Order in the matter of Gujarat Themis Biosyn Limited

WTM/PS/58/CFD/NOV/2013 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM : PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Section 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 Gujarat Themis Biosyn Limited 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') 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. Gujarat Themis Biosyn Limited (hereinafter referred to as 'the Company') is one such company against whom the interim order was passed. The public shareholding in the Company on the date of the interim order was 15.21%. The shares of the Company are listed on the Bombay Stock Exchange Limited ('BSE') and Ahmedabad Stock Exchange ('ASE').

3. The Company vide its letters dated June 24, 2013, August 16, 2013 and September 10, 2013 replied to the interim order. Thereafter, an opportunity of personal hearing was afforded to the Company on October 10, 2013, when Mr. Dinesh S. Patel, Chairman of the Company and Mr. Prakash Naringrekar, Company Secretary appeared and made submissions. The submissions of the Company are as under: a. The Company was declared a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985 ('SICA') on June 02, 2008. A scheme for rehabilitation was then sanctioned on February 13, 2012 by Hon'ble Board for Industrial and Financial Reconstruction ('BIFR') and the promoters of the Company were called upon to provide financial support. As the promoters of the Company namely Pharmaceutical Business Group (India) Limited and Yuhan Corporation had indicated their inability to contribute any further funds/ efforts in the revival of the Company, one Themis Medicare Limited (a group company of one of the promoter) was inducted as co-promoter with an equity stake in the Company. Accordingly, Themis Medicare Limited was allotted 29,28,702 fresh equity shares of 5 each at a premium post restructuring against advances and supply of capital requirement. b. BIFR also ordered that in order to bring the public shareholding of the Company to minimum 25%, a public offer of 14,71,250 equity shares of 5 each at par aggregating to 73.56 lakhs be made within a period of three years i.e. by financial year 2014. c. Yuhan Corporation has insisted on maintaining its shareholding at 26% in the Company even after the public issue by the year 2014 to meet the SEBI guidelines.

In this regard, Themis Medicare Limited has agreed to offload part of its shareholding in favour of Yuhan Corporation at a price to be determined in accordance with applicable laws. d. Before the scheme was sanctioned by the BIFR, the public shareholding in the Company was around 22.85%. The reduction of the public shareholding has taken place as a result of the scheme of rehabilitation and revival of the Company. As required by BIFR, Themis Medicare Limited was inducted as a promoter, the public shareholding was reduced and the promoter shareholding was enhanced. On allotment of the shares to the promoters as per the scheme of BIFR, the public shareholding was reduced to 15.21%. e. The scheme approved by BIFR envisages complete restructuring of the authorised paid up and subscribed capital of the Company. BIFR has thought it appropriate to enhance promoters' holding in order to revive the Company and in the interest of investors and also to ensure that the public is not at an disadvantage. f. It will comply with the MPS requirements by March 31, 2014 as per the directions of BIFR dated January 12, 2012.

4. I have considered the replies of the Company and the submissions made in the personal hearing. I note that the Company was a sick company for which the BIFR had sanctioned a rehabilitation scheme. I have also perused the order dated January 12, 2012, passed by BIFR and the sanctioned rehabilitation scheme. I note that the Company had proposed, before BIFR, to make a public offer of 14,71,250 equity shares of 5 each at par aggregating to 73.56 lakhs to bring up the public shareholding to a minimum level of 25% of the total paid up capital within a period of three years, i.e. by financial year 2014. I note that the Company had requested for exemption from operations/ applicability of Regulations 7, 10, 11 and 12 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 under the scheme. The Company had also requested for exemption from the applicability of Clause 40A of the Listing Agreement with the BSE specifically clause 40A(v) and to allow continued listing of the Company's shares on the BSE post share capital restructuring. I note that the scheme has been approved. I note that in terms of Section 32 of the SICA, the provisions of the said Act, rules or schemes made there under shall have overriding effect on other laws. SEBI Act is not a statute exempted from the applicability of Section 32 of the SICA. Further, in terms of Section 32 of the SEBI Act, the provisions of the SEBI Act shall be in addition to, and not in derogation of the provisions of any other law for the time being in force. I have also noted the proposals to be taken by the Company for bringing down its promoters' holding to 75% or less and for achieving compliance with the MPS requirements.

5. In view of the foregoing, 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 vacate the directions issued vide the interim order dated June 04, 2013 against Gujarat Themis Biosyn Limited, its directors, promoters and promoter group, with immediate effect. However, the directions issued vide the SEBI Order dated June 04, 2013, shall immediately be revived (without the need for passing of a separate order) against the said Company, its directors, promoters and the promoter group, if - a. the promoter shareholding in Gujarat Themis Biosyn Limited, is not reduced to 75% or less by March 31, 2014 being the end of the period till which the Hon'ble BIFR had given exemption; and b. Gujarat Themis Biosyn Limited, fails to increase its public shareholding to the minimum 25% as stipulated under rule 19A of the SCRR, within the said time frame (i.e, on or before March 31, 2014).

6. Further, the above directions would be without prejudice to the right of SEBI to initiate other appropriate action in accordance with law, if the company, Gujarat Themis Biosyn Limited, fails to reduce its promoter shareholding to 75% or less as directed by the Hon'ble BIFR, and increase its public shareholding to the minimum 25% as stipulated under rule 19A of the SCRR, within March 31, 2014.

7. Copy of this Order shall be served on the stock exchanges and depositories for their information and action that may deem fit and necessary in this case.

DATE: November 05, 2013 PRASHANT SARAN PLACE: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA