Order in the matter of acquisition of shares of Epsom Properties Limited

1. Epsom Properties Limited (hereinafter referred to as the target company) is a company originally incorporated as Tamilnadu Drugs & Pharmaceuticals Exports Private Limited on March 4, 1987 andwas converted into a public limited company with effect from December 26, 1994 under the name Hulta Pharmaceutical Export Limited. The name of the said company was again changed to Epsom Properties Limited on May 11, 2007. The registered office of the target company is at Regency House, 2A Second Floor, 250/7 Anna Salai, Teynampet, Chennai - 600006. The equity shares of the target company are listed on the Bombay Stock Exchange Limited (hereinafter referred to as the BSE) and the Madras Stock Exchange Limited (hereinafter referred to as the MSE).

2. Aryaman Financial Services Limited, vide letter dated March 25, 2010 filed an application on behalf of Dr. Mohan Swami and Chase Perdana Sdn. Bhd. (hereinafter referred to as the acquirers) under Regulation 4 (2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, (hereinafter referred to as the Takeover Regulations) to Securities and Exchange Board of India (hereinafter referred to as SEBI), seeking exemption from the applicability of Regulation 11 (1) of the Takeover Regulations with respect to the proposed acquisition by the acquirers, through preferential allotment of 20,00,000 equity shares of the target company constituting 16.03 % of its expanded capital. As per the said application, the acquirers are the promoters of the target company, holding 21,95,900 equity shares constituting 40.27 % of the paid up equity capital of the target company. The exemption has been sought inter alia on the following grounds:

a. The target company has been incurring losses for last many years and its net worth had been eroded and hence it is experiencing severe liquidity crisis. To revive the financial position and to meet the long term and short term working capital requirements, it has been decided by the target company to raise additional funds. b. In the absence of infusion of capital there is no possibility of revival of the operations of the target company and therefore, its board of directors was of the view that the promoters should bring in funds by way of equity shares through preferential allotment route. c. The target company owes unsecured loan of Rs. 78.09 Lakhs to the acquirers. Out of this, acquirers agreed to convert the amount of Rs. 76.30 Lakhs towards allotment of equity shares by way of preferential allotment to them. The acquirers have also agreed to invest further funds to the tune of Rs. 123.70 Lakhs in the target company through the issue of equity shares by way of preferential allotment to them. The sole purpose of investment made by the acquirers was to revive the target company from the financial crisis. d. As the promoters would make sincere efforts to revive the target company and would maximize investment into the target company, rather than utilizing the resources towards the acquisition of shares. e. If the target company proposes investment by all shareholders in the form of rights issue, it would not evoke any favorable response from other shareholders since the shares of the target company are quoted below par and it involves substantial statutory formalities and expenses.

Further, the cost of raising such rights issue would burden the target company, at his juncture, when it has only meager resources. f. There would be no resultant change in control due to the proposed preferential allotment as the acquires are already in control. The target company shall not cause any violation of the condition of continuous listing prescribed under Clause 40 A of the Listing Agreement. g. The acquirers have confirmed that, the proposed allotment would be in due compliance with Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and all other provisions governing preferential allotment. The allotment shall not in any way prejudice the interest of any shareholders or creditors of the target company. h. If the acquirers are granted exemption from the requirement of making public offer/public announcement, they would expedite the process of revival and expansion of business without prejudicially affecting the interest of any public shareholder of the target company. The exemption, if granted, would be in the interest of the Target Company, its promoters and 3,648 members of the public who hold shares in the target company.

3. The shareholding pattern of the target company as per the application is as under:-

Category Number of Before the proposed acquisition After the proposed acquisition registered shareholders as on date of application No. of shares/ % of Shares/ No. of shares/ total % of Shares/ %voting total voting %voting capital voting rights held capital held rights held held

Promoter group (including 21,95,900 40.27 % 41,95,900 56.30 % Acquirers) 2

Public 3,648 32,56,900 59.73 % 32,56,900 43.70 % Total 3,650 54,52,800 100 % 74,52,800 100 %

4. Thereafter, the acquirers, vide letter dated June 22, 2010, have submitted a copy of the special resolution passed in the target company’s 23rd Annual General Meeting of held on June 19, 2010, wherein it is noted that the proposed preferential allotment has been approved by way of a special resolution passed by the shareholders. The aforesaid application was forwarded to the Takeover Panel in terms of sub-regulation (4) of Regulation 4 of the Takeover Regulations and the Takeover Panel, vide report dated July 21, 2010 has recommended as under:

“The panel observed that the Target Company has been incurring losses and its Net worth has been fully eroded. The shares of the Company are being quoted below par and as such the Company may not receive favourable response from the other shareholders for the rights issue. The Target Company needs funds for its revival and since the infusion of funds by way of preference shares or loans may further increase the liabilities of the Company, the panel found the proposal for preferential allotment in favour of the acquirers as beneficial to the Company and the public shareholders. The panel also observed that even after the proposed preferential allotment, the public shareholding will remain much above the threshold limit of minimum 25% of the shareholding. Against the above background, the panel recommended the exemption to the acquirers from compliance of regulation 11 (1) of the SAST Regulations.”

5. I have carefully considered the application dated March 25, 2010 and the recommendations of the Takeover Panel and relevant materials available on record. I note that the acquirers propose to acquire 20,00,000 equity shares of the target company constituting 16.03 % of the expanded capital of the company through preferential allotment. I have also noted that the target company owes unsecured loan of Rs. 78.09 Lakhs to the acquirers. Out of the said loan, the acquirers propose to convert an amount of Rs. 76.30 Lakhs towards allotment of equity shares by way of preferential allotment and have also agreed to invest further funds to the tune of Rs. 123.70 Lakhs through issue of equity shares by way of preferential allotment to them. I note from the certified copy of the special resolution that 20,00,000 shares of Rs.10/- each is proposed to be issued in the following manner:

a. 7,63,979 nos of equity shares of Rs.10/- each to be allotted against conversion of unsecured loan of Rs.76,29,789/- brought in by Mr. Mohan Swami, as per approval obtained from the Reserve Bank of India;

b. 12,37,021 nos. of equity shares of Rs.10/- each to M/s. Chase Perdana Sdn. Bhd as per the approval obtained from the Reserve Bank of India.

In addition to the conversion of unsecured loans into equity, I note that the target company would be receiving funds through the said allotment. I have also noted the submissions of the acquirers that, if the target company proposes investment by all shareholders in the form of rights issue, it would not evoke any favorable response from other shareholders since the shares of the target company are quoted below par and it involves substantial statutory formalities and expenses. In this regard, I have noted that the current market price of the shares of the target company is Rs. 4.85, which is less than the face value., Further, according to the acquirers the cost of raising such rights issue would burden the target company, at his juncture, when it has only meager resources. I also note that the acquirers are the promoters of the target company and their shareholding, pursuant to the proposed acquisition would increase from 40.27 % to 56.30% of the equity share capital of the target company. There would not be any change in control pursuant to the proposed preferential allotment as the acquirers, being the sole promoters, are already in control of the target company.

Further, I note that the proposed preferential allotment of shares has already been approved by the shareholders of the target company at their Annual General Meeting held on June 19, 2010. I have also noted that the facts such as financial crisis of the target company, requirement of long term and short term working capital for its revival, etc. have been disclosed to the shareholders in the Explanatory Statement to the notice convening the aforesaid Annual General Meeting. I also note that, even after the proposed acquisition, the public shareholding in the target company would be at a level more than what is required for meeting the conditions of continuous listing. Thus the minimum public shareholding requirement specified in Clause 40A of the Listing Agreement would not be breached by the said increase in the shareholding of the acquirers. The panel has recommended exemption to the acquirers stating that the same is beneficial to the target company and the public shareholders. I note that pursuant to the proposed acquisition, the shareholding of the acquirers would increase from 40.27% to 56.30% of the equity share capital of the target company.

In view of the above, I agree with the recommendations of the Takeover Panel and consider the present case, a fit one for granting exemption to the acquirers from the provisions of Regulation 11(1) and (2) of the Takeover Regulations.

6. In view of the above findings, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 4(6) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, hereby grant exemption to the acquirers, namely Dr. Mohan Swami and Chase Perdana Sdn. Bhd. from complying with the provisions of Regulation 11(1) and (2) thereof, with respect to their proposed acquisition through preferential allotment of 20,00,000 equity shares of the target company, Epsom Properties Limited.

7. The exemption is granted subject to the following conditions:

(a) The statements/averments made/facts or figures given in the application and other correspondence are true and correct to the best knowledge of the acquirers. (b) The acquirers shall ensure compliance with the statements, disclosures and undertakings made in the application and subsequent letters. (c) In respect of the proposed preferential allotment, the relevant norms including the norms regarding the pricing as specified in Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 shall be observed and complied with. (d) There shall be no reduction in the minimum level of public shareholding pursuant to the proposed preferential allotment and that the target company shall maintain the minimum level of public shareholding, as required in terms of the listing agreement.

8. The exemption granted hereinabove shall not be construed as an exemption from the requirements of any other provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (e.g. disclosure requirements under Chapter II), the Listing Agreement or any other law.

DR. K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

PLACE: MUMBAI DATE: AUGUST 30, 2010