Order in respect of Anil Mittal Family Trust, Arun Kumar Gupta Family Trust and Anoop Kumar Gupta Family Trust in the matter of KRBL Limited

SEBI/WTM/SR/CFD–DCR/58/09/2017 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER UNDER REGULATION 11(5) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011. IN THE MATTER OF PROPOSED ACQUISITION OF SHARES AND VOTING RIGHTS IN KRBL LIMITED.

Background –

1.1 KRBL Limited (“Target Company”) was incorporated under the Companies Act, 1956, on March 30, 1993. The Registered Office of the Target Company is at 5190, Lahori Gate, Delhi–110006. The shares of the Target Company are listed on BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”).

1.2 SEBI received an application dated April 12, 2017 (“Application”) from Shri Anil Kumar Mittal–Trustee of Anil Mittal Family Trust (“Acquirer Trust 1”), Arun Kumar Gupta–Trustee of Arun Kumar Gupta Family Trust (“Acquirer Trust 2”) and Anoop Kumar Gupta–Trustee of Anoop Kumar Gupta Family Trust (“Acquirer Trust 3”) (collectively referred to as “Acquirer Trusts”) seeking exemption from the applicability of Regulation 3 and 4 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) in respect of the proposed acquisition of shares and voting rights and control in the Target Company.

1.3 Regulation 3 and 4 of the Takeover Regulations states – “Substantial acquisition of shares or voting rights. 3. (1) No acquirer shall acquire shares or voting rights in a target company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such target company, entitle them to exercise twenty-five per cent or more of the voting rights in such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations. (2). No acquirer, who together with persons acting in concert with him, has acquired and holds in accordance with these regulations shares or voting rights in a target company entitling them to exercise twenty-five per cent or more of the voting rights in the target company but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permissible non-public shareholding.

Explanation — For purposes of determining the quantum of acquisition of additional voting rights under this sub-regulation,— (i) Gross acquisitions alone shall be taken into account regardless of any intermittent fall in shareholding or voting rights whether owing to disposal of shares held or dilution of voting rights owing to fresh issue of shares by the target company. (ii) In the case of acquisition of shares by way of issue of new shares by the target company or where the target company has made an issue of new shares in any given financial year, the difference between the pre-allotment and the post-allotment percentage voting rights shall be regarded as the quantum of additional acquisition. (3) For the purposes of sub-regulation (1) and sub-regulation (2), acquisition of shares by any person, such that the individual shareholding of such person acquiring shares exceeds the stipulated thresholds, shall also be attracting the obligation to make an open offer for acquiring shares of the target company irrespective of whether there is a change in the aggregate shareholding with persons acting in concert.

Acquisition of control. 4. Irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these Regulations.”

1.4 In the aforementioned Application, the following was inter alia stated – i. “The Acquirer Trusts are proposing to acquire shares of KRBL Limited.

ii. The present Board of Directors of the Target Company as on the date of filing of the application is as follows – Sr. No. Name Designation 1. Anil Kumar Mittal Chairman & Managing Director 2. Arun Kumar Gupta Joint Managing Director 3. Anoop Kumar Gupta Joint Managing Director 4. Ashok Chand Whole Time Director 5. Alok Sabharwal Additional Director 6. Priyanka Mittal Whole Time Director 7. Vinod Ahuja Non-Executive & Independent Director 8. Ashwani Dua Non-Executive & Independent Director 9. Shyam Arora Non-Executive & Independent Director 10. Devendra Kumar Agarwal Non-Executive & Independent Director iii. The pre-acquisition shareholding in the Target Company as on March 31, 2017 alongwith the proposed post-acquisition shareholding in the Target Company, is as under:

Table A Sr. No. Name Pre – Acquisition Post – Acquisition No. of shares % Shareholding No. of shares % Shareholding A. Promoter/ Promoter Group 1. Anil Kumar Mittal 2,14,90,649 9.13 100 0.00 2. Ashish Mittal 46,00,000 1.95 100 0.00 3. Priyanka Mittal 2,50,000 0.11 100 0.00 4. Preeti Mittal 1,62,05,515 6.88 100 0.00 5. Anil Mittal Family Trust 100 0.00 4,25,45,864 18.07% 6. Anulika Gupta 4,12,93,714 17.54 100 0.00 7. Arun Kumar Gupta Family Trust 100 0.00 4,12,93,714 17.54% 8. Binita Gupta 3,88,49,338 16.50 100 0.00 9. Anoop Kumar Gupta Family Trust 100 0.00 3,88,49,338 16.50% 10. Anil Kumar Mittal, Karta of Anil Kumar 35,99,900 1.53 35,99,900 1.53 Mittal HUF 11. Arun Kumar Gupta, Karta of Arun 48,49,900 2.06 48,49,900 2.06 Kumar Gupta HUF 12. Anoop Kumar Gupta, Karta of Anoop 72,99,900 3.10 72,99,900 3.10 Kumar Gupta HUF 13. Anoop Kumar Gupta 100 0.00 100 0.00 14. Arun Kumar Gupta 100 0.00 100 0.00 15. Neha Gupta 100 0.00 100 0.00 16. Rashi Gupta 100 0.00 100 0.00 17. Ayush Gupta 100 0.00 100 0.00 18. Akshay Gupta 100 0.00 100 0.00 19. Kunal Gupta 100 0.00 100 0.00 Total 13,84,39,916 58.81 13,84,39,916 58.81 B. Public Shareholding 9,69,49,976 41.19 9,69,49,976 41.19 C. Total (A + B) 23,53,89,892 100.00 23,53,89,892 100.00

Acquisition 1 – Acquisition of equity shares of the Target Company by entity at Sr. no. 5 from entities at Sr. no. 1–4 of Table A. i. Acquisition of 4,25,45,764 (18.07%) equity shares of KRBL Limited by Anil Mittal Family Trust from Anil Kumar Mittal Family. ii. Anil Mittal Family Trust or Acquirer Trust 1, incorporated under the Indian Trust Act, 1882, through a duly registered Trust Deed dated October 19, 2016, to establish a sustainable framework for the long – term dynastic holding of certain assets and interests of Anil Kumar Mittal Family (the objective more clearly defined in the Trust Deed). iii. The Settlor, Trustee and beneficiaries of Acquirer Trust 1 are as under – Acquirer Trust 1 Settlor Trustee Beneficiaries Relationship Mahesh C. Jain Anil Kumar Mittal and Anil Kumar Mittal The two Trustees are spouse. Preeti Mittal Preeti Mittal The two Trustees along with their son and daughter are the Ashish Mittal Beneficiaries. Priyanka Mittal Transferor – Anil Kumar Mittal Family (18.07%) iv. As on March 31, 2017, the Acquirer Trust 1 holds 100 shares in the Target Company.

Acquisition 2 – Acquisition of equity shares of the Target Company by entity at Sr. no. 7 from entity at Sr. no. 6 of Table A.

i. Acquisition of 4,12,93,614 (17.54%) equity shares of KRBL Limited by Arun Kumar Gupta Family Trust from Mrs. Anulika Gupta. ii. Arun Kumar Gupta Family Trust or Acquirer Trust 2, incorporated under the Indian Trust Act, 1882, through a duly registered Trust Deed dated October 28, 2016, to establish a sustainable framework for the long – term dynastic holding of certain assets and interests of Arun Kumar Gupta Family (the objective more clearly defined in the Trust Deed). iii. The Settlor, Trustee and beneficiaries of Acquirer Trust 2 are as under – Acquirer Trust 2 Settlor Trustee Beneficiaries Relationship Anil Gupta Arun Kumar Gupta Arun Kumar Gupta The two Trustees and Beneficiaries are father and son. and Kunal Gupta Kunal Gupta Transferor – Anulika Gupta (Wife – 17.54%) iv. As on March 31, 2017, the Acquirer Trust 2 holds 100 shares in the Target Company.

Acquisition 3 – Acquisition of equity shares of the Target Company by entity at Sr. no. 9 from entity at Sr. no. 8 of Table A.

i. Acquisition of 3,88,49,238 (16.50%) equity shares of KRBL Limited by Anoop Kumar Gupta Family Trust from Mrs. Binita Gupta. ii. Anoop Kumar Gupta Family Trust or Acquirer Trust 3, incorporated under the Indian Trust Act, 1882, through a duly registered Trust Deed dated October 17, 2016, to establish a sustainable framework for the long – term dynastic holding of certain assets and interests of Anoop Kumar Gupta Family (the objective more clearly defined in the Trust Deed). iii. The Settlor, Trustee and beneficiaries of Acquirer Trust 3 are as under – Acquirer Trust 3 Settlor Trustee Beneficiaries Relationship Arvind Saraf Anoop Kumar Gupta, Anoop Kumar Gupta The three Trustees and Beneficiaries are father and two sons. Akshay Gupta and Akshay Gupta Transferor – Binita Gupta (Wife – 16.50%) Ayush Gupta Ayush Gupta iv. As on March 31, 2017, the Acquirer Trust 3 holds 100 shares in the Target Company.

The Proposed Acquisition will have the following implications:

i. Acquirers will be regarded as a person acting in concert with the Promoters in terms of Regulation 2(q) of the Code being part of the Promoter or Promoter Group. ii. Anil Mittal Family Trust, Arun Kumar Gupta Family Trust and Anoop Kumar Gupta Family Trust are persons disclosed as Promoters in the shareholding patterns as on March 31, 2017, as filed by the Target Company in terms of Regulation 31(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. However, they are not disclosed as Promoters for 3 years or more prior to the date of the proposed acquisitions. iii. Transferors are part of the Promoter Group and are named as Promoters in the shareholding patterns as on March 31, 2017, as filed by the Target Company in terms of Regulation 31(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for more than 3 years.

Grounds for seeking exemption – i. The Acquirers and the Transferors are part of the Promoter Group of KRBL. The Trustees and Beneficiaries of the Acquirers are family members and the promoters of the Target Company. ii. The Transferors and persons acting in concert with the Transferors are directly in control of the Acquirers. The promoters are the Trustees of the Family Trusts. iii. There will be no change in control or management of the Target Company pursuant to the acquisition of shares by the Acquirers as the Trustees of the Acquirers through whom the control is exercised over the assets of the Trusts, are promoters of the Target Company in their personal capacity. iv. The Proposed Acquisitions are only a part of the internal re-alignment of holdings within the Promoter Group and will not affect the interests of the public shareholders of the Target Company. v. There will be no change in the shareholding pattern, control and management of the Target Company, pre and post the Proposed Acquisition. vi. It is a non-commercial transaction which will not prejudice the interests of the public shareholders of the Target Company in any manner.

vii. The change in the identity of the persons who will exercise voting rights over the Target Company through the Acquirers will only be between persons who, in their personal capacities, are promoters of the Target Company. viii. The proposed acquisitions for which exemption is sought will take place pursuant to private family arrangements, which are intended to streamline promoter shareholding in KRBL and facilitate succession planning and welfare of the respective families of promoters.”

1.5 Vide an e–mail dated June 19, 2017, the Acquirer Trusts provided amended Trust Deeds, which incorporated the following conditions:

a. “Clause 24.2(a): The Trust Deed does not contain any limitation of liability of the Trustees/Beneficiaries in relation to the provisions of the SEBI Act and all regulations framed thereunder. b. Clause 24.2(b): The liabilities and obligations of the transferors under the SEBI Act and the regulations framed thereunder will not change or get diluted due to the transfer of shares of KRBL Limited to the Trust. c. Clause 24.2(c): The Trust shall confirm, on an annual basis, that it is in compliance with the exemption order passed by SEBI. The said confirmation shall be furnished to the KRBL Limited which it shall disclose prominently as a note to the shareholding pattern filed for the quarter ending March 31 each year, under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. d. Clause 24.2(d): The Trust shall get the compliance status certified from an independent auditor annually and furnish the same to stock exchange for public disclosure with a copy endorsed to SEBI for its records. e. Clause 24.2(e): The Trustees and Beneficiaries of the Trust shall only be individual promoter or immediate relative of the said promoter or their lineal bloodline descendants. f. Clause 24.2(f): No power of trustees shall be delegated (directly or indirectly) to persons other than the individual promoter or immediate relative of the said promoter or their lineal bloodline descendants.”

1.6 In the aforesaid e–mail dated June 19, 2017, the Acquirer Trusts informed SEBI that they will provide the registered amended Trust Deeds of the respective Acquirer Trusts, post the SEBI Order approving the proposed transfer of shares to their respective Family Trust under Section 11(1) of the Takeover Regulations. The Acquirer Trusts also informed SEBI of the following – “Mrs. Preeti Mittal is the wife of Mr. Anil Kumar Mittal; Mrs. Anulika Gupta is the wife of Mr. Arun Kumar Gupta and Mrs. Binita Gupta is the wife of Mr. Anoop Kumar Gupta.”

Observations of the Takeover Panel on the Application made by the Proposed Acquirers –

A. Takeover Panel’s Recommendations –

2.1 The Application dated April 12, 2017, was forwarded to the Takeover Panel in terms of the proviso to Regulation 11(5) of the Takeover Regulations. The matter was deliberated by the Takeover Panel in its meeting held on June 28, 2017. The Takeover Panel made the following observations – “In the case of KRBL Limited, the Panel took note of the amended Trust Deeds submitted by the applicants and the incorporation of the necessary undertakings in the Trust Deeds. The Panel also took note of a provision in the Trust Deed that provides for appointment of a representative Trustee for a limited time and that too in exceptional circumstances. The Panel further noted that the representative Trustee will be a family member i.e. daughter of the Trustee and has also been disclosed as a Promoter in the shareholding pattern filed with the Stock Exchange. In view of the above, the Panel recommended grant of exemption in the matter subject to the applicant submitting the registered Trust Deeds.”

Consideration of the Application and Findings –

3.1 I have considered the Application submitted by the Acquirer Trusts; the recommendations of the Takeover Panel and other material available on record.

3.2.1 From the preceding paragraphs, it is noted that –

A. The Application submitted is in respect of the proposed acquisition of shares and voting rights in the Target Company i.e. KRBL Limited.

B. The aforesaid acquisition is proposed to be made by Anil Mittal Family Trust; Arun Kumar Gupta Family Trust and Anoop Kumar Gupta Family Trust i.e. the Proposed Acquirers, in the following manner – i. Transfer of 4,25,45,764 (18.07%) equity shares of the Target Company, by the existing Promoters i.e. Anil Kumar Mittal, Preeti Mittal, Ashish Mittal and Priyanka Mittal to Anil Mittal Family Trust.

ii. Transfer of 4,12,93,614 (17.54%) equity shares of the Target Company, by the existing Promoter i.e. Anulika Gupta, to Arun Kumar Gupta Family Trust.

iii. Transfer of 3,88,49,238 (16.50%) equity shares of the Target Company, by the existing Promoter i.e. Binita Gupta, to Anoop Kumar Gupta Family Trust.

iv. Anil Mittal Family Trust; Arun Kumar Gupta Family Trust and Anoop Kumar Gupta Family Trust will collectively acquire a total of 12,26,88,616 (52.11%) equity shares of the Target Company from 6 transferors belonging to the Promoter Group.

v. The pre and post–acquisition shareholding in the Target Company will be as under –

Table A Sr. No. Name Pre – Acquisition Post – Acquisition No. of shares % Shareholding No. of shares % Shareholding A. Promoter/ Promoter Group 1. Anil Kumar Mittal 2,14,90,649 9.13 100 0.00 2. Ashish Mittal 46,00,000 1.95 100 0.00 3. Priyanka Mittal 2,50,000 0.11 100 0.00 4. Preeti Mittal 1,62,05,515 6.88 100 0.00 5. Anil Mittal Family Trust 100 0.00 4,25,45,864 18.07% 6. Anulika Gupta 4,12,93,714 17.54 100 0.00 7. Arun Kumar Gupta Family Trust 100 0.00 4,12,93,714 17.54% 8. Binita Gupta 3,88,49,338 16.50 100 0.00 9. Anoop Kumar Gupta Family Trust 100 0.00 3,88,49,338 16.50% 10. Anil Kumar Mittal, Karta of Anil Kumar 35,99,900 1.53 35,99,900 1.53 Mittal HUF 11. Arun Kumar Gupta, Karta of Arun 48,49,900 2.06 48,49,900 2.06 Kumar Gupta HUF 12. Anoop Kumar Gupta, Karta of Anoop 72,99,900 3.10 72,99,900 3.10 Kumar Gupta HUF 13. Anoop Kumar Gupta 100 0.00 100 0.00 14. Arun Kumar Gupta 100 0.00 100 0.00 15. Neha Gupta 100 0.00 100 0.00 16. Rashi Gupta 100 0.00 100 0.00 17. Ayush Gupta 100 0.00 100 0.00 18. Akshay Gupta 100 0.00 100 0.00 19. Kunal Gupta 100 0.00 100 0.00 Total 13,84,39,916 58.81 13,84,39,916 58.81 B. Public Shareholding 9,69,49,976 41.19 9,69,49,976 41.19 C. Total (A + B) 23,53,89,892 100.00 23,53,89,892 100.00

C. The proposed acquisition is pursuant to an internal restructuring of the shareholding in the Target Company and for streamlining the shareholding structure of the Promoter of the Target Company.

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

E. The pre-acquisition and post-acquisition shareholding of the Promoter in the Target Company will remain the same at 58.81%.

F. There will also be no change in the public shareholding of the Target Company.

G. The Target Company shall continue to be in compliance with the minimum public shareholding requirements under the Securities Contracts Regulation Rules, 1957 (“SCRR”) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

H. The Proposed Acquirers have executed and amended their respective Trust Deeds and submitted the same vide an e–mail dated June 19, 2017.

I. The Takeover Panel has also recommended grant of exemption to the Target Company subject to the Proposed Acquirer submitting their registered Trust Deeds.

3.2.2 Considering the aforementioned, I am of the view that exemption as sought for in the Application (read with further correspondence/submissions/ clarifications) be granted to the Proposed Acquirers, subject to certain conditions as ordered herein below.

Order –

4.1 I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) read with Regulation 11(5) of the Takeover Regulations, hereby grant exemption to the Proposed Acquirers, viz. Anil Mittal Family Trust; Arun Kumar Gupta Family Trust and Anoop Kumar Gupta Family Trust, from complying with the requirements of Regulation 3(1) of the Takeover Regulations with respect to the proposed acquisition/exercise of voting rights in respect of the Target Company, viz. KRBL Limited, by way of proposed transactions as mentioned in the Application.

4.2 The exemption so granted is subject to the following conditions:

i. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws. ii. On completion of the proposed acquisition, the Proposed Acquirers shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations.

iii. The statements/ averments made or facts and figures mentioned in the Application by the Proposed Acquirers are true and correct. iv. The provisions of the SEBI Act and the Regulations framed thereunder will apply on the basis that the ownership or control of shares or voting rights vests not only directly with the Trustees but also indirectly with the beneficiaries of the Proposed Acquirers. v. There shall be no limitation of liability of the Trustees/beneficiaries in relation to the provisions of the SEBI Act and all Regulations framed thereunder. vi. The Proposed Acquirers shall honour their undertakings and shall also ensure compliance with the statements, disclosures and undertakings made in the Application and in the subsequent correspondence. vii. The Proposed Acquirers shall confirm, on an annual basis, that they are in compliance with the Exemption Order passed by SEBI. The said confirmation shall be furnished to the Target Company, which shall disclose prominently as a note to the shareholding pattern filed for the quarter ending March 31 each year, under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. viii. The Proposed Acquirers shall get the compliance status certified from an Independent Auditor annually and furnish the same to the stock exchanges with a copy endorsed to SEBI for its records. ix. The liabilities and obligations of the transferor under the SEBI Act and Regulations framed thereunder will not change or get diluted due to transfers to the Proposed Acquirers. x. The Proposed Acquirers shall also ensure that the covenants in the Trust Deeds are not contrary to the above conditions and undertaking provided by the transferors. In such case, the Trust Deeds shall be suitably modified and expeditiously reported to SEBI. xi. The Trust Deeds shall be registered as undertaken by the Proposed Acquirers within a period of 30 days from the date of this Order. An authenticated copy of the same shall be submitted to SEBI within 30 days of this Order.

4.3 The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations and shall not be construed as exemption from the disclosure requirements under Chapter V of the aforesaid Regulations; compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015; Listing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other applicable Acts, Rules and Regulations.

4.4 The Application dated April 12, 2017, filed by Shri Anil Kumar Mittal–Trustee of Anil Mittal Family Trust, Arun Kumar Gupta–Trustee of Arun Kumar Gupta Family Trust and Anoop Kumar Gupta–Trustee of Anoop Kumar Gupta Family Trust, is accordingly disposed of.

Place: Mumbai S. RAMAN Date: September 5, 2017 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA