Order in the matter of non-complaince with the requirement of MPS by listed companies in respect of Shalimar Wires Industries Limited

WTM/PS/50/CFD/OCT/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 Shalimar Wires Industries 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. Shalimar Wires Industries 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 12.10%. The shares of the Company are listed on the Bombay Stock Exchange Limited ('BSE') and Calcutta Stock Exchange ('CSE'). 3. The Company vide its letters dated June 14, 2013 and August 12, 2013 filed reply to the interim order. Thereafter, an opportunity of personal hearing was afforded to the Company on September 06, 2013, when Mr. S.K. Kejriwal, Company Secretary of the Company and Mr. Anup Kumar Sharma, Vice President, V.C. Corporate Advisors Pvt. Limited appeared and made submissions. The submissions of the Company are as under: a. The Company is a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985 ('SICA') and is registered with the Board for Industrial and Financial Reconstruction ('BIFR') since January, 2004. Pursuant to the same, a scheme for rehabilitation was approved on June 10, 2010 by BIFR and the promoters of the Company/ their associates were directed to bring additional fund of 500 lacs in the form of equity. b. As per the scheme, the promoters had brought 500 lacs in the Company in two instalments i.e. 125 lacs and 375 lacs. On receipt of such amounts, 2,50,00,000 fully paid up shares of 2 each amounting to 500 lacs were allotted to the promoters by the Company in the board meeting held on February 05, 2013. These 2,50,00,000 equity shares to the promoters are under lock in of three (3) years. c. Further, as per the scheme, 59,50,000 equity shares of 2 each were allotted to Asset Reconstruction Company (India) Limited on August 06, 2013. d. Pursuant to the same, the promoter shareholding based on expanded capital of the Company reduced to 73.99% thereby raising the public shareholding to 26.01%. e. The Company also represented that it is now compliant with the MPS norms and requested SEBI to withdraw the show cause notice.

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 June 10, 2010, passed by BIFR and the sanctioned rehabilitation scheme. I note that the allotment of equity shares to Asset Reconstruction Company (India) Limited has been exempted from complying with the requirement of the applicable provisions of the Companies Act, 1956, SEBI Guidelines for preferential allotment of shares, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, SEBI (Disclosure & Investor Protection) Guidelines, 2000. The Company has also been exempted from the ceiling on promoters' holding. Considering above and the fact that the Company is now compliant with the stipulated minimum public shareholding level, I do not find it necessary to continue with the interim directions or initiate further action against the Company, its directors, promoters and promoter group, as contemplated in paragraph 18 of the interim order.

5. In view of the same, 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 the company, Shalimar Wires Industries Limited, its directors, promoters and promoter group, with immediate effect.

6. 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: October 1st, 2013 PRASHANT SARAN PLACE: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA