Order in the matter of Super Sales India Ltd.

WTM/GM/CFD/ 09 /2019–20 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1) AND SECTION 11(2)(h) OF THE SEBI ACT READ WITH REGULATION 11(5) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011. IN THE MATTER OF PROPOSED ACQUISITION OF SHARES AND VOTING RIGHTS IN – TARGET COMPANY SUPER SALES INDIA LIMITED ACQUIRER ADI LAKSHMI FAMILY TRUST

BACKGROUND – 1. Super Sales India Limited (“Target Company”) was incorporated under the Companies Act, 1956 on September 18, 1981. The Registered Office of the Target Company is at 34A, Kamaraj Road, Coimbatore – 641 018, Tamil Nadu. The shares of the Target Company are listed on BSE Limited (“BSE”).

2. SEBI received an Application dated November 27, 2017 ("Application") from Mr. Sanjay Jayavarthanavelu – Trustee/Managing Trustee of Adi Lakshmi Family Trust ("Acquirer"/ “Acquirer Trust”) seeking exemption from the applicability of inter alia Regulations 3, 4 and 5 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) in the matter of proposed indirect acquisition of interest in the Target Company, by the Acquirer Trust. An Addendum to the said application was received vide letter dated November 14, 2018. Subsequently, a Restated and Amended Deed of Trust dated April 22, 2019 (hereinafter referred to as "Trust Deed") was submitted along with letter dated May 02, 2019 from the Acquirer Trust.

3. As per the Application read with subsequent submissions and the Trust Deed, the following are the brief facts for consideration in this Order - A. As per the Application, the proposed acquisition of shares by the Acquirer Trusts envisages the following – i. Lakshmi Life Sciences Limited (“LLS”) is a part of the promoter group of the Target Company, and holds 9,39,590 (30.59%) equity shares of the Target Company. LLS is a public limited company, incorporated under the provisions of the Companies Act, 1956 on September 04, 2009 having its registered office Order in the matter of Super Sales India Limited at 34-A, Kamaraj Road, Coimbatore - 641 018, Tamil Nadu. It is currently engaged in the business of manufacturing of plastic injection molding for medical and engineering and related businesses. The Acquirer Trust currently does not have any direct or indirect interest in the Target Company. ii. Sanjay Jayavarthanavelu ("Tranferor Promoter"/"Settlor"), along with his daughter, Ms. Shivali Jayavarthanavelu, collectively hold 99.99% of the shares of LLS and individually holds 3,29,985 (59.9973%) equity shares of Lakshmi Life Science Ltd. (LLS). Thus currently, the Transferor Promoter's Indirect Interest in the Target Company is held and controlled by LLS. iii. The Transferor Promoter proposes to transfer 59.99% of his shareholding in LLS to the Acquirer Trust. Thus the Acquirer Trust shall indirectly acquire 30.591% equity shares of the target company. iv. Pursuant to the proposed acquisition, the Transferor Promoter's Indirect Interest in the Target Company will be continue to be held and controlled by the Transferor Promoter as the managing trustee of the Acquirer Trust. After the Transferor Promoter ceases to be a trustee of the Acquirer, the Transferor’s Indirect Interest in the Target Company will be held and controlled by the Transferor’s daughter (and immediate relative), Ms. Shivali Jayavarthanavelu, who is one of the trustees of the Acquirer Trust.

B. The Settlor, Trustees and Beneficiaries of the Acquirer Trust, as per the Trust Deed are as under – TABLE 1 SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP 1. Mr. Sanjay 1. Mr. Sanjay 1. Ms. Shivali 1. Mr. Sanjay Jayavarthana Jayavarthanav Jayavarthana Jayavarthanavelu/Se velu elu velu; ttlor is the part of the 2. Ms. Shivali 2. Mrs. Lalitha Promoter Group. Jayavarthanav Devi 2. Ms. Shivali is the the elu Jayavarthana daughter of the 3. Mrs. Lalitha velu; Transferor Promoter Devi Sanjay 3. Other 3. Ms. Lalitha is the Jayavarthanav members of wife of the Transferor elu; and/or the Family, as Promoter 4. Lineal may be descendants or admitted as Immediate Beneficiaries relatives of Mr. of the Trust, Sanjay in the manner Jayavarthanav provided in elu Clause 2.7.2 of the Trust

Deed; (Family being Lalitha Devi J, Shivali J. and lineal descendants of Shivali J.) 4. Immediate relatives and/or Lineal Descendants of Sanjay J.

C. Grounds for seeking exemption – The Application lists the following as being the reasons for the proposed acquisition by the Acquirer Trust and the grounds for exemption from the applicability of regulations 3, 4 and 5 of the Takeover Regulations- i. The Proposed Transaction is being undertaken as a non-commercial internal family arrangement intended to streamline succession and welfare of the Transferor Promoter's family. ii. As per the Acquirer Trust Deed, the Transferor Promoter shall act as managing trustee during his life time, and in the case of death or any temporary or permanent incapacitation of the Transferor Promoter, Ms. Shivali Jayavarthanavelu is entitled to act as the managing trustee of the Acquirer. All decisions of the Acquirer Trust can be taken by the managing trustee, and if there is no managing trustee, then by all trustees acting unanimously. Further, under the Acquirer Trust Deed, at all times it is the managing trustee or all trustees acting unanimously who are empowered to exercise all rights (including voting rights) arising directly or indirectly in connection with the Target Company. iii. Pursuant to the Proposed Transaction, the existing promoter of the Target Company i.e., the Transferor Promoter and/or his immediate relatives/lineal descendants, Ms. Lalitha Devi Jayavarthanavelu and Ms. Shivali Jayavarthanavelu shall retain ownership and control over 100% of the Indirect Interest in the Target Company. Therefore, there will be no new acquisition of shares by the promoters/ promoter group pursuant to the proposed transaction and the pre-acquisition and post-acquisition shareholding of the promoter group in the Target Company would remain the same at 59.814%.

iv. Since the Acquirer Trust has been set up for the benefit of the members of the family of Ms. Shivali Jayavarthanavelu, the trustees of the Acquirer Trust will exercise control only as part of the family of Ms. Shivali Jayavarthanavelu. Therefore, regardless of whether the managing trustee or the trustees exercise control in their personal capacity or as trustees, the Transferor Promoter, Ms. Shivali Jayavarthanavelu and the family of Ms. Shivali Jayavarthanavelu would continue to be in control of the Target Company. There will accordingly be no resultant change in the effective control and management of the Target Company pursuant to the Proposed Transfer. v. Pursuant to the Proposed Transaction there will not be any change in the public shareholding of the Target Company. The Target Company will continue to be in compliance with the minimum public shareholding requirements under the Securities Contracts (Regulation) Rules, 1957 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Acquirer Trust being a private family trust wherein the trustees and the ultimate beneficiaries are individuals belonging to the family of Ms. Shivali Jayavarthanavelu (member of the promoter/ promoter group of the Target Company), there is no lack of transparency in respect of the structure of the Acquirer and the Proposed Transaction in no way affects the interest of the public shareholders. vi. Though the Acquirer Trust may not strictly be eligible for an exemption under Regulation 10 of the Takeover Regulations, in light of the intent and spirit behind Regulation 10 that exempts transfer of shares inter-se between immediate relatives, the Proposed Transaction would merit an exemption under the Takeover Regulations.

4. In their reply to certain clarifications sought by SEBI through various e-mails and reminders dated December 27, 2017, July 13, 2018 and July 31, 2018, the Acquirer Trusts through their representative law firm (vide email dated Aug 17, 2018) confirmed their compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017. An additional confirmation of compliance with the said SEBI Circular has been provided vide the Acquirer Trust's letter dated May 02, 2019 in reply to SEBI email dated February 26, 2019.

CONSIDERATION – 5. The provisions of the Takeover Regulations relevant to this Order i.e. Regulation 3, 4 and 5 of the Takeover Regulations are reproduced below for ease in reference– “Substantial acquisition of shares or voting rights. 3. (1) No acquirer shall acquire shares or voting rights in a Target Company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such Target Company, entitle them to exercise twenty-five per cent or more of the voting rights in such Target Company unless the acquirer makes a public announcement of an open offer for acquiring shares of such Target Company in accordance with these regulations. (2). No acquirer, who together with persons acting in concert with him, has acquired and holds in accordance with these regulations shares or voting rights in a Target Company entitling them to exercise twenty-five per cent or more of the voting rights in the Target Company but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such Target Company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such Target Company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permissible non-public shareholding. Explanation — For purposes of determining the quantum of acquisition of additional voting rights under this sub-regulation,— (i) Gross acquisitions alone shall be taken into account regardless of any intermittent fall in shareholding or voting rights whether owing to disposal of shares held or dilution of voting rights owing to fresh issue of shares by the Target Company. (ii) In the case of acquisition of shares by way of issue of new shares by the Target Company or where the Target Company has made an issue of new shares in any given financial year, the difference between the pre-allotment and the post-allotment percentage voting rights shall be regarded as the quantum of additional acquisition.

Acquisition of control. 4. Irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations. Indirect acquisition of shares or control 5. (1) For the purposes of regulation 3 and regulation 4, acquisition of shares or voting rights in, or control over, any company or other entity, that would enable any person and persons acting in concert with him to exercise or direct the exercise of such percentage of voting rights in, or control over, a Target Company, the acquisition of which would otherwise attract the obligation to make a public announcement of an open offer for acquiring shares under these regulations, shall be considered as an indirect acquisition of shares or voting rights in, or control over the Target Company.”

6. I have considered the Application submitted by the Acquirer Trust and other material available on record. From the preceding paragraphs, it is noted that the Application submitted is in respect of the proposed indirect acquisition of interest in the Target Company i.e. Super Sales India Limited. The aforesaid acquisition is proposed to be made by Adi Lakshmi Family Trust i.e. Acquirer Trust through its managing trustee Mr. Sanjay Jayavarthanavelu, in the manner described in the foregoing paragraphs. A tabular depiction of shareholding in the Target Company and pre and post acquisition by the Acquirer Trust/ change in indirect shareholding in the Target company is provided below: TABLE 2 – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) SR. NAME PRESENT SHAREHOLDING PROPOSED SHAREHOLDING NO. NO. OF % NO. OF % SHARES SHAREHOLDING SHARES SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. Lakshmi Life sciences Ltd. (LLS) 939500 30.591% 939500 30.591% 2. 897700 29.223% 897700 29.223% OTHERS TOTAL 1837200 59.814 1837200 59.814 B. PUBLIC SHAREHOLDING 1234300 40.186% 1234300 40.186% C. TOTAL (A + B) 3071500 100.00 3071500 100.00

TABLE 3 – SHAREHOLDING IN THE PROMOTER COMPANY (LLS) BEING ACQUIRED BY THE ACQUIRER TRUSTS (SOURCE: APPLICATION AND SUBSEQUENT SUBMISSIONS) PROMOTE TARGET COMPANY R PRE – POST – ACQUISITION POST – ACQUISITION COMPANY ACQUISITION NO. OF % OF NO. OF % OF NO. OF % OF SHARES SHARES SHARES SHARES SHARES SHARES IN IN THE THE TARGET TARGET COMPANY COMPANY INDIRECT INDIRECTLY LY ACQUIRED ACQUIRED BY BY ACQUIRER ACQUIRER TRUST TRUST THROUGH THROUGH PROMOTER PROMOTE HOLDING R COMPANY HOLDING COMPANY LAKSHMI Mr. Sanjay 3,29,98 59.997 0.00 0.00 LIFE Jayavarthanavelu 5 3 SCIENCES (‘Transferor’) LIMITED Adi Lakshmi Family Trust 0.00 0.00 3,29,985 59.9973 9,39,590 30.591 (‘Acquirer Trust ’)

7. In view of the aforementioned, the following is noted –

A. The aforesaid proposed acquisitions will attract Regulation 5 (indirect acquisition of shares or control) of the Takeover Regulations.

B. Pursuant to the proposed acquisition, the Acquirer Trust would hold indirect interest in the Target Company.

C. The objective of the proposed acquisition is to provide for a suitable succession planning structure to enable seamless inter–generational transfer of the Trust fund among the beneficiaries who are family members.

D. There will be no change in control of the Target Company pursuant to the proposed acquisition.

E. The pre–acquisition and post–acquisition indirect shareholding of the Promoter Transferor in the Target Company will remain the same.

F. There will also be no change in the public shareholding of the Target Company.

G. The Target Company is in compliance with the minimum public shareholding requirements under the Securities Contracts Regulation Rules, 1957 (“SCRR”).

H. The proposed Acquirers have confirmed that only immediate relatives and lineal descendants of the Transferor Promoter, being natural persons, shall be Trustees and Beneficiaries of the Acquirer Trust and that no delegation of substantive powers in relation to management and control of the Acquirer Trust or its properties shall be made in favour of any person other than the Trustees.

I. The proposed Acquirer Trust has also confirmed that they are in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017.

8. Considering the aforementioned, I am of the view that exemption as sought for in the Application (read with further submissions) may be granted to the proposed Acquirers, subject to certain conditions as ordered herein below.

ORDER –

9. I, in exercise of the powers conferred upon me under Section 11(1) and Section 11(2)(h) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) and Regulation 11(5) of the Takeover Regulations read with Section 19 of the SEBI Act, hereby grant exemption to the proposed Acquirer Trust - Adi Lakshmi Family Trust, from complying with the requirements of Regulations 3, 4 and 5 of the Takeover Regulations with respect to the proposed acquisition/exercise of voting rights in respect of the Target Company, viz. Super Sales India Limited, by way of proposed transaction as described in the Application and this Order.

10. The exemption so granted is subject to the following conditions:

A. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws. B. On completion of the proposed acquisition, the proposed Acquirer shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations. C. The statements/ averments made or facts and figures mentioned in the Application and other submissions by the proposed Acquirer are true and correct. D. The proposed Acquirer shall ensure compliance with the statements, disclosures and undertakings made in the Application and in subsequent submissions. The proposed Acquirer shall also ensure compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017. E. The proposed Acquirer shall also ensure that the covenants in the Trust Deed are not contrary to the conditions stipulated in the aforesaid SEBI Circular and undertakings provided. In any case of discrepancy, the Trust Deed shall be suitably modified and expeditiously reported to SEBI.

11. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations and shall not be construed as exemption from the disclosure requirements under Chapter V of the aforesaid Regulations; compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015; Listing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other applicable Acts, Rules and Regulations.

12. The Application dated November 27, 2017 and subsequent letters dated November 14, 2018 and May 02, 2019, filed by Mr. Sanjay Jayavarthanavelu – Trustee/Managing Trustee of Adi Lakshmi Family Trust, are accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: May 28, 2019 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA