Order in respect of RMG Alloy Steel Limited

WTM/PS/84/CFD/MAR/2014

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 RMG Alloy Steel Limited (earlier known as Remi Metal Gujarat 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. RMG Alloy Steel Limited, earlier known as Remi Metals Gujarat Limited (hereinafter referred to as "the Company") is one such listed company against whom the interim order was passed.

2. As it was brought to the notice of SEBI that the Hon'ble Board for Industrial and Financial Reconstruction ("BIFR") has allowed the Company to reduce its promoters' shareholding to 75% or less within a period of 5 years from February 07, 2009 i.e. by February 06, 2014, the interim order issued against the Company, its directors, promoters and promoter group, was vacated, vide the SEBI Order dated October 14, 2013. The said Order also directed that the interim order shall immediately be revived (without the need for passing of a separate order) against the said company, its directors, promoters and the promoter group, if - (i) the promoter shareholding in the Company is not reduced to 75% or less within February 06, 2014 being the end of the period till which the Hon'ble BIFR had given exemption; and (ii) the company, RMG Alloy Steel Limited, fails to increase its public shareholding to the minimum 25% as stipulated under rule 19A of the SCRR, within the said time frame (i.e, on or before February 06, 2014).

3. Thereafter, the Company, vide an electronic mail dated February 21, 2014 submitted that it approached the Hon'ble BIFR by way of a miscellaneous application seeking extension for further two years from February 06, 2014 for disposal of shares of co-promoters and strategic investors, in order to reduce shareholding of promoters/co-promoters/strategic investors up to 75% of shareholding. The Company further submitted that the Hon'ble BIFR in the hearing held on January 16, 2014 had granted extension of time of two (02) years i.e. till February 06, 2016 to its promoter(s)/co-promoter/strategic investors of the Company for diluting their shareholding in the Company to 75% or below, in conformity with the SEBI requirement of listing guidelines. A copy of the summary record of the proceedings dated January 16, 2014 of the Hon'ble BIFR ("the BIFR Order") was forwarded vide the aforesaid e-mail by the Company.

4. I have considered the submissions and have perused the BIFR Order and note that vide the BIFR Order, the Hon'ble BIFR has inter alia observed/directed as follows :

"30.6 ……………… The Bench observed that the sick company has already filed a Modified Draft Rehabilitation Scheme (MDRS ) with the Board's office, which is under examination. The Bench also observed that the entire global economy is going through turbulent time and Steel Industry is also going through sluggish demand. As such a last and final opportunity, be given to the sick company and its promoters to comply with the listing requirement of diluting the promoter(s ) shareholding to 75% or below. Accordingly, the Bench issued the following directions :- (i) The promoter(s) / co-promoter / strategic investor of the sick company are granted extension of time period of two (02) years i.e. till 06.02.2016, for diluting their shareholding in the sick company to 75% or below, in conformity with the SEBI requirement of listing guidelines. (ii) Accordingly, MA No.17/ 2014 filed by the sick company, stands disposed of." [Emphasis supplied]

5. From the above said BIFR Order, I note that the Hon'ble BIFR, as a last and final opportunity, has granted the promoter(s)/co-promoter/strategic investor of the Company extension of time till February 06, 2016, for diluting their shareholding in the Company to 75% or below, in conformity with the SEBI requirement of listing guidelines.

6. 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 modify the SEBI Order dated October 14, 2013 to the extent that the directions issued vide the SEBI Order dated June 04, 2013, shall immediately be revived (without the need for passing of a separate order) against the said company, its directors, promoters and the promoter group, if - (i) the promoter shareholding in the company, RMG Alloy Steel Limited, is not reduced to 75% or less within February 06, 2016 being the end of the period till which the Hon'ble BIFR had given exemption as per its Order dated 16.01.2014; and (ii) the company, RMG Alloy Steel Limited, fails to increase its public shareholding to the minimum 25% as stipulated under rule 19A of the SCRR, within the said time frame (i.e, on or before February 06, 2016).

7. Further, the above directions would be without prejudice to the right of SEBI to initiate other appropriate action in accordance with law, if the company, RMG Alloy Steel Limited, fails to reduce its promoter shareholding to 75% or less as directed by the Hon'ble BIFR, and increase its public shareholding to the minimum 25% as stipulated under rule 19A of the SCRR, within February 06, 2016.

8. 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 : March 03, 2014 Place : Mumbai