Order in the matter of Ganesh Housing Corporation Limited

1.1 Ganesh Housing Corporation Limited (earlier known as Ganesh Housing Finance Corporation Limited) is a company incorporated under the Companies Act, 1956, having its registered office at 1st Floor, “Samudra”, Nr. Klassic Gold Hotel, Off CG Road, Ellisbridge, Ahmedabad - 380006. Ganesh Housing Corporation Limited is hereinafter referred to as the target company. The equity shares of the target company are listed on the National Stock Exchange of India Limited (NSE) and The Bombay Stock Exchange Limited (BSE).

2.0 APPLICATION FOR EXEMPTION

2.1 Mr. Shekhar G Patel, one of the promoters of the target company, vide letter dated December 20, 2008 filed an application under Regulation 4(2) read with Regulation 3(1)(l) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations) on behalf of the promoter group including Mr. Govindbhai C Patel, Mr. Deepak G Patel, Mr. Shekhar G Patel, Ms. Lalitaben G Patel, Mr. Jayantibhai C Patel, Ms. Sapnaben D Patel, Mr. Hemang J Patel, Ms. Kailashben J Patel and Shri Ganesh Construction Private Limited (hereinafter collectively referred to as the acquirers) seeking exemption from the provisions of Regulation 11(2) of the Takeover Regulations. The acquirers inter alia made the following submissions in the said application:

i) The acquirers are the promoters of the target company and collectively they are holding 57.49% (1,87,74,723 equity shares) of the outstanding equity share capital of the target company.

ii) At the meeting held on October 25, 2008 and November 26, 2008, the Board of Directors of the target company passed a resolution under section 77A and 77B of the Companies Act, 1956, approving the proposal to buy back maximum possible number of fully paid up equity shares of the target company of the face value of Rs 10/-, which can be bought back by the target company at a maximum price not exceeding Rs. 101/- per share and for a total amount not exceeding Rs. 20 crore. The buy-back offer is expected to contribute to the overall enhancement of the shareholders value, resulting in an increase in the return on equity of the target company.

iii) The proposed buy-back is expected to lead to a reduction in the outstanding equity shares, which might lead to increase in earnings per shares, thereby creating long term shareholder value.

iv) In case of 100% response to the proposed buyback offer of the target company, assuming that 40,00,000 equity shares are bought back, the voting rights of the acquirers would increase from 57.49% to 65.52%.

v) Pursuant to the proposed buy-back, there would be no change in the management control over the target company as the acquirers are the promoters and are already in control over the target company.

vi) The acquirers do not intend to offer their shareholding in the proposed buy-back offer and that they would not transact in the equity shares of the target Company till the closure of the buy-back offer.

vii) The acquirers are not acquiring any additional shares in the target company and the proposed increase in the voting rights of the acquirers would be incidental to the proposed buy-back offer of the target company. The increase in the voting rights of the acquirers is incidental to the buy-back proposal of the target company and the acquirers existing shareholding (in terms of numbers) i.e, 1,87,74,723 equity shares would remain the same.

viii) The proposed buy-back would not result in the violation of the conditions of continuous listing specified in terms of Clause 40A of the Listing Agreement entered into between the target company and the stock exchanges.

2.2 The shareholding pattern of the target company before and after the proposed buy back offer (as per the application) is as under:

Shareholders No. of Before the Proposed buy After the Proposed buy back Category registered back Shareholders as No of Shares/ % of No of Shares/ % of on 12.12.2008 total voting Shares/ total voting Shares/ rights held total voting rights held total voting rights held rights held Promoters & 12 18774723 57.49 18774723 65.52 Promoter Group / Acquirers FIs/ Banks, MFs 4 1517244 4.65 9881157 34.48 FIIs/ NRIs/ 87 8007024 24.52 OCBs Public 10052 4356889 13.34 Total 10155 32655880 100 28655880 100

3.0 RECOMMENDATION OF THE TAKEOVER PANEL

3.1 The aforesaid application was forwarded by Securities and Exchange Board of India to the Takeover Panel in terms of sub-regulation (4) of Regulation 4 of the Takeover Regulations. The Takeover Panel vide report dated January 20, 2009 has recommended as under– “It was observed that the closing price of the Company's shares on BSE & NSE on December 19, 2008 was Rs 66.70/- and Rs 66.75/- respectively. As against the said price, the Target Company proposes to buyback equity shares from open market at a price not exceeding Rs.101/- per equity share. Even after buyback of 40.00,000 equity shares by the Target Company, the public shareholding will still be 34.48%. Against the aforesaid background, the proposal for buyback was found to be in the interest of the public shareholders as it will enhance overall shareholders value and provide exit option to those who desire to exit from the Company. After careful consideration, the panel therefore recommended exemption to the Acquirers from the applicability of regulation 11(2), subject to the Target Company complying with the relevant provisions of the Companies Act. 1956, SEB1 Regulations and Listing Agreement.”

4.0 FINDINGS

4.1 I have considered the application for grant of exemption, the abovementioned recommendations of the Takeover Panel and other relevant material available on record.

4.2 I note that though the shareholding and voting rights of the acquirers in the target company would increase from 57.49% to 65.52% (of the outstanding equity share capital), the number of shares held by them would remain same at 18774723 even after the buy back of shares by the target company. There is no active acquisition of shares by the acquirers and the increase in shareholding and voting rights of the acquirers is only incidental to the buy-back offer of the target company. I note that the proposed buy back offer would not result in change in control over the target company as the acquirers are the promoters of the target company and have control over it. The acquirers have stated that they did not intend to tender their shares in the said buy-back offer by the target company. The acquirers stated in the application that the minimum public shareholding requirement stipulated in Clause 40A of the Listing Agreement will not be breached by the said increase in shareholding and voting rights of the acquirers pursuant to the proposed buy-back of shares by the target company. Thus, public shareholding in the target company will be maintained at above 25% limit on a continuous basis.

4.3 The maximum proposed buy-back price is Rs. 101/- per share. In terms of the application filed by the acquirers, the said offer price is much greater than the market price of the share of the target company on BSE and NSE viz. Rs. 66.70/- and Rs. 66.75/-, respectively (closing price as on December 20,2008).

4.4 In view of the above findings I am of the opinion that this is a fit case for grant of exemption under regulation 3 (1)(l) read with regulation 4 of the Takeover Regulations.

5.0 ORDER

5.1 In view of the above findings, I, in exercise of the powers conferred upon me by virtue of section 19 of the Securities and Exchange Board of India Act, 1992 read with sub-regulation (6) of Regulation 4 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, hereby grant exemption to the acquirers namely Mr. Shekhar G Patel, Mr. Govindbhai C Patel, Mr. Deepak G Patel, Mr. Shekhar G Patel, Ms. Lalitaben G Patel, Mr. Jayantibhai C Patel, Ms. Sapnaben D Patel, Mr. Hemang J Patel, Ms. Kailashben J Patel and Shri Ganesh Construction Private Limited from complying with the provisions of Regulation 11(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 with respect to the increase in percentage shareholding and voting rights of the acquirers from 57.49% to 65.52% in the target company viz. Ganesh Housing Corporation Limited, pursuant to the proposed buy-back of upto 40,00,000 paid-up equity shares by the said target company.

5.2 The exemption is granted subject to the condition that the acquirers shall ensure compliance with the statements, disclosures and undertakings made in the application and that the proposed buy back of equity shares shall be in accordance with the Companies Act, 1956, the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, the Listing Agreement and other applicable laws.

5.3 This exemption shall not be construed as exemption from 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.

K.M.ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Place: Mumbai Date: March 24, 2009