order in the matter of Videocon Industries Limited

WTM/PS/64/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 Videocon 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. Videocon Industries Limited (hereinafter referred to as 'the Company') is one such company against whom the interim order was passed. The shares of the Company are listed on the Bombay Stock Exchange Limited ('BSE') and National Stock Exchange of India Limited ('NSE').

3. The Company filed replies vide letters dated June 21, 2013 and September 30, 2013. Thereafter, an opportunity of personal hearing was afforded to the Company on October 10, 2013, when Mr. R.S. Loona, Advocate, Mr. Vinod Kumar Bohra, Company Secretary, Mr. Abhishek Borgikar, Advocate and Mr. R.S. Kini, Advocate appeared and made submissions. The submissions of the Company inter alia are as follows: a. The Company was compliant with the MPS norms till March 05, 2013. The promoters'/ promoter group of the Company acquired 49,75,056 equity shares, representing 1.56% of the outstanding share capital of the Company, through secondary market on different dates between December 31, 2012 and May 23, 2013. Such acquisition of shares was in compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. However, due to such acquisition, the public shareholding of the Company fell below 25%. b. The acquisition has been made by the promoters/ promoter group of the Company due to improper understanding about the calculation of the promoter shareholding. The shares held by the custodian against the depository receipts issued overseas were included for the purpose of determining public shareholding. c. As the public shareholding of the Company fell below 25% on March 05, 2013, under Rule 19A(2), the Company is under obligation to bring back the public shareholding at 25% within twelve months i.e. on or before March 04, 2014. d. As per the Company, since June 04, 2013, 15,00,000 Global Depository Receipts ('GDR') were converted into equity shares by their holders. Thereby, as on June 30, 2013, the shareholding of the promoters'/ promoter group of the Company was 75.56%. e. In order to comply with the MPS requirements, the Company and its promoters'/ promoter group had decided to adopt the method of Offer for Sale ('OFS'). The promoters'/ promoter group of the Company then made an OFS on September 24, 2013 and sold 18,00,000 equity shares in order to achieve MPS requirement. As a result the shareholding of the promoters'/ promoter group of the Company, post OFS, stands at 74.95%. It has been said that the last tranch of the acquisition by the promoter group was only on May 23, 2013, it was not possible for the Company and its promoters'/ promoter group to make an OFS before August 16, 2013, due to the cooling off period of twelve (12) weeks.

4. I have considered the submissions made by the Company including the documents submitted by it. I have perused the filings made by the Company with the exchanges with respect to its shareholding pattern and note that the public shareholding was at 25.75% for the quarter ended December 2012 and the same was reduced to 24.05% as per the filing made for the quarter ended March 2013. The Company has submitted that the promoter group had inadvertently included the custodian shareholding representing depository receipts issued overseas for the purpose of determining the public shareholding as 32.17% and acquired further shares. As per the Company the same happened due to an improper understanding of the manner of calculating the promoter shareholding under SCRR.

5. As regards the compliance with the MPS requirement, I note that the Company had made an OFS on September 24, 2013 by which the promoters' shareholding has come down to 74.95%. I have perused the filings made by the Company with the exchanges with respect to its shareholding pattern and note that the public shareholding was at 25.05% for the quarter ended September, 2013. The Company has submitted that it could not do OFS before August 16, 2013, due to cooling off period of twelve weeks.

6. Having considered the above facts, I note that the Company was compliant with the MPS requirements till March 05, 2013. The promoters/ promoter group had started acquiring shares between December 31, 2012 and May 23, 2013. It has been said by the Company that the acquisition of shares had happened due to an improper understanding about the calculation. I have considered the submissions of the Company and note that the public shareholding was raised to 25.05% on September 24, 2013 through an OFS. Taking note of the same, 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.

7. 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, Videocon Industries Limited, its directors, promoters and promoter group, with immediate effect.

8. 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 22nd, 2013 PRASHANT SARAN PLACE: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA