Order in the matter of The Sandesh Limited

1.1 The Sandesh Limited (hereinafter referred to as the target company) is a company incorporated under the Companies Act, 1956, having its registered office at Sandesh Bhavan, Lad Society Road, B/h Vastrapur Gam, P.O Bodakdev, Ahmedabad - 380054. 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 The target company, vide letter dated December 15, 2008 read with subsequent letters dated December 19, 2008 and December 26,2008 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 its promoters namely, Mr. Falgunbhai C. Patel, Mr.

Parthiv Falgunbhai Patel, Ms. Pannaben Falgunbhai Patel, Ms. Ritaben C. Patel, Satlon Investment Private Limited, Avaniparivar Investments Private Limited, Chimanbhai Patel Stock Holdings Private Limited, Suvasshanti Investments Private Limited, Sandesh Patel Agencies Private Limited, Abadadarsh Investments Private Limited and Samdrushti Investments 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 as on the date of the application, they were collectively holding 56,71,015 equity shares representing 65.58% of the voting rights of the target company.

ii) At the meeting held on December 01, 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 brought back by the target company at a maximum price not exceeding Rs. 180 per share subject to a maximum of 10,85,000 fully paid up shares. The proposed buyback is expected to increase earnings per share and thereby create long-term shareholder value.

iii) The acquirers do not propose to acquire a single share of the target company either directly or indirectly. 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 i.e, 56,71,015 equity shares (in terms of number) would remain the same. In case of 100% response to the proposed buyback offer of the target company, assuming that 10,85,000 equity shares are bought back, the voting rights of the acquirers would increase from 65.58% to 74.99% of the voting rights of the target company.

iv) The acquirers do not propose to participate in the buy back offer of the target company. There would not be any change in control over the target company.

v) Pursuant to the buy back of the equity shares by the target company (even in case of 100% response), the public shareholding in the target company would be at a level more than which is required for meeting the conditions for continuous listing.

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

Shareholders No. of registered Before the Proposed buy After the Proposed buy back Category Shareholders as back on 19.12.2008 No of Shares/ % of No of Shares/ % of total voting Shares/ total total voting Shares/ total rights held voting rights rights held voting rights held held Promoters & 35 5671015 65.58 5671015 74.99 Promoter Group / Acquirers FIs/ Banks, 2 3600 0.04 1891599 25.01 Mutual Funds FIIs/ NRIs/ 15 11318 0.13 OCBs Public 4785 2961681 34.25 Total 4837 8647614 100 7562614 100

3.0 RECOMMENDATION OF THE TAKEOVER PANEL

3.1 The aforesaid application was forwarded by SEBI 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 as against the closing price of the Company’s shares of Rs.139.55 and Rs.139.85 on 15/12/2008 at BSE and NSE respectively, the Target Company proposes to offer buyback price of Rs.180 per share. After the buyback, the shareholding of the promoters may go up to 74.99% thus leaving the public shareholding marginally above the threshold limit of 25%. The panel found the proposal to be in the interest of the public shareholders as it will enhance overall shareholder value and provide exit option to those who desire to exit from the Company. The panel therefore recommended the exemption to the promoters and persons acting concert (as listed out in the application) from the applicability of the provisions of Regulation 11(2), subject to the Target Company complying with the relevant provisions of the Companies Act, 1956, SEBI Regulations and Listing Agreement.”

4.0 FINDINGS

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

4.2 I note that, though, pursuant to the proposed buy back of the target company, the shareholding and voting rights of the acquirers in the target company would increase from 65.58% to 74.99% (of the outstanding equity share capital), the number of shares held by them would remain same at 56,71,015, even after the said buy back. 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 (promoters) are already in control over the target company. The acquirers stated in their application that they do not propose to participate in the buy back offer by the target company.

They have also stated in the application that, even after the buy back of the equity shares of target company (in case of 100% response), the public shareholding in the target company would be at a level more than what is required for meeting the conditions for continuous listing.

4.3 The maximum proposed buy back price is Rs. 180/- per share. In terms of the application filed by the acquirers, the said offer price is much greater than the market price of the shares of the target company on BSE and NSE viz. Rs. 139.55/- and Rs. 139.85/-, respectively (closing price as on December 15,2008).

4.4 Taking into account all the facts and circumstances as mentioned above, I agree with the recommendations of the Takeover Panel. I am of the opinion that this is a fit case for grant of exemption, from the applicability of the provisions of regulation 11(2) of the Takeover Regulations, in terms of regulation 3 (1)(l) read with Regulation 4 thereof.

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. Falgunbhai C. Patel, Mr. Parthiv Falgunbhai Patel, Ms. Pannaben Falgunbhai Patel, Ms. Ritaben C. Patel, Satlon Investment Private Limited, Avaniparivar Investments Private Limited, Chimanbhai Patel Stock Holdings Private Limited, Suvasshanti Investments Private Limited, Sandesh Patel Agencies Private Limited, Abadadarsh Investments Private Limited and Samdrushti Investments Private Limited from complying with the provisions of Regulation 11(2) of 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 65.58% to 74.99% in the target company viz. The Sandesh Limited, pursuant to the proposed buy-back of upto 10,85,000 fully paid-up equity shares by the said target company.

5.2 The exemption is granted subject to the condition that the above mentioned 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 26, 2009