In the matter of Miven Machine tools Limited- minimum public shareholding requirement

ORDER Under sections 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with section 12A of the Securities Contracts (Regulation) Act, 1956 in the matter of non-compliance with the requirement of minimum public shareholding by listed companies

In respect of Miven Machine Tools Limited

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had passed an interim order dated June 04, 2013 (hereinafter referred to as "the interim order ") with respect to 105 listed companies who did not comply with the Minimum Public Shareholding ("MPS") norms as stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as "SCRR") within the due date i.e., June 03, 2013. The interim order was passed without prejudice to the right of SEBI to take any other action, against the non-compliant companies, their promoters and/or directors or issuing such directions in accordance with law. The interim order was to be treated as a show cause notice by those companies for action contemplated in paragraph 18 thereof.

2. Miven Machine Tools Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The equity shares of the Company are listed on the Bombay Stock Exchange Limited ("BSE"), the Delhi Stock Exchange Limited ("DSE") and the Bangalore Stock Exchange Limited ("BgSE").

3. The Company filed its replies to the interim order vide letters dated September 13, 2013 and December 07, 2013, wherein the following submissions were inter alia made :

(i) The present promoters of the Company are N.A. Sirur (Hubli) Private Limited (25,88,150 shares constituting 86.17%), Mr. Vikram Sirur (300 shares constituting 0.01%) and Ms. Alka Sirur (200 shares constituting 0.01%), who collectively hold 86.19% of the paid-up capital of the Company. The public shareholding in the Company is at 13.81%.

(ii) The proposal of the Company for dilution of promoter group's equity shareholding by transferring their shares to another entity was not favourably considered by SEBI. Subsequently, the promoters vide their letter dated May 27, 2013 expressed their intent to the Company to delist the equity shares and requested the Company to initiate steps for the same. (iii) The Board of Directors, in their meeting held on July 15, 2013, approved the delisting proposal subject to necessary approvals. The Board, on September 13, 2013, approved the postal ballot notice and explanatory statement. The postal ballot process was completed on October 28, 2013 and the Scrutinizer submitted his report dated October 30, 2013 wherein 92.59% of the votes casted were in favour of delisting the equity shares from the stock exchanges. The Company had intimated the results of the postal ballot to the stock exchanges on October 31, 2013. (iv) The machine tools industry has been going through a long period of recession due to various factors. Being a capital intensive industry where there is significant time lag between supply of machinery and realization, the Company has become a loss making company. (v) Further, the equity shares of the Company have not been trading at the stock exchanges since April 05, 2002. As a result, the investments made by investors have become illiquid. Considering the same, delisting of shares will give the shareholders an exit opportunity. (vi) As shareholders have approved the proposal for delisting, the promoters wish to proceed with the delisting offer. In this regard, the promoters seek revocation of paragraph 17(b) of the interim order. (vii) Pursuant to the SEBI's relaxation of paragraph 17(b) of the interim order, the Company would approach the stock exchanges for in-principle approval and complete the delisting process in a timely manner subject to compliance with the Delisting Regulations.

4. An opportunity of personal hearing was afforded to the Company on January 21, 2014, when Mr. Vikram Sirur (Chairman and Managing Director of the Company), Mr. V. Sreedharan (Practising Company Secretary), Mr. Prashanth Kumar and Ms. Poorna Pikle of BOB Capital Markets Limited, appeared and reiterated the submissions made in the Company's reply and sought for relaxation of the directions issued in the interim order so as to enable the promoters to proceed with the delisting offer. During the personal hearing, the representatives submitted that the Company has a large shareholders' base and that many shareholders could not be traced. In view of such submission and on consideration of the requirements of the Delisting Regulations for considering an offer for delisting as successful, it was found that relaxing the directions passed vide the interim order may not serve the purpose at that stage. Accordingly, the Company was granted a period of one month to take efforts to trace its public shareholders and to report the status thereof to SEBI.

5. Pursuant to a request (made vide letter dated February 20, 2014) for extension of time for tracing its shareholders and a request (made vide letter dated March 18, 2014) for another personal hearing, the Company vide letter dated March 26, 2014 inter alia submitted that it was in the process of contacting those shareholders to whom earlier correspondences returned undelivered. The percentage of those shareholders was 1.63% comprising of 49,100 equity shares. The Company was successful in tracing shareholders holding 30,900 shares (1.03%) and it continues to trace shareholders holding another 0.60% shares. The Company also submitted that it has sent letters to shareholders to avail the facility of dematerialization of shares and that 3.79% of the equity shares held by the public have already been dematerialized.

6. Thereafter, the Company vide letters dated May 09, 2014 and May 28, 2014 submitted that out of the 4,14,850 shares held by public, only those shareholders holding 49,100 shares could not be traced. However, this constituted only 1.63% of the total paid-up capital of the Company. The Company submitted that it has been able to forward its annual reports and correspondence etc to the remaining public shareholders holding 3,65,750 equity shares (12.18% of paid-up capital). In terms of the Delisting Regulations, the minimum number of shares to be acquired is 2,07,425 shares for a successful delisting offer. The Company further submitted that it is able to communicate with shareholders holding shares more than what is required for successful delisting and therefore the promoters are confident that the delisting offer would now be successful. The Company requested that a suitable order be passed to facilitate delisting and to permit the promoters to acquire shares from the public shareholders in the delisting offer.

7. The Company was afforded another opportunity of personal hearing on June 25, 2014, when Mr. Vikram Sirur (Chairman) and Mr. V. Sreedharan (Practising Company Secretary) along with other representatives appeared and reiterated the above submissions. They sought time till October 2013 for completing the delisting process.

8. I have considered the submissions made by the Company/promoters vide their replies and the oral submissions made during the personal hearings and other material available on record. The shareholding of the promoter and promoter group in the Company is at 86.19%. The public shareholders hold 13.81%. The promoters of the Company have expressed their intention to acquire the equity shares held by the public shareholders in the Company and to delist the shares from the stock exchanges. Considering the fact that the shareholders have, on October 30, 2013, approved the proposal for delisting vide their special resolution and also the submissions that the Company has traced more than 50% of its public shareholders, I am of the considered view that the Company/promoters could be allowed to proceed with the delisting process and also to suitably relax the directions issued against the Company's promoters to enable them to purchase shares in the delisting offer to be made by them. As regards the request for time for completing the delisting process, I note that the special resolution approving the proposal for delisting the Company was passed on October 30, 2013. In terms of regulation 8(1)(d) of the Delisting Regulations, the final application should be filed within one year of passing of special resolution, i.e., on or before October 29, 2014. The Company has also submitted that it would approach the stock exchanges for in-principle approval as soon as SEBI permits the promoter to proceed with the delisting proposal. Therefore, on consideration of the above facts and circumstances of the case, I am of the opinion that time till October 29, 2014, as discussed above, be granted to the Company/promoters to conclude their delisting process.

9. Accordingly, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(2)(j), 11(4) and 11B thereof and section 12A of the Securities Contracts (Regulation) Act, 1956, hereby issue the following directions :

(i) The direction issued in paragraph 17(b) of the interim order dated June 04, 2013 stands modified to the extent that it shall not hinder the voluntary delisting process initiated by the Company/promoters and that its promoters shall be permitted to buy shares of the Company held by public shareholders in their offer for delisting. (ii) The Company shall endeavour to complete the delisting process on or before October 29, 2014 and shall report the outcome of the delisting process to SEBI within a period of two weeks thereafter. (iii) The direction issued in paragraph 17(b) of the interim order dated June 04, 2013 shall be re-imposed immediately (without the need for passing of a separate order) in case the delisting process of the Company is not completed successfully within the period directed in sub-paragraph (ii) above. (iv) The directions contained in paragraphs 17(a), (c) and (d) of the interim order dated June 04, 2013 shall continue to be in effect till such time the Company is delisted from the stock exchanges or till the time the Company becomes compliant with the MPS norms, whichever is earlier.

10. This Order shall come into force with immediate effect.

11. The aforesaid directions are issued without prejudice to the right of SEBI to initiate action as contemplated in paragraph 18 of the interim order in case the delisting process of the Company is not successful within the period as directed above.

12. Copy of this Order shall be served on the stock exchanges and depositories for their information and necessary action.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : July 11th, 2014 Place : Mumbai