Order in respect of Swastik Surfactants Limited

WTM/PS/19/CFD/MAY/2016

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 Swastik Surfactants 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. Swastik Surfactants Limited(hereinafter referred to as "the Company") is one such company against whom the interim orderwas passed. The equity shares of the Company are listed on the Bombay Stock Exchange Limited (BSE) and the Ahmedabad Stock Exchange Limited (ASE).

3. The interim order was forwarded to the Company at its registered address vide SEBI‟s letter dated June 05, 2013. However, the letter had returned undelivered with reason “office closed”. Thereafter, a personal hearing in the matter was scheduled on July 30, 2014, which was sought to be intimated to the Company vide SEBI‟s letter dated June 17, 2014. However, this letter too returned undelivered. Thereafter, vide email dated May 27, 2015, SEBI informed the Company regarding the personal hearing fixed on July 03, 2015. However, there was no response to the communication nor the Company appeared on the said date of hearing.

4. SEBI, vide letters dated October 01, 2015, again sought to serve the interim order on the Company and its directors, Mr. Ravi Bhushan Verma, Mr. Jagesh Kumar Gupta and Mr. Sushil Kumar. However, this letter was served on only Mr. Jagesh Kumar Gupta. However, he did not submit any response. As the interim order could not be served on the Company and two of its directors, SEBI made a public notice in newspapers (Times of India, Ahmedabad dated February 23, 2016 and in Sandesh (all editions in Gujarat) dated March 06, 2016) regarding the proceedings initiated vide the interim order. The public notices informed the Company that it can collect the interim order from the offices of SEBI and may also appear in the personal hearing that was scheduled on March 29, 2016. Despite these public notices, neither the Company nor its directors/promoters appeared in the said personal hearing. I, accordingly find that it would be futile to afford further opportunities to the noticees and therefore proceed to consider the case on merits on the basis of material on record. It is also noted that vide order dated July 17, 2012 (in Case No. 208/1988), the Board for Industrial and Financial Reconstruction (BIFR) had deregistered the Company on the grounds that the Company has permanently lost its „industrial character‟ and also for „non-prosecution‟.

5. I have considered the interim order passed in the matter against the Company, its promoters and directors and other material available on record. The interim order was issued against the Company as it failed to maintain the minimum public shareholding 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"). The last disclosure of the Company in BSE with respect to its Shareholding Pattern was in June 2011. As per this disclosure, the promoters and promoter group of the Company held 94.35% and the public shareholders held 5.65%. From the above, it can be concluded that the public shareholding in the Company is less than the mandated minimum of 25% in a listed company. The Company is therefore in violation of the MPS requirements.

6. Considering the above observations, 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, Swastik Surfactants 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.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date: May 02nd, 2016 Place: Mumbai