Order in the matter of Delisting of Equity Shares of Wintac Limited

WTM/GM/CFD/ 21 /2020–21 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH REGULATION 25A OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (DELISTING OF EQUITY SHARES) REGULATIONS, 2009 – RELAXATION FROM THE STRICT ENFORCEMENT OF THE REQUIREMENTS UNDER REGULATIONS 8(1)(d), 10(1) AND 12(1) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (DELISTING OF EQUITY SHARES) REGULATIONS, 2009 IN THE MATTER OF WINTAC LIMITED.

BACKGROUND –

1. Wintac Limited (“Applicant/the Company/Wintac”) was incorporated under the Companies Act, 1956 in 1990. The Registered Office of Wintac is at 54/1, 54/2, Boodihal Village, Nelamangala Taluk, Bangalore– 562123, Karnataka. The Company is in the business of developing and manufacturing sterile products using pharmaceutical formulations.

2. Securities and Exchange Board of India (“SEBI”) received an Application dated June 3, 2020 read with e– mail dated June 24, 2020 (“Application”), from Wintac seeking exemption under Regulation 25A of the SEBI (Delisting of Equity Shares) Regulations, 2009 (“Delisting Regulations 2009”) from strict compliance with the requirements under Regulations 8(1)(d), 10(1) and 12(1) of the aforesaid Regulations.

3. Regulations 8(1)(d), 10(1), 12(1) and 25A of the Delisting Regulations 2009, state:

“Conditions and procedure for delisting where exit opportunity is required 8. (1) Any company desirous of delisting its equity shares under the provisions of Chapter III shall, except in a case falling under clause (a) of regulation 6, – …

Order in the matter of Wintac Limited (b) obtain the prior approval of shareholders of the company by special resolution passed through postal ballot, after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution: (d) within one year of passing the special resolution, make the final application to the concerned recognised stock exchange in the form specified by the recognised stock exchange: Provided that in pursuance of special resolution as referred to in clause (b), passed before the commencement of these regulations, final application shall be made within a period of one year from the date of passing of special resolution or six months from the commencement of these regulations, whichever is later.

Public announcement 10. (1) The acquirers or promoters of the company shall within one working day from the date of receipt of in principle approval for delisting from the recognised stock exchange, make a public announcement in at least one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language newspaper of the region where the concerned recognised stock exchange is located.

Letter of offer 12. (1) The acquirer or promoter shall despatch the letter of offer to the public shareholders of equity shares, not later than two working days from the date of the public announcement.

Power to relax strict enforcement of the regulations. 25A. (1) The Board may for reasons recorded in writing, grant relaxation from strict enforcement of any of the requirements of these regulations, if the Board is satisfied that the relaxation is in the interests of investors in securities and the securities market. … (4) The Board may after affording reasonable opportunity of being heard to the applicant and after considering all the relevant facts and circumstances, pass a reasoned order either granting or rejecting the exemption or relaxation sought as expeditiously as possible.”

4. In the Application, the following was stated:

i. The shares of the Wintac are listed on BSE Limited (“BSE”).

ii. Pursuant to the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India (“DOP”) granting Veego Pharma, LLC (“Veego/Promoter”) FDI approval to hold upto 66% shareholding in Wintac on January 23, 2013 (“DOP 2013 Approval”), Veego invested a total of ₹55 Crore in Wintac. Currently, Veego holds 54.99% of the total equity shareholding of Wintac and is also its Promoter. The shareholding pattern of the Company as on June 30, 2020 is as under:

TABLE I – SHAREHOLDING IN WINTAC LIMITED (SOURCE: BSE WEBSITE) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 55,12,098 54.99 B. PUBLIC SHAREHOLDING 45,12,144 45.01 TOTAL (A + B) 1,00,24,242 100.00 iii. In furtherance of the DOP 2013 Approval, Veego made an amendment application to the same in 2017 and was granted FDI approval to hold upto 75% shareholding in Wintac. The DOP granted approval for the aforesaid on January 16, 2018 (“DOP 2018 Approval”).

iv. Thereafter, Veego made a fresh application to DOP to hold upto 100% shareholding in Wintac. The DOP granted approval for the aforesaid on March 13, 2020 (“DOP 2020 Approval”).

v. As on March 31, 2020, the paid up equity capital of the Company was approximately ₹10.02 Crore. Further, Wintac has 5003 public shareholders.

vi. Veego is committed for long term growth of Wintac and has never traded in equity shares of the Company till date. Veego decided to obtain the approval of the DOP for the purpose of reviving the business of the Company by purchasing the equity shares of the public shareholders as it would offer better flexibility to the Promoter (Veego) and also consider investing funds into the Company for other purposes including paying off debts of the Company and the capital expenditure such as expansion of manufacturing and R&D facilities of the Company, while at the same time, offer a fair exit to the public shareholders. Thus, based on the aforesaid, Wintac/Veego is of the view that voluntary delisting of the equity shares of Wintac from the BSE would be in the interest of the public shareholders of Wintac. Accordingly, Veego intends to delist the equity shares of Wintac from BSE and had communicated its intention to Wintac by way of a letter dated April 21, 2018.

vii. The floor price was fixed by Veego at ₹220 per equity share on May 2, 2018 after considering various aspects and valuation parameters in accordance with the Delisting Regulations 2009. Pursuant to receipt of the DOP 2018 Approval, Veego has reaffirmed its intention to delist the equity shares of Wintac by way of letter dated March 13, 2020, addressed to the Company. The same has been informed to BSE and is available in the public domain. The equity shares of the Company have been infrequently traded since long and are currently trading in a broad range of ₹160 to ₹190 over the past one month. Bearing in mind the interests of the public shareholders of Wintac, Veego continues to retain the floor price at ₹220 per equity share to the public shareholders for acquiring the equity shares of Wintac.

viii. Accordingly, we seek exemptions/extension under the relevant Regulation of the Delisting Regulations 2009 on the following grounds:

a. Grounds and rationale for Seeking Exemption from Regulation 8(1)(d) of the Delisting Regulations 2009: Owing to the extended lockdown period which is presently in force and is expected to continue, the Company may not be able to complete/adhere to the strict timelines stipulated under the Delisting Regulations 2009 and make the final delisting application to Stock Exchange within the stipulated period of one year from the date of shareholders resolution which expires on August 9, 2020. Although the shareholders resolution was passed on August 10, 2019, the Promoter of Wintac Limited, Veego Pharma LLC, being a foreign entity, was required to obtain the approval, for increasing its shareholding in Wintac Limited to 100%, from the DOP, which was received only on March 13, 2020 (copy was attached to our application dated June 3, 2020). Since the month of March 2020 itself, nationwide lockdown restrictions owing to COVID– 19 were imposed, due to which the Company could not proceed with the delisting proposal. The Company has not yet made the application to stock exchange for in-principle approval, apprehensive that it may not be able to comply with the strict timelines prescribed under the Delisting Regulations 2009 for making public announcement and dispatch of offer documents to public shareholders, etc. Even as on the date of filing this application (June 3, 2020), the Company is unable to commence publishing of the public announcement and printing/ dispatch of Letter of Offer in accordance with the requirements of the Delisting Regulations 2009. Banking and escrow arrangements are also progressing slowly due to disruption of services. Considering that the present situation will continue till June 30, 2020 (approx. 4 months since imposition of lockdown in Mumbai) and based on current situation, very high probability of only partial relaxations beyond June 30, 2020, we seek additional period of 4 months after August 9, 2020 i.e. till December 9, 2020 to make final application to the stock exchange under Regulation 8(1)(d) of the Delisting Regulations 2009.

b. Grounds and rationale for Seeking Exemption from Regulation 10(1) of the Delisting Regulations 2009: Consequent to the extension of lockdown in Maharashtra with some relaxations, the Company has been informed by its advertising agency that the regular publishing of notices and advertisements have begun only partially but the processing time for typesetting, proof reading etc. has substantially increased due to limited availability of staff and communication delays. Since the advertising agencies and newspaper offices are functioning with limited capacity, it is extremely difficult for the Company to make the public announcement on newspapers within one working day and therefore, relaxation may be granted to publish the public announcement in the newspapers within three working days. The public announcement can however be made available in soft copy format on the website(s) of the Company / registrar / stock exchange / manager to the offer within the stipulated time frame under Regulation 10(1) of the Delisting Regulations 2009.

c. Grounds and rationale for Seeking Exemption from Regulation 12(1) of the Delisting Regulations 2009: Owing to the lockdown situation in Maharashtra, the printers have not resumed operations and postal services are currently unavailable or accepting only emergency/ essential articles and not bulk posting. Mailing of Offer Documents through post within two days from the date of public announcement may not be possible. The Company requests for being allowed to dispatch the letter of offer (Offer Documents) through electronic means (e-mails)

including SMS or digital (web-based) advertisement as well as make the same available on the website of the Company / registrar / manager to the offer. The Company would abide by the mode of physical dispatch of offer documents stipulated under Regulation 12(1) of the Delisting Regulations 2009 if the same is available by the time the dispatches are required to be made. The above relaxations are sought only to facilitate completion of the Delisting procedure in case the current restrictions continue till such time especially in cities of Mumbai / Bangalore.

CONSIDERATION –

5. I have considered the Application submitted by Wintac and other material available on record. Accordingly, the following is noted:

A. Regulation 8(1)(d) of the Delisting Regulations 2009: Wintac had obtained prior approval of its shareholders by special resolution on August 10, 2019 (in accordance with Regulation 8(1)(b) of the Delisting Regulations 2009), for delisting of its equity shares. As per Regulation 8(1)(d) of the aforesaid Regulations, Wintac was required to make the final application to BSE within a period of one year from the date of passing of special resolution i.e. August 9, 2020. It is also noted that the DOP had granted approval to Veego for 100% FDI in Wintac only on March 13, 2020. Accordingly, the Applicant has sought additional period of 4 months after August 9, 2020 i.e. till December 9, 2020, to make final application to the stock exchange under Regulation 8(1)(d) of the Delisting Regulations 2009. As submitted by Wintac, most of the activities involved in the process of delisting were stopped due to lockdown. Given the backdrop of strict lockdown in the country so far and the fact of gradual resumption of activity in the last few days, I am inclined to view the request of the Applicant favorably.

B. Regulation 10(1) of the Delisting Regulations 2009: Regulation 10(1) of the aforesaid Regulations states that the Acquirer or Promoter of the Company shall make a public announcement in at least one English and Hindi national daily and one regional language newspaper where the concerned stock exchange is located, within one working day from the date of receipt of in principle approval for delisting from the recognised stock exchange. In this context, Wintac has requested that it may be granted relaxation to publish the public announcement in the newspapers within three working days while at the same time ensuring that such announcement will be made available in soft copy format on the website(s) of the Company / Registrar / BSE / Manager to the Offer within the stipulated time frame under Regulation 10(1) of the Delisting Regulations 2009. Upon a consideration of the aforementioned, I find that relaxation in this context may be granted to Wintac and its Promoter for ensuring the publishing of the public announcement within a period of three working days from the date of receipt of in principle approval for delisting from BSE. Wintac and its Promoter shall ensure that the announcement is uploaded on the aforesaid websites, as undertaken.

C. Regulation 12(1) of the Delisting Regulations 2009: Regulation 12(1) of the aforesaid Regulations states that the Acquirer or Promoter of the Company shall despatch the letter of offer to the public shareholders not later than two working days from the date of the public announcement. Accordingly, as requested by Wintac, I am inclined to grant relaxation in respect of the requirement for dispatch of letter of offer. Accordingly, the Applicant and its Promoter is permitted to dispatch the letter of offer through electronic means (e-mails) including SMS or digital (web-based) advertisement. The Applicant and its Promoter shall also make such letter of offer available on the website(s) of the Company / Registrar / BSE / Manager to the Offer in addition to ensuring physical dispatch of the letter of offer in accordance with Regulation 12(1) of Delisting Regulations 2009, if such services are available by the time such dispatches are required to be made.

6. As noted from the submissions made by Wintac, the Company was not in a position to adhere to the strict timelines stipulated under the Delisting Regulations 2009 on account of the extended lockdown period. Accordingly, in the interests of investors in securities and the securities market, I am inclined to grant Wintac and its Promoter relaxation from the strict enforcement of the requirements under Regulations 8(1)(d), 10(1) and 12(1) of the Delisting Regulations 2009, subject to compliance with the conditions stated in paragraphs 5. A., B. and C.

ORDER –

7. I, in exercise of the powers conferred upon me under Section 11(1) and Section 11B of the SEBI Act, 1992 and Regulation 25A of the Delisting Regulations 2009, hereby grant relaxation to Wintac Limited and its Promoter, from the strict enforcement of the requirements under Regulations 8(1)(d), 10(1) and 12(1) of the Delisting Regulations 2009, as requested for in the Application, subject to the conditions stated in paragraphs 5. A., B. and C.

8. Subject to the above, the Company/Promoter shall comply with all other applicable conditions, stipulated in the Delisting Regulations 2009.

9. A copy of this Order shall also be served to BSE for its information and necessary action.

10. The Application dated June 3, 2020 read with e–mail dated June 24, 2020, stands disposed of accordingly.

Place: Mumbai G. MAHALINGAM Date: July 31, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA