Order in the matter of Jolly Boards Limited

WTM/PS/28/CFD/AUG/2013 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 Jolly Board Limited

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had passed an ad 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. Jolly Board Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The equity shares of the Company are listed on the Bombay Stock Exchange Limited ("BSE"). 3. The Company, its directors including independent directors and its promoters filed a common reply dated June 17, 2013 (read with the letter dated June 18, 2013) to the interim order.

An opportunity of personal hearing was afforded to the Company on July 17, 2013, when Mr. R.S. Loona, Advocate represented the Company and made submissions. Mr. Arvind Jolly (Managing Director), Mrs. Rashmi A. Jolly (Director) and Mr. Jimmy Pochkhanawalla (Senior Advocate and Independent Director of the Company) and the representatives from Keynote Corporate Services Limited (manager in the delisting offer made by the promoter) were also present in the hearing. 4. It was submitted on behalf of the Company that the promoters of the Company decided to delist the Company and began taking concrete steps from September 2012. The delisting offer was approved by the Company's Board on November 10, 2012 and that the shareholders had also approved the same vide a special resolution through postal ballot on January 04, 2013. The Company submitted that it received in-principle approval for the proposed delisting of equity shares from BSE vide its letter dated February 18, 2013. Pursuant to the offer letter, the public shareholders submitted their bids through the Reverse Book Building ("RBB") process through the electronic system of the BSE, which opened on May 27, 2013 and closed on May 31, 2013. The price discovered through RBB in accordance with the Delisting Regulations after closure of the bid period was 775/-.

The promoter of the Company, Jolly Exports Private Limited, had announced the final price of 1000/- per equity share for accepting shares successfully tendered in the delisting offer. The Company had also submitted that the process of dispatch of the consideration to the equity shareholders whose shares were accepted under the delisting offer was completed on June 10, 2013. 5. The Company had also submitted that the delisting offer was very much in the interest of the public shareholders as is evident from the fact that while the floor price was 350/- per share and the discovered price was 775/- per share, the promoters have accepted the exit price at 1,000/- per equity share. 6. During the personal hearing, I had pointed out to the representatives that despite having the approvals in place from February 2013, the Company/its promoters had commenced its delisting process only during May 2013 and that the same was the reason for the Company to have delayed in completing the necessary formalities and taking the final step for delisting before June 03, 2013. In response to the same, Mr. Arvind Jolly, the Managing Director of the Company, had submitted that the delay was because of the reason that the Company desired to publish the latest audited financial results as on March 31, 2013 before the public announcement by the promoter, so as to enable the public shareholders to take an informed decision while participating in the price discovery through RBB.

7. Mr. Arvind Jolly (Managing Director of the Company) for himself and on behalf of the directors, the promoters and the Company, vide letter dated July 22, 2013 filed written submissions along with certain documents/information. In the written submissions, it was inter alia submitted that the Company was orally advised by the merchant bankers as well as legal advisors that it would be more appropriate for the Company to make the public announcement after finalising the audited annual accounts, as the same would provide transparency. The Company has also submitted that the financial results of the Company for the year ended March 31, 2013 were approved by the Board of Directors at their meeting held on May 04, 2013. In the said meeting, the Board was also apprised of the developments in the proposed delisting offer including the fact that the promoters are waiting for the finalisation of the accounts for the year ended March 31, 2013 before making the public announcement. I had perused the said minutes annexed with the written submissions and note that it was inter alia mentioned "…..

The Promoters have been waiting for finalisation of Company's Accounts for the year ended 31.03.2013 before making public announcement about the offer for Delisting of Equity Shares." It was further submitted that a statement was also made in the audited financial results published in newspapers on May 05, 2013 that "6. The Company has received from BSE Ltd. 'In-Principle' approval to delist its Equity Shares from the Bombay Stock Exchange. The Promoters are in the process of finalizing a draft of public announcement with Merchant Bankers". The Company further submitted that both the aforesaid documents would indicate that the public announcement to be made by the promoters was linked to the finalisation of the annual accounts and the promoters were waiting for such finalisation. 8. The Company has submitted that though as per law, the Company was entitled to finalize its audited annual accounts within 6 months from March 31st, it took extra steps to ensure that the annual accounts were audited at the earliest so that the public announcement was not unduly delayed. In the process, the Company had succeeded in finalizing the accounts within a record period of 34 days.

It was submitted that the issue of the public announcement on the very next day after publication of the audited annual accounts vindicates the promoter's intention to proceed with the delisting offer immediately after finalisation of the accounts. The Company has also submitted that arrangement of funds was not a reason for delay as a bank guarantee for escrow account was available on March 01, 2013. 9. The Company has submitted that as the annual results showed substantial growth in the Company's profit (130%) and Earnings Per Share (EPS) increased from 17.01/- in the previous year to 40.15/-, the shareholders could get a better idea of the financials of the Company and accordingly decide on the bidding price. The Company has also submitted that as per the process flow with respect to the delisting prepared by the merchant bankers, all activities were proposed to be completed by April 18, 2013 and only because of the decision to make the public announcement after the publication of the audited annual results, the delisting process was delayed. The Company has also submitted that if its promoters had gone ahead with the public announcement immediately after the arrangement of the bank guarantee, they would have saved substantially on the money outflow.

It was also submitted that payments have been made to the successful bidders in the delisting offer and the consideration to be paid to the remaining public shareholders has already been deposited in the escrow account. In view of their submissions, the Company, its promoters and directors have requested SEBI to vacate the interim order and permit the promoters to complete the remaining delisting process.

10. After having examined the submissions and documents furnished by the Company in these proceedings, I am of the considered view that the Company's submission that it waited to make the public announcement only after publication of its audited financial results for the year ended March 31, 2013 appears to be genuine. I note that the promoters had fixed 1,000/- as the exit price when the final price discovered in the bidding process was 775/-. I also note that the promoters have already made payments to the public shareholders who participated in the bids and who had tendered their shares. The Company has also submitted that the payment due to the remaining public shareholders who would tender their shares during the exit period is already deposited in the escrow account. Considering the above, I am of the view that the directions imposed on the Company, its directors, promoters and the promoter group vide the interim order need not continue. I am also of the opinion that this case does not warrant initiation of further action as contemplated in paragraph 18 of the interim order. 11. 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 revoke the directions issued vide the interim order dated June 04, 2013 against the company, Jolly Board Limited, its directors, promoters and promoter group, with immediate effect. The aforesaid direction would enable the Company/its promoter to proceed with the payments to the residual public shareholders who tender their shares during the exit period and acquire shares so offered therein. 12. 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.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : August 12, 2013 Place : Mumbai