Order in respect of Automobile Products of India Ltd[SAT Appeal No.:374/2016,[SAT Appeal No.:135/2016]

WTM/PS/104/CFD/DEC/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER 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 Automobile Products of India Limited Date of Hearing: July 08, 2015 Appearances: For Noticee: Mr. Manoj Thakar, Company Secretary Mr. Devesh Bhatt, Chartered Accountant Mr. S. Karthikeyan. Adviser For SEBI: Dr. Anitha Anoop, Deputy General Manager, Mr. Pradeep Kumar, Assistant General Manager, Mr. Rohan Vijay, Assistant Manager.

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. Automobile Products of India 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 scrip of the Company is suspended for trading.

3. The Company vide its letter dated June 19, 2013, replied to the interim order and requested for an opportunity of personal hearing. The submissions in brief, are as under: a. The Company was incorporated on September 12, 1949. The equity shares of the Company are listed on BSE. b. Kiyana Real Estate Private Limited (hereinafter referred to as ‘Kiyana’), is the present and the only entity in the current promoter and promoter group of the Company. Kiyana vide share purchase agreement had agreed to acquire the equity shares and control of the Company from its erstwhile promoters, pursuant to which the promoter had completed the open offer process in November 2011. Post the open offer, the shareholding pattern of the Company is as under: Particulars No. of equity shares % of shareholding Kiyana 40,81,122 84.71 Public 7,36,534 15.29 Total 48,17,565 100.00 c. Post the open offer, efforts are being made to revive the Company’s business, improve its financial position and comply with applicable rules and regulations. d. The Company had analysed all the options available under Clause 40A of the listing agreement, however, the available options are not workable due to the suspension of trading in its equity shares, no tripartite agreement with NSDL and CDSL to get its shares dematerialised, accumulated losses, weak financial position, non-availability of the free reserves, etc. e. The promoter of the Company vide letter dated May 28, 2013, had requested SEBI to allow it to sell the equity shares to select investor through off market trade. However, the same was not acceded to.

4. Before proceeding further, an opportunity of personal hearing was afforded to the Company on July 09, 2014. However, the same was deferred due to certain administrative exigencies. Thereafter, another opportunity of personal hearing was granted to the Company on July 01, 2015, which was later rescheduled to July 08, 2015. In the hearing, Mr. Manoj Thakar, Company Secretary; Mr. Devesh Bhatt, Chartered Accountant and Mr. S. Karthikeyan, Adviser appeared on behalf of the Company and made oral submissions. The representatives also requested liberty to file written submissions. The request was allowed and the representatives were advised to file the written submissions within a period of one week. The director of the Company, Mr. Shyam Agarwal vide his e-mail dated August 06, 2015, has submitted that steps are being taken to lift the trading suspension imposed on the scrip of the Company and to comply with the SEBI circulars and the listing agreement.

5. While proceeding further, I have considered the interim order passed in the matter against the Company, its promoters and directors. The interim order was issued against the Company as it had failed to maintain the MPS of 25% as mandated under Rule 19A of the SCRR and Clause 40A of the Listing Agreement read with section 21 of the Securities Contract (Regulation) Act, 1956 (‘SCRA’). As per the shareholding pattern of the Company for the quarter ended September 2015, as seen in the BSE website, the promoter hold 84.71% and the public holds only 15.29%. The Company is therefore in violation of the MPS requirements.

6. I note that the Company has not taken any steps towards the compliance with the MPS norms due to various reasons as stated in its submissions dated June 19, 2013. Considering the facts and circumstances of the case, it is clear that the Company has not complied with the MPS requirements till date in breach of Rule 19A of the SCRR and Clause 40 A of the Listing Agreement read with Section 21 of the SCRA, and such non-compliance being continuous in nature, it becomes necessary for SEBI, to confirm the directions issued vide the interim order against the Company, its directors and promoters/ promoter group. Further, for proper regulation of the securities market and in view of the continuing nature of the violations committed by the Company, SEBI may also initiate other action, as appropriate in law, against the Company, its directors and promoters.

7. 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 confirm the directions issued vide the interim order dated June 04, 2013 against the Company, Automobile Products of India Limited, its directors, promoters and promoter group.

8. This Order shall remain in force till further directions.

9. Copy of this Order shall be served on the Stock Exchanges and Depositories for their information and necessary action.

Date: December 10, 2015 PRASHANT SARAN Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA