Order in respect of Suashish Diamonds Limited

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 Suashish Diamonds 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. Suashish Diamonds Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The Company filed its reply to the interim order vide letter dated June 25, 2013, wherein the following submissions were inter alia made : (i) The Company was incorporated on October 05, 1988. (ii) The equity shares of the Company are listed on the Bombay Stock Exchange Limited ("BSE") since 1995. The equity shares of the Company are infrequently traded on the BSE. (iii) The Company was initially listed on the Ahmedabad Stock Exchange Limited ("ASE"), the Calcutta Stock Exchange Limited ("CSE") and the Delhi Stock Exchange

Limited ("DSE"). The Company has applied for voluntary delisting and obtained approval from ASE (on 31.03.2004), CSE (26.12.2006) and DSE (27.03.2008). (iv) The Company has not accessed the capital markets since the first issuance of shares in 1995. 14 shareholders constitute the promoter and promoter group as on May 20, 2013 and hold 1,85,68,800 equity shares constituting 89.43%. There are 2,269 public shareholders holding 21,94,400 equity shares constituting 10.57% of the total paid-up share capital of the Company. (v) On seeing no other ways for the Company to comply with the MPS requirement, the promoters had initiated the process of delisting of the equity shares of the Company and had been actively pursuing this exercise. (vi) The promoters want to provide exit opportunity to the public shareholders as the scrip is infrequently traded on BSE and there is not much interest in the market for the shares of a midcap diamond company. (vii) The efforts of the Company since 2006 to place its promoters' equity with institutional investors and its efforts taken in 2008 for diluting their holding did not yield any result.

(viii) After the failure to increase the public shareholding, one of its promoter, Mr. Ashish Goenka, offered to acquire the public shareholding of 10.57% in order to voluntarily delist the equity shares of the Company from BSE. Though, the shareholders approved the voluntary delisting offer, the price discovered in the reverse book-building process was abnormally high at 320/. The promoter rejected the discovered price. Therefore, the delisting attempt failed despite the best efforts of the promoters and the Company. (ix) Mr. Ashish Goenka has again proposed, vide his letter dated May 06, 2013, for acquiring the shares of the public shareholders at an indicative price of 230/- per equity shares under the Delisting Regulations. This decision was taken after factoring in the lack of demand for the Company's shares as experienced before. It is believed that an effective delisting would be possible in view of the same. (x) BSE, was intimated on May 08, 2013, about the convening of a board meeting on May 11, 2013 inter alia to consider the proposal for voluntary delisting of equity shares of the Company.

(xi) The Board of the Company in the meeting held on May 11, 2013 considered the letter of the promoter and approved the proposal for delisting of the shares from BSE. It was also decided to communicate and recommend the proposal for voluntary delisting proposal for approval of the shareholders of the Company through postal ballot process pursuant to section 192A of the Companies Act, 1956 and rules made thereunder and as required under the Delisting Regulations. A practising company secretary was also appointed as the scrutinizer for the postal ballot. (xii) The Company despatched postal ballot notices by June 03, 2013 based on the statement of beneficial ownership dated May 20, 2013. (xiii) The Company is in the process of finalising the terms of appointment of the merchant banker for the delisting exercise. (xiv) The interim order, especially paragraph 17(b), restrains its promoters from dealing in the Company's shares and therefore the delisting exercise would not be capable of being implemented.

In view of the submissions, the Company therefore requested SEBI to lift the operation of the interim order to enable the completion of the delisting exercise.

3. An opportunity of personal hearing was afforded to the Company on January 31, 2014, when Mr. Ashish Goenka, Chairman and Mr. Pawan Bagla, Executive Director, of the Company appeared and made submissions. The representatives inter alia submitted that they were confident that the present delisting proposal would be successful as the offered price is higher than the market price and that more shareholders have voted in favour of the present delisting proposal compared to the earlier instance. They also requested time till July 2014 for completing the delisting process.

4. I have considered the submissions made by the Company vide its reply and the oral submissions made during the personal hearing and other material available on record. I have perused the disclosure of shareholding pattern for the period ending December 2013 filed by the Company with BSE and note that the shareholding of the promoter and promoter group in the Company is at 89.43% and the public shareholders hold 10.57%. The Company has submitted that it could not comply with the MPS requirements as its efforts in that regard met with failures. Therefore, the Company's promoter Mr. Ashish Goenka has proposed to acquire the equity shares held by the public shareholders of the Company and to delist the shares of the Company from BSE. I note that on receipt of such proposal, the Board of Directors had approved the same. It is submitted before me that the shareholders of the Company have approved the resolution for delisting. In this regard, I have perused the report dated July 06, 2013 of the scrutinizer, wherein it is mentioned that 97.87% of the votes cast were in favour of the resolution. In terms of regulation 8(1)(d) of the Delisting Regulations, the final application for delisting should be made within one year of passing of the special resolution of the shareholders approving the delisting proposal.

5. The Company has also submitted that the directions passed vide the interim order has restricted the Company's promoter from moving ahead in the delisting process and requested SEBI to lift the ban imposed vide the interim order in order to enable the promoter/Company to proceed forward in the delisting process. The Company has sought for time till July 2014 for completing its delisting process as it has one year's time from the date of passing of the special resolution for making the final application to the concerned stock exchange. Considering the submissions made and the fact that the shareholders have approved the special resolution passed with respect to the delisting proposal, I am of the view that the Company may be permitted to delist its shares in accordance with the applicable provisions of the Delisting Regulations and be allowed to do so on or before July 05, 2014.

6. 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 already commenced voluntary delisting process initiated by the Company, Suashish Diamonds Limited and that its promoter, Mr. Ashish Goenka shall be permitted to buy shares of the Company held by public shareholders in his offer for delisting. (ii) The Company shall endeavour to complete the delisting process on or before July 05, 2014 and shall report the outcome of the delisting process to SEBI within a period of 15 days 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.

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

8. 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 in paragraph 6(ii) above.

9. 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 : February 18th, 2014 Place : Mumbai