0.00 Pvt. Ltd. Parachit Sales & PAC 525000 4.95 0 0.00 525000 4.95 0 0.00 Marketing (I) Pvt. Ltd. Prime Dyes & Chemicals PAC 372500 3.51 0 0.00 372500 3.51 0 0.00 Co Pvt Ltd. Rajratan Trading Pvt Ltd PAC 331900 3.13 0 0.00 331900 3.13 0 0.00 Vishal Information Acquire 640000 6.04 100000 0.94 740000 6.98 100000 0.94 Technologies Ltd. r 445385 Grand Total 42.02 100000 0.94 4553856 42.96 100000 0.94 6 106000 106000 1060000 106000 Total no. of shares (TNS) 100 100 100 100 00 00 0 00

17.2. The SCN alleges that the acquirer, Noticee no. 11 along with PACs Noticee no. 1 to 7 have violated Regulation 11(1) of Takeover Regulations, 1997 on March 26, 2010, by acquiring shares in excess of the permissible creeping limit of 5% during the financial year, without making the mandatory public announcement for open offer.

17.3. From an analysis of the acquisitions by these Noticees I find as follows:

- Noticee no. 11, Vishal Information Technologies Ltd. acquired 1.32% (1,40,100 shares) of the target company on March 15, 2010. - The same Noticee acquired 1.60% (1,70,100 shares) on March 19, 2010. - The same Noticee acquired 3.11% (3,30,000 shares) on March 23, 2010. - The same Noticee acquired 0.94% (1,00,000 shares) on March 26, 2010.

17.4. Based on the reasons discussed in para 16.5 and 16.6 above, I find that Noticee no. 1 is not a PAC with Noticee nos. 2,3,4,5,6,7 and 10. It has been recorded above that Noticee nos. 2 to 7 and 10 had, while acting in concert, acquired shares of the target company with a common objective, in violation of 11(1) on March 12, 2010. I also note that Noticee no. 10 is a subsidiary of Noticee no. 11 and Noticee no. 11 had transferred funds to Noticee nos.3,4,5,6 and 7 through their bank accounts all held in the Sakinaka Branch of The Saraswat Co-operative Bank. It is also noted that the common directors of Noticee nos.3,4,5 and 7 were employees of Noticee no. 10 which was the holding company of Noticee no. 11. Therefore, I find that Noticee no. 11 is also connected to Noticee nos. 2,3,4,5 and 7 through common management and the conduct of Noticee no.11 to acquire shares of MCL around the same period as that of Noticee no. 2 to 7 leads me to the conclusion that Noticee no. 11 also acquired shares of MCL with a common objective as demonstrated by Noticee nos. 2,3,4,5,6 and 7 in their previous acquisition of shares of MCL. In view of the same, I hold that Noticee nos. 2,3,4,5,6,7 acted PAC of Noticee no. 11 (Acquirer) for the acquisition of shares of the target company on March 15, 19, 23 and 26, 2010.

17.5. In this background, I note that the consolidated acquisition by these Noticees crossed the creeping acquisition limit of 5% on March 23, 2010 (totalling 6.03%) and not on March 26,2010 as alleged in the SCN. In this regard, I note that certain

Noticees had sold their shares during this period which the SCN may have taken into account while calculating the increase in shareholding of these Noticees. However, such sale cannot be considered while analyzing the trigger for Regulation 11 (1) of the Takeover Regulations in accordance with the settled principle of law laid down by the Hon’ble Supreme Court of India in Kosha Investments Ltd. vs SEBI [(2016) 1 SCC 542 ]. The relevant portion of the decision in Kosha Investments Ltd. (supra) is as follows:

“The concept of permitting creeping acquisitions by permitting not more than 5% of the shares or voting rights in a company limits the period for such acquisition to a financial year ending by 31st March. But such concept does not dilute the requirement of making a public announcement within the time mentioned in Regulation 14(1) if the acquisition even if only once made and divested, is of more than 5% of shares or voting rights in the target company. In other words, even if such acquisition is followed by sale in the same financial year, the liability of making the public announcement would remain unaffected and shall attract action, as in this case.”

17.6. In view of the discussions above, I find that by acquiring a consolidated percentage of 6.03% of the target company on March 23, 2010, which is in excess of the permissible creeping limit of 5% during the financial year, theacquirer, Noticee no.s 11 along with PAC Noticee nos 2 t 7 were liable to make a mandatory public announcement for open offer which they failed to do and therefore have violated Regulation 11(1) of Takeover Regulations, 1997.

18. Fifth Trigger Date on March 29, 2010:

18.1. The SCN alleges that the consolidated shareholding of the Noticees (Noticee nos.1, 2,3,4,5,6,7 and 11) in the target company further increased by 5.07% of share capital (5,37,300 shares) going up to 48.03% (50,91,256 shares) on March 30, 2010 from their previous holding of 42.96% (45,53,856 shares) of share capital as on March 26, 2010. The details of pre and post-acquisition shareholdings of these Noticee in the target company and change in holding of these Noticees as on March 29, 2010 is provided in a tabular form in the SCN is reproduced under:

Table VI

Pre acquisition Post-Acquisition Acquired on holding (As on holding (i.e. Change in holding Acquire 30/03/10 Names of the entities 29/03/10) 30/03/10) r/ PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service Pvt PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Ltd. Dash Pharmaceuticals PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Pvt Ltd. Mandvi Dyes & PAC 782388 7.38 0 0.00 782388 7.38 0 0.00 Chemicals Co. Pvt. Ltd Maxilla Financial Services PAC 412500 3.89 0 0.00 412500 3.89 0 0.00 Pvt. Ltd. Parachit Sales & PAC 525000 4.95 0 0.00 525000 4.95 0 0.00 Marketing (I) Pvt. Ltd. Prime Dyes & Chemicals Acquire 372500 3.51 53000 0.50 425500 4.01 53000 0.50 Co Pvt Ltd. r Acquire Rajratan Trading Pvt Ltd 331900 3.13 40000 0.38 371900 3.51 40000 0.38 r Vishal Information PAC 1184400 11.17 0 0.00 1184400 11.17 0 0.00 Technologies Ltd. Grand Total 4998256 47.15 93000 0.88 5091256 48.03 93000 0.88 1060000 1060000 1060000 1060000 Total no. of shares (TNS) 100 100 100 100 0 0 0 0

18.2. The SCN alleges that the acquirers, Noticee nos. 6,7 and 11along with PACs ( Noticee nos 1 to 5), have violated Regulation 11(1) of Takeover Regulations, 1997 on March 30, 2010, by acquiring shares in excess of the permissible creeping limit of 5% during the financial year, without making the mandatory public announcement for open offer.

18.3. From an analysis of the acquisitions these Noticees I find the following:

- Noticee no. 11, Vishal Information Technologies Ltd. acquired 0.94% (1,00,000 shares) of the target company on March 26,2010. - The same Noticees acquired 2.87% (3,04,400 shares) on March 27, 2010. - The same Noticee acquired 1.32% (1,40,000 shares) on March 29, 2010. - Noticee nos. 6, Prime Dyes and Chemicals Pvt. Ltd. and 7, Rajratan Tarding Pvt. Ltd. acquired 53,000 and 40,000 respectively totaling 0.88% (93,000 shares) on March 30, 2010.

Therefore, the consolidated acquisition of these Noticees crossed the threshold of 5% on March 29, 2010 ( amounting to 5.13%).

18.4. Based on the reasons discussed in para 16.5 and 16.6 above, I find that Noticee no. 1 is not a PAC with Noticee nos. 2,3,4,5,6,7 and 11. It has also been established in the previous paras that on March 12, 2010, Noticee nos. 3 to 7 along with PAC Noticee no.2 acquired shares of the target company in violation of Regulation 11(1) of the Takeover Regulations and that on March 23, 2010, Noticee no. 11 acquired shares of the target company along with PAC Noticee nos. 2 to 7 in violation of Regulation 11(1) of the Takeover Regulations. The common objective of acquiring shares of the target company of Noticee nos. 2,3,4,5,6,7 and 11 have been established with respect to their previous acquisition of the shares of the target company on March 12, 2010 and March 23,2010 and therefore, the further acquisition of shares of the target company by Noticee no.11 from March 26, 2010 to March 29, 2010 reflected the same common objective. Therefore, in view of the fact that the acquirers ( Notice nos. 6,7 and 11) acquired further 5.13% in the target company, which is in excess of 5%, they, along with their PAC (Noticee nos. 2,3,4 and 5) were liable to make a public announcement of open offer which they failed to do. Therefore, I find that Noticee nos. 2,3,4,5,6,7 and 11 have violated Regulation 11(1) of Takeover Regulations, 1997.

19. Sixth Trigger on April 22, 2010:

19.1. The SCN alleges that the consolidated shareholding of Noticee nos. 1,2,3,4,5,6,7 and 11 in the target company was 51,31,156 shares (48.41% of share capital) as on April 01, 2010. These Noticee nos. 4 and 7 acquired additional 5.23% on April 22, 2010 which took the consolidated shareholding of Noticee nos. 1,2,3,4,5,6,7 and 11 to 53.64% (i.e. 56,85,527 shares) on April 22, 2010. The details of pre and post-acquisition shareholdings of these Noticee in the target company and change in holding of these Noticees as on April 22, 2010 is provided in a tabular form in the SCN is reproduced under: Table VII Pre acquisition Post-Acquisition Acquired on holding (As on holding (i.e. Change in holding Acquire 22/04/10 Names of the entities 21/04/10) 22/04/10) r/ PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service Pvt PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Ltd. Dash Pharmaceuticals PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Pvt Ltd. Mandvi Dyes & PAC 997179 9.41 0 0.00 997179 9.41 0 0.00 Chemicals Co. Pvt. Ltd Maxilla Financial Acquire 452500 4.27 114480 1.08 566980 5.35 114480 1.08 Services Pvt. Ltd. r Parachit Sales & PAC 525000 4.95 0 0.00 525000 4.95 0 0.00 Marketing (I) Pvt. Ltd. Prime Dyes & Chemicals PAC 525500 4.96 0 0.00 525500 4.96 0 0.00 Co Pvt Ltd. Acquire Rajratan Trading Pvt Ltd 371900 3.51 25000 0.24 396900 3.74 25000 0.24 r Vishal Information PAC 1284400 12.12 0 0.00 1284400 12.12 0 0.00 Technologies Ltd. Grand Total 5546047 52.32 139480 1.32 5685527 53.64 139480 1.32 Total no. of shares 1060000 1060000 1060000 10600000 100 100 100 100 (TNS) 0 0 0

19.2. The SCN alleges that since the consolidated acquisition by Noticee nos. 4 and 7 amounted to 5.23% of the share capital of the target company on April 22, 2010, the acquirers along with PAC ( Noticee nos. 2,3,5,6 and 11) had breached the creeping acquisition limit of 5% during the financial year and that they had violated regulation 11(1) of Takeover Regulations, having failed to make a public announcement for open offer.

19.3. From an analysis of the acquisitions by these Noticees during this period I note the following:

- Noticee no. 11, Vishal Information technologies Ltd. acquired 0.94% of share capital of the target company (i.e. 1,00,000 shares) on April 7, 2010. - Noticee no. 6, Prime Dyes and Chemical Company Ltd. acquired 0.94% of share capital of the target company (i.e. 1,00,000 shares) on April 09, 2010. - Noticee no. 3, Mandvi Dyes and Chemicals Co, Ltd. acquired 1.26% (i.e. 1,34,000 shares) on April 13, 2010. - Noticee no.3 further acquired 0.76% (i.e. 80,791 shares) on April 20, 2010. - Noticee no. 4, Maxilla Financial Services Pvt. Ltd. and Noticee no. 7, Rajratan Trading Pvt. Ltd. acquired 114480 and 25000 shares respectively totalling 1.32% (i.e. 1,39,480 shares) on April 22, 2010.

Therefore, the consolidated acquisitions of these Noticees totaled 5.22% of the share capital of the target company on April 22, 2010.

19.4. As discussed above, it has been established that Noticee nos. 3,4,5,6,7 acquired shares of the target company with a common objective along with their PAC, Noticee no. 2 on March 12, 2010, and thereafter, on two separate occasions on March 23, 2010 and March 29, 2010, Noticee no. 11 acquired shares of the target company with a common objective with its PAC, Noticee nos. 2 to 7. Therefore, the act of further acquisition of shares of the target company by Noticee nos. 3,4,6,7 and 11 from April 07, 2010 to April 22, 2010 was also in continuation of the same common objective. In view of the same I hold that, the acquirers ( Noticee nos. 3,4,6,7 and 11) along with PAC ( Noticee nos. 2 and 5) have violated Regulation 11(1) of Takeover Regulations on April 22, 2010, by acquiring 5.22% of the share capital of the target company, which is in excess of the permissible creeping limit of 5% during the financial year, without making the mandatory public announcement for open offer.

Violations of Regulation 11(2) of the Takeover Regulations

20. First trigger of Regulation 11(2) on May 18, 2010: 20.1. The SCN alleges that the Noticee nos. 4,7,8 and 11 have further acquired additional 1.51% (1,60,120 shares) of the share capital of the target company on May 18, 2010 as a result of which the consolidated shareholding of these acquirers with their PAC (Noticee nos1,2,3,5 and 6) increased from 54.51% (57,77,801 shares) as on May 11, 2010 to 56.02% (i.e. 59,37,821 shares) as on May 18, 2010. The details of pre and post-acquisition shareholdings of these Noticee in the target company and change in holding of these Noticees as on May 18, 2010 is provided in a tabular form in the SCN is reproduced under:

Table VIII Pre acquisition Acquired Post-Acquisition holding (As on (disposed) on holding (i.e. Change in holding Names of the Acquire 17/05/10) 18/05/10 18/05/10) entities r/ PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Pvt Ltd. Dash Pharmaceuticals PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Pvt Ltd.

Mandvi Dyes & Chemicals Co. Pvt. PAC 1024261 9.66 0 0.00 1024261 9.66 0 0.00 Ltd Maxilla Financial Acquire 511172 4.82 20 0.00 511192 4.82 20 0.00 Services Pvt. Ltd. r Parachit Sales & Marketing (I) Pvt. PAC 525000 4.95 0 0.00 525000 4.95 0 0.00 Ltd. Prime Dyes & Chemicals Co Pvt PAC 525500 4.96 0 0.00 525500 4.96 0 0.00 Ltd. Rajratan Trading Acquire 396900 3.74 50000 0.47 446900 4.22 50000 0.47 Pvt Ltd r Shingar Dyes and Acquire 121000 1.14 110000 1.04 231000 2.18 110000 1.04 Chemicals Ltd. r Vishal Information Acquire 1284400 12.12 100 0.00 1284500 12.12 100 0.00 Technologies Ltd. r Grand Total 5777801 54.51 160120 1.51 5937921 56.02 160120 1.51 Total no. of shares 1060000 1060000 1060000 1060000 100 100 100 100 (TNS) 0 0 0 0

20.2. The SCN has alleged that the acquirers 4,7,8 and 11 along with PACs Noticee nos1,2,3,5 and 6, have violated Regulation 11(1) of Takeover Regulations, 1997 on May 18, 2010 since these Noticees failed to make a public announcement for open offer.

20.3. As noted in previous paras, Noticee no, 1 has not been found to be a PAC with the other Noticees. Moreover, it has been established that Noticee nos. 3,4,5,6,7 acquired shares of the target company with a common objective along with their PAC, Noticee no. 2 on March 12, 2010 in violation of Regulation 11 (1) of the Takeover Regulations. Thereafter, on two separate occasions on March 23, 2010, March 29, 2010 Noticee no. 11 acquired shares of the target company with a common objective with its PAC, Noticee nos. 2 to 7 and on April 22, 2010 Noticee nos. 3,4,6,7 and 11 acquired shares of the target company with a common objective with PAC, Noticee nos. 2 and 5 in contravention of Regulation 11(1) of the Takeover Regulations. In this background, it can be concluded that Noticee nos. 4, 7 and 11, having continued to acquire further shares of the target company on May 18, 2010, would have done so with a common objective with their PAC Noticee nos.2,3,5 and 6. Further, I note that Noticee no. 8 has a common director (out of two directors) with Noticee nos. 2,3,5 and 7 and therefore is also a company having a common management with Noticee nos. 2,3,5 and 7, and therefore deemed to be a PAC with them unless denied. I note that Noticee no. 8 has not denied the same. Moreover, Noticee no. 8 has off market transactions with Noticee no. 10 which is the holding company of Noticee no.11. I also note that Noticee no. 8 received funds of Rs. 24,91,000/- (through two transfers of Rs. 8,00,000 and Rs. 16,91,000) from Vishal Information Technologies Ltd. (Noticee no. 11). Therefore, the connection of Noticee No. 8 with the rest of the Noticees coupled with the fact that Noticee no. 8 has also acquires shares of the target company simultaneously with Noticee nos.4,7 and 11, leads to the conclusion that Noticee no. 8 was sharing the common objective of acquisition of shares of the target company with the other Noticees.

20.4. Be that as it may, I find that the allegation against these Noticees is that they have violated Regulation 11 (1) of the Takeover Regulations by acquiring 1.51% of the total issued share capital of MCL on May 18, 2010 without making the mandatory public announcement for open offer. I note that Regulation 11(1) deals with the creeping acquisition of 5% or more shares of the target company by acquirers and PAC who together hold more than 15 % but less than 55% of the shareholding of the target company. In this instance, I note that the SCN alleges that the pre-acquisition holding of Noticees 2 to 8 and 11 was 54.51% and increased to 56.02%. Therefore, I note that the allegation made out in the SCN does not substantively amount to a violation of Regulation 11 (1) of the Takeover Regulations since their acquisition did not amount to 5% of the of the shares or voting rights in the target company.

21. Second trigger of Regulation 11(2) on May 25, 2010:

21.1. The SCN has alleged that the Noticee no. 8 acquired additional 0.71% share capital of MCL (74,850 shares) on May 25,2010 and as a result the consolidated shareholding of this acquirer along with PAC ,i.e. Noticee nos.2 to 7 and 11, in the target company increased from 56.02% (i.e. 59,37,921 shares) as on May 18, 2010 to 56.72% (60,12,771 shares) on May 25, 2010. The details of pre and post-acquisition shareholdings of these Noticee in the target company and change in holding of these Noticees as on May 25, 2010 is provided in a tabular form in the SCN is reproduced under:

Table IX Pre acquisition Acquired Post-Acquisition holding (As on (disposed) on holding (i.e. Change in holding Acquire Names of the entities 24/05/10) 25/05/10 25/05/10) r/ PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service Pvt PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Ltd. Dash Pharmaceuticals PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Pvt Ltd. Mandvi Dyes & PAC 1024261 9.66 0 0.00 1024261 9.66 0 0.00 Chemicals Co. Pvt. Ltd Maxilla Financial PAC 511192 4.82 0 0.00 511192 4.82 0 0.00 Services Pvt. Ltd. Parachit Sales & PAC 525000 4.95 0 0.00 525000 4.95 0 0.00 Marketing (I) Pvt. Ltd. Prime Dyes & Chemicals PAC 525500 4.96 0 0.00 525500 4.96 0 0.00 Co Pvt Ltd. Rajratan Trading Pvt Ltd PAC 446900 4.22 0 0.00 446900 4.22 0 0.00 Shingar Dyes and Acquire 231000 2.18 74850 0.71 305850 2.89 74850 0.71 Chemicals Ltd. r Vishal Information PAC 1284500 12.12 0 0.00 1284500 12.12 0 0.00 Technologies Ltd. Grand Total 5937921 56.02 74850 0.71 6012771 56.72 74850 0.71 Total no. of shares 1060000 1060000 1060000 10600000 100 100 100 100 (TNS) 0 0 0

21.2. The SCN alleges that the acquirer, Noticee no. 8, along with PAC, Noticee nos. 2 to 7 and 11 have violated Regulation 11(2) of Takeover Regulations, 1997 on May 25, 2010, by acquiring shares during the financial year beyond the threshold limit of 55%, without making the mandatory public announcement for open offer.

21.3. As discussed above, Noticee no. 1 is not a PAC will the remaining Noticees. Moreover, it has been established that Noticee nos. 3,4,5,6,7 acquired shares of the target company with a common objective along with their PAC, Noticee no. 2 on March 12, 2010 in violation of Regulation 11 (1) of the Takeover Regulations. Thereafter, on two separate occasions on March 23, 2010, March 29, 2010 Noticee no. 11 acquired shares of the target company with a common objective with its PAC, Noticee nos. 2 to 7 and on April 22, 2010 Noticee nos. 3,4,6,7 and 11 acquired shares of the target company with a common objective with PAC, Noticee nos. 2 and 5 in contravention of Regulation 11(1) of the Takeover Regulations. Moreover, in pre para 20.3 it has also been established that Noticee no. 8 is also connected to the other Noticees and acquiring shares of the target company with a common objective. I find that the same group of entities have continued to acquire shares on May 25, 2010 and therefore, for the transaction on May 25, 2010 they have continued to act with the same common objective. Since the Acquirer ( Noticee no. 8) and PAC, i.e. Noticee nos 2 to 7 and 11 were holding 56.02% of the issued share capital of MCL and acquired a further 74,850 shares i.e. 0.71 % of the share capital of MCL on May 25,2010 they were liable to make a public announcement for open offer. Since they failed to make such a public announcement, I hold that Noticee nos. 2 to 8 and 11 have violated Regulation 11(2) of the Takeover Regulations on May 25, 2010.

22. Third trigger of Regulation 11(2) on June 07, 2010:

22.1. The SCN alleges that the Noticee nos. 1 to 9 and 11 acquired an additional 2.46% shares (i.e. 2,60,000 shares) in the target company on June 07, 2010 as a result of which their consolidated shareholding in the target company increased from 56.72% (i.e. 60,12,771 shares) as on May 25, 2010 to 59.18% (i.e. 62,72,771 shares) as on June 7, 2010. The change in shareholding of these Noticees in the target company on June 07, 2010 is given as follows:

Table X Pre acquisition Acquired Post-Acquisition Change in holding (As on (disposed) on holding (i.e. Acquirer holding Names of the entities 06/06/10) 07/06/10 07/06/10) / PAC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service Pvt Ltd. PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Dash Pharmaceuticals Pvt 11.5 PAC 1223350 11.54 0 0.00 1223350 0 0.00 Ltd. 4 Mandvi Dyes & Chemicals PAC 1024261 9.66 0 0.00 1024261 9.66 0 0.00 Co. Pvt. Ltd Maxilla Financial Services PAC 511192 4.82 0 0.00 511192 4.82 0 0.00 Pvt. Ltd. Parachit Sales & Marketing PAC 525000 4.95 0 0.00 525000 4.95 0 0.00 (I) Pvt. Ltd. Prime Dyes & Chemicals Acquirer 525500 4.96 35000 0.33 560500 5.29 35000 0.33 Co Pvt Ltd. Rajratan Trading Pvt Ltd PAC 446900 4.22 0 0.00 446900 4.22 0 0.00 Shingar Dyes and PAC 305850 2.89 0 0.00 305850 2.89 0 0.00 Chemicals Ltd. Vishal Information 12.1 PAC 1284500 12.12 0 0.00 1284500 0 0.00 Technologies Ltd. 2 Sparkle Tooth Brush Mfg Acquirer 0 0.00 225000 2.12 225000 2.12 225000 2.12 Co. Pvt Ltd. 59.1 Grand Total 6012771 56.72 260000 2.45 6272771 260000 2.45 8 1060000 1060000 1060000 1060000 Total no. of shares (TNS) 100 100 100 100 0 0 0 0

22.2. The SCN alleges that the acquirers, Noticee nos. 6 and 9 along with PAC, Noticee nos. 2 to 5, 7, 8 and 11 have violated Regulation 11(2) of Takeover Regulations,

1997 on June 7, 2010, by acquiring shares during the financial year beyond the threshold limit of 55%, without making the mandatory public announcement for open offer.

22.3. As discussed above, Noticee no. 1 is not a PAC with the remaining Noticees. Moreover, as discussed above, Noticee nos. 2 to 8 and 11 have been found to have acted in concert with a common objective of acquiring shares of MCL on May 18, 2010 in violation of Regulation 11 (2) of the Takeover Regulations and on May 25, 2010 Noticee no. 8 was found to have acted in concert with Noticee nos. 2 to 7 and 11, while acquiring shares of the target company in violation of Regulation 11 (2) of the Takeover Regulations. In view of the same, I find that the acquisition of further shares by Noticee no. 6 is in furtherance of the same common objective of this group. With respect to Noticee no. 9, I note that it has the same directors as Noticee nos. 3 and 5 and common directors with Noticee nos. 2,5 and 7 and 8. Therefore, it is a company with the same management with these other Noticees, and deemed to be PAC. Moreover, Notice no.9 had off market transactions with Noticee nos. 5,6 and 11 (which is the holding company of Noticee no. 10)on June 24, 2010 and September 21, 2010 for 50,00, 50,000 and 20,000 share of MCL respectively. Such connection, coupled with its conduct of acquiring shares on the same date as Noticee no. 6 leads to the conclusion that Noticee no. 9 was also acting with a common objective of acquiring shares of the target company with the other Noticees. In view of the same, it is noted that since the acquirers (Noticee nos. 6 and 9) along with their PAC ( Noticee nos. 2 to 5, 7,8 and 11) were together holding 56.72% of the issued share capital of target company before acquisition and further acquired 2,60,000 shares, i.e. 2.45 % of the share capital on May 25,2010, the acquirers and PAC were liable to make a public announcement of open offer. Since they failed to do so, I hold that these Noticees have violated Regulation 11(2) of the Takeover Regulations on June 07, 2010.

23. Fourth trigger of Regulation 11(2) on June 09, 2010:

23.1. The SCN alleges that the Noticee nos. 5 and 6 acquired additional 0.61% share capital of the target company (64,950 shares) on June 09, 2010 and as a result the consolidated shareholding of these two acquirers along with their PAC (Noticee nos. 1 to 4,7,8,9 and 11) increased from 59.18% (i.e. 62,72,771 shares) as on June 7, 2010 to 59.79% (63,37,721 shares) on June 09, 2010 and since they failed to make a public announcement for open offer they violated regulation 11(2) of the Takeover Regulations, 1997. The change in shareholding of these Noticees in the target company on June 09, 2010 is given as follows:

Table XI

Acquired Post-Acquisition Pre holding (As on Change in (disposed) on holding (i.e. 08/06/10) holding Acquire 09/06/10 09/06/10) Names of the entities r/ PAC % of No. of % of No. of % of No. of % of No. of TNS shares TNS shares TNS shares TNS shares Basiz Fund Service PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Pvt Ltd. Dash Pharmaceuticals PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Pvt Ltd. Mandvi Dyes & Chemicals Co. Pvt. PAC 1024261 9.66 0 0.00 1024261 9.66 0 0.00 Ltd Maxilla Financial PAC 511192 4.82 0 0.00 511192 4.82 0 0.00 Services Pvt. Ltd. Parachit Sales & Acquire 525000 4.95 49950 0.47 574950 5.42 49950 0.47 Marketing (I) Pvt. Ltd. r Prime Dyes & Acquire 560500 5.29 15000 0.14 575500 5.43 15000 0.14 Chemicals Co Pvt Ltd. r

Rajratan Trading Pvt PAC 446900 4.22 0 0.00 446900 4.22 0 0.00 Ltd Shingar Dyes and PAC 305850 2.89 0 0.00 305850 2.89 0 0.00 Chemicals Ltd. Vishal Information PAC 1284500 12.12 0 0.00 1284500 12.12 0 0.00 Technologies Ltd. Sparkle Tooth Brush PAC 225000 2.12 0 0.00 225000 2.12 0 0.00 Mfg Co. Pvt Ltd. Grand Total 6272771 59.18 64950 0.61 6337721 59.79 64950 0.61 Total no. of shares 1060000 1060000 1060000 100 100 10600000 100 100 (TNS) 0 0 0

23.2. As discussed above, Noticee nos. 2 to 8 and 11 have been found to have acted with a common objective for their acquisition of shares of the target company on May 25, 2010 and June 09, 2010 and Noticee nos. 2 to 9 and 11 have been found to have acted with a common objective for their acquisition of shares of the target company on June 07, 2010. Therefore, I find that the acquisition of further shares of the target company by Noticee nos. 5 and 6 on June 09, 2010 was also with the same common objective. Therefore, with respect to the acquisition of shares by Noticee nos. 5 and 6 on June 09, 2010, I find that these Notices were acting on concert with Noticee nos. 2 to 4, 7,8,9, and 11 and since these two acquirers along with PAC had a consolidated shareholding of 59.18% in the target company as on June 7, 2010 and further acquired 64,950 shares, i.e. 0.61% of the issued share capital of MCL on June 09,2010, the acquirers and PAC were liable to make a public announcement of open offer. Since they failed to do so, I hold that these Noticees have violated Regulation 11(2) of the Takeover Regulations on June 09, 2010.

24. Fifth trigger of Regulation 11(2) on July 01, 2010: 24.1. The SCN alleges that the Noticee no. 9 has acquired additional 0.75% share capital of the company (80,000 shares) on July 01, 2010 and as a result the consolidated shareholding of the acquirer along with PAC (Noticee nos. 1 to 8 and 11) in the target company increased from 59.79% (63,37,721 shares) on June 09, 2010 to 60.54% (64,17,721 shares) on July 01, 2010 and since these Noticees did not make a public announcement for open offer they have violated regulation 11(2) of the Takeover Regulations, 1997.

Table XII

Acquired Post-Acquisition Pre holding (As Change in Acquir (disposed) on holding (i.e. on 30/06/10) holding Names of the entities er/ P 01/07/10 01/07/10) AC No. of % of No. of % of No. of % of No. of % of shares TNS shares TNS shares TNS shares TNS Basiz Fund Service Pvt Ltd. PAC 166218 1.57 0 0.00 166218 1.57 0 0.00 Dash Pharmaceuticals Pvt PAC 1223350 11.54 0 0.00 1223350 11.54 0 0.00 Ltd. Mandvi Dyes & Chemicals PAC 1024261 9.66 0 0.00 1024261 9.66 0 0.00 Co. Pvt. Ltd Maxilla Financial Services PAC 511192 4.82 0 0.00 511192 4.82 0 0.00 Pvt. Ltd. Parachit Sales & Marketing (I) PAC 524950 4.95 0 0.00 524950 4.95 0 0.00 Pvt. Ltd. Prime Dyes & Chemicals Co PAC 525500 4.96 0 0.00 525500 4.96 0 0.00 Pvt Ltd. Rajratan Trading Pvt Ltd PAC 446900 4.22 0 0.00 446900 4.22 0 0.00 Shingar Dyes and Chemicals PAC 305850 2.89 0 0.00 305850 2.89 0 0.00 Ltd. Vishal Information PAC 1284500 12.12 0 0.00 1284500 12.12 0 0.00 Technologies Ltd. Sparkle Tooth Brush Mfg Co. Acquir 325000 3.07 80000 0.75 405000 3.82 80000 0.75 Pvt Ltd. er Grand Total 6337721 59.79 80000 0.75 6417721 60.54 80000 0.75 1060000 1060000 1060000 1060000 Total no. of shares (TNS) 100 100 100 100 0 0 0 0 25. As discussed above, Noticee nos. 2 to 8 and 11 have been found to have acted with a common objective for their acquisition of shares of the target company on May 25, 2010 and June 09, 2010 and Noticee nos. 2 to 9 and 11 have been found to have acted with a common objective for their acquisition of shares of the target company on June 07, 2010 and June 09, 2010. Therefore, I find that the acquisition of further shares of the target company by Noticee nos. 9 on July 01, 2010 was also with the same common objective.

Therefore, with respect to the acquisition of shares by Noticee nos. 9 on July 01, 2010, I find that these Notices were acting on concert with Noticee nos. 2 to 8 and 11 and since this acquirer along with PAC had a consolidated shareholding of 59.79% in the target company as on June 09, 2010 and further acquired 80,000 shares, i.e. 0.75% of the issued share capital of MCL on July 01, 2010, the acquirers and PAC were liable to make a public announcement of open offer. Since they failed to do so, I hold that these Noticees have violated Regulation 11(2) of the Takeover Regulations on July 01, 2010.

26. In view of the discussions above, I find that the Noticee nos. 2 to 11 have violated the provisions of Regulation 10, 11 (1) and 11 ( 2) of the Takeover Regulations in the following instances.

Sr. No. Trigger Date Noticee nos. Percentage Violation of Change in provision of shareholding Takeovers Regulations 1. 19.11.2008 2,3,5, 10 3.17 ( from 10 14.99 to 18.16) Instances in which Regulation 11 (1) of the Takeover Regulations have been triggered 1. 27.11.2008 2,3,5, 10 7.38 11(1) 2. 11.12.2008 2,3,4,5,10 7.67 11(1) 3. 12.03.2010 2,3,4,5,6,10 7.79 11(1) 4. 23.03.2010 2,3,4,5,6,7,10 6.03 11(1) 5. 29.03.2010 2,3,4,5,6,7, 11 5.13 11(1) 6. 22.04.2010 2,3,4,5,6,7,11 5.22 11(1) Instances in which Regulation 11 (2) of the Takeover Regulations have been triggered 1. 18.05.2010 2,3,4,5,6,7,8, 1.51 11(2) 11 2. 25.05.2010 2,3,4,5,6,7,8, 0.71 11(2) 11 3. 07.06.2010 2,3,4,5,6,7,8, 2.46 11(2) 9, 11 4. 09.06.2010 2,3,4,5,6,7,8, 0.61 11(2) 9, 11

5. 01.07.2010 2,3,4,5,6,7,8, 0.75 11(2) 9, 11

27. I also note that once the threshold limit prescribed under regulation 10, 11(1) or 11 (2) of the Takeover Regulations had been breached on the twelve instances mentioned above, the acquirer along with PAC were liable to make a public announcement for acquiring minimum 20% of the voting capital of the target company as per regulation 21(1) of Takeover Regulations. The Hon’ble Securities Appellate Tribunal in the matter of Nirvana Holdings Private Limited vs. SEBI (Appeal no. 31/2011) has held as follows:

“It must be remembered that whenever an acquirer violates Regulation 10, 11 or 12 of the takeover code by not making a public announcement, he should be directed to comply with the provision by making a public offer. The words “unless such acquirer makes a public announcement” appearing in Regulations 10 and 11(1) make these provisions mandatory and a public announcement has to be made. Similar words appear in Regulation 12 as well. These provisions make the acquisition conditional upon a public announcement being made. The primary object of the takeover code is to provide an exit route to the public shareholders when there is substantial acquisition of shares or a take over. This right to exit is an invaluable right and the shareholders cannot be deprived of this right lightly. It is only when larger interest of investor protection or that of the securities market demands that this right could be taken away. Therefore, as a normal rule, a direction to make a public announcement to acquire shares of the target company should issue to an acquirer who fails to do that. The Board need not give reasons as to why such a direction is being issued because that is the mandate of Regulations 10, 11 and 12.”

28. Therefore, the direction to make a public announcement for open offer is essential to remedy the violations committed by these Noticees. In this back ground, I also note that the feasibility of directions issued by this order for each trigger has to be kept in mind and having regard to the same, I am of the opinion that it would be pragmatic to direct the said Noticees to make public announcement for a single open offer at the highest price, i.e. the acquisition which triggers the Takeover Regulations where shareholders are entitled to the highest price. Hence, as a measure of feasibility and practicality, I find that a single open offer by all the acquirers along with the persons acting in concert would suffice in the facts and circumstances of the case.

29. I note that one of the principle underlying the Takeover Regulations, 1997 as well as under Takeover Regulations, 2011 is exit opportunity to the public shareholders of the target company at the best price and accordingly, the offer price in an open offer has to be highest of the prices of shares of the target company derived through various methods, as mentioned in these Regulations. Thus, I note that public shareholders of the target company are entitled to highest of the offer price to be computed in accordance with law.

Directions:

30. In view of the aforesaid observations and findings, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4) and 11B read with Section 19 of the Securities and Exchange Board of India Act, 1992 along with regulations 44 and 45 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 read with Regulation 32 and 35 of Takeover Regulations, 2011 hereby issue the following directions:

a) Dash Pharmaceuticals Pvt. Ltd. ( Noticee no. 2), Mandvi Dyes & Chemicals Co. Pvt. Ltd.( Noticee no. 3), Maxilla Financial Services Pvt. Ltd. (Noticee no.4), Parachit Sales & Marketing (I) Pvt. Ltd.( Noticee no. 5), Prime Dyes and Chemical Company Pvt. Ltd.( Noticee no. 6), Rajratan Trading Pvt. Ltd. ( Noticee no.7), Shingar Dyes & Chemicals Pvt. Ltd.( Noticee no. 8), Sparkle Tooth Brush Mfg. Co. Pvt. Ltd.( Noticee no. 9), Tutis Technologies Ltd.( Noticee no. 10) and Vishal Information Technologies Ltd. (Noticee no. 11), shall make a public announcement for open offer to the public shareholders of the target company in terms of the provisions of Takeover Regulations, 1997 read with provisions of Takeover Regulations, 2011 within a period of 45 days from April 15, 2020; and b) Noticee no. 2 to 11 shall along with the offer price, as mentioned in para 28, pay interest at the rate of 10% per annum, for delay in making of open offer in terms of Takeover Regulations, 1997, to the public shareholders of the target company who were shareholders of the target company as on the date of triggers as mentioned in para 26 above, and whose shares are accepted in the open offer, directed to be made in sub-para (a) above.

31. This order shall come into force with immediate effect.

32. This order is without prejudice to any other actions that SEBI may take in accordance with securities laws.

33. A copy of this order shall be served on all the Noticees, recognized stock exchanges, depositories and RTAs of mutual funds to ensure compliance with above directions.

Date: April 07, 2020 ANANTA BARUA Place: Mumbai WHOLE TIME MEMBER