Order in respect of Chettinad Cement Corporation Limited

WTM/PS/CFD/21 /JULY/2013 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM : PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under section 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 Chettinad Cement Corporation Limited

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had passed an ad interim order dated June 04, 2013 (hereinafter referred to as "the interim order ") with respect to 105 listed companies who failed to comply with the Minimum Public Shareholding ("MPS") norms as stipulated under rules 19(2)(b) and 19(A) 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. Chettinad Cement Corporation Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The equity shares of the Company were listed on the Bombay Stock Exchange Limited ("BSE"), National Stock Exchange of India Limited ("NSE") and the Madras Stock Exchange Limited ("MSE").

3. The Company filed its reply dated June 06, 2013 to the interim order. An opportunity of personal hearing was afforded to the Company on July 16, 2013, when Mr. S. Hariharan, its Company Secretary appeared and made submissions. Mr. Vishal Karjani, Assistant Vice President, ICICI Securities Limited was also present in the hearing. The Company also filed letters dated July 05, 2013 and July 17, 2013 seeking permission of SEBI for making payments to the residual shareholders who have tendered shares during the exit period.

4. I have considered the replies/submissions of the Company, the oral submissions made during the personal hearing and the documents available on record. The Company has submitted that as on March 31, 2012, the promoters of the Company held 88.44% of the equity share capital and the public shareholders held the remaining 11.56%. In order to obtain full ownership of the Company along with the other promoters and to provide exit opportunity to the public shareholders, the promoter of the Company, namely, Chettinad Holdings Private Limited, decided to delist the Company from the stock exchanges. Accordingly, the Board of Directors of the Company had approved the proposal for delisting on May 15, 2012 and the shareholders of the Company had also approved the same on February 04, 2013. Based on the results of the postal ballot, the Company had sought and obtained in-principle approvals for delisting from the stock exchanges. The Acquirer (the aforesaid promoter), vide the letter of offer dated March 01, 2013, offered to acquire up to 44,16,421 equity shares representing 11.56% of the paid-up equity share capital of the Company or the entire outstanding shares held by the public shareholders of the Company. The reverse book building process was made available through the electronic system of the BSE from March 15, 2013 to March 21, 2013. Pursuant to the same, the promoters acquired 23,06,702 shares constituting 6.04% of the paid-up equity capital. The Company also submitted that on successful closure of the delisting offer, the Company had applied to the stock exchanges for delisting of its equity shares. The representative of the Company also stated that the Company has been delisted from the stock exchanges.

5. I have perused the notices/letters from NSE, BSE and MSE regarding the delisting of the Company. NSE, vide notice dated May 17, 2013 has informed its trading members that the securities of the Company would be suspended from trading with effect from May 31, 2013 and the scrip would be delisted with effect from June 07, 2013. The MSE, vide letter dated May 24, 2013, has informed that the Company would be removed from the list of listed securities of the exchange with effect from June 07, 2013. According to the notice dated May 27, 2013 of the BSE, the Company had complied with all formalities for voluntary delisting and that the trading in the shares of the Company would be discontinued with effect from May 31, 2013. I also note that subsequently, the Company was delisted by NSE and MSE on June 07, 2013 and by the BSE on July 08, 2013.

6. In this regard, I would like to observe that delisting is a long process involving various steps and unforeseen delays can jeopardise the process. Ideally, the Company should have started its delisting process well in advance so that the final step would have been completed before June 03, 2013. As the Company now stands delisted, I am of the opinion that the directions issued against the Company, its directors, promoters and promoter group, vide the interim order need not be continued against them. Further, in view of the above observations, I also do not find it necessary to initiate any action as contemplated in paragraph 18 of the interim order against the Company, its directors, promoter and the promoter group.

7. In view of the foregoing, 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 revoke the directions issued vide the interim order dated June 04, 2013 against the company, Chettinad Cement Corporation Limited, its directors, promoters and promoter group, with immediate effect.

8. The aforesaid direction would enable the Company/its promoter, Chettinad Holdings Private Limited to proceed with the payments to the residual public shareholders who tender their shares during the exit period and acquire shares so offered therein.

9. Copy of this Order shall be served on the stock exchanges and depositories for their information and action that may deem fit and necessary in this case.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : July 30, 2013 Place : Mumbai