TEXT OF LETTER WRITTEN TO SEBI & OTHERS
Reg. L&T—Open Offer for Mind Tree- violation of Takeover code 2011.
We regret to note that there is no reply or any visible action in the above matter in spite of our bringing to your attention the gross irregularities committed by Larsen & Toubro Ltd., who continue to violate the regulations with impunity.
It will not be out of place to mention here that the conduct of L&T in the past on many occasions have been much below the desired level of good corporate governance and it is a company shrouded in various shades of grey. In the past when Birlas acquired their cement division, Mr. Naik did a lot of arm twisting and bargained for himself a great personal benefit in the name of Employees trust. By sharing the unholy gain with his other colleagues, he was able to institutionalise corruption and avoid public scrutiny. Earlier there were allegations of bribery by them in middle east. Recently there have been many allegations of L & T being party to corrupt practices involving crores of Rupees in the matter ov Cognizant. Earlier it was alleged that Mr. Naik has formed a trust and hospital on company land and with company indirect resources but in the name of his personal relative. If the Public Announcement dated March 18, 2019, other filings, press release and the DPS are examined thoroughly, you will find many irregularities and false declaration. I wish to point out the following:
1. ATTEMPT TO BEAT THE REGULATION-- OPEN OFFER IN VIOLATION OF THE TAKEOVER CODE 2011-The SAST 2011 does not allows voluntary offer by any third party. This is a departure from the earlier 1997 code. As per Regulation 6(1) of SAST 2011, only person/s holding 25% or more can bring a voluntary Open offer.
2. FALSE DECLARATION IN THE PUBLIC ANNOUNCEMENT—It has been wrongfully stated in the Public Announcement at point no.1 that this is a mandatory open offer. L&T claimed to have triggered the Open offer by placing an order for 15% of the share capital of the target company. This is wrong and incorrect. Open offer was not triggered and it is incorrect to say that “This Open Offer is a mandatory open offer made in compliance with Regulations 3(1) and 4”
3. FALSE AND CONTRADICTORY DECLARATION IN THE PRESS RELEASE- The press release said
“ Immediately following the filing of the Public Announcement, L & T has placed an order with its broker for on-market purchase of up to 15% of share capital of Mindtree at a price not exceeding INR 980 per share”.
This statement is in contradiction with the statement made in the PA which said
“pursuant to execution of the SPA and proposal for placing of the Purchase Order”
It an admitted fact that only a proposal was there for placing of the purchase order. There was no actual placement of an order. L & T was in no position to place such an order. They have stated the order could be placed only after receipt of regulatory approvals. An order to the share broker is a definitive order. An order placed for a specific number of shares up to a limit price, in this case 2.48 Crs. Shares, to be bought up to INR 980 will make the broker buy all the shares available in the market at a price at or below 980 till the desired quantity of 2.48 Crs. Shares is achieved. But this was never the case.
4. MALA-FIDE INTENTION OF L & T.—L&T acted in a great haste and without fulfilling legal & regulatory requirements with a mala-fide intention to pre-empt the Board of MINDTREE who had notified the stock Exchange on 15-03-2019 that the meeting of the Board of Directors of the Company is scheduled on 20-03-2019, inter alia, to consider and approve Buyback of equity shares of the Company. L & T successfully thwarted this meeting and the Board meeting of Mindtree had to be adjourned. The moment any Public Announcement is made for takeover of any company, Regulation 26 places several restrictions on the Target company. Under such circumstances no buy back can be done without passing a special Resolution.
5. UNWARRANTED DPS ISSUED ON 26.03.19—The Detailed Public Statement (DPS) issued by L&T is totally unwarranted and a misuse of the process of law. Till date L&T has not purchased from open market, or even paced a definitive order on its broker for purchase of shares as was falsely claimed. There is no question of L&T triggering an Open Offer. Regulation 13(4) specifically provides that even if PA has been issued but “the acquirer does not succeed in acquiring the ability to exercise or direct the exercise of voting rights in, or control over the target company,” then there is no need to make any DPS. The relevant portion is extracted below:
Explanation.— It is clarified that in the event the acquirer does not succeed in acquiring the ability to exercise or direct the exercise of voting rights in, or control over the target company, the acquirer shall not be required to make a detailed public statement of an open offer for acquiring shares under these regulations.
In the light of the above, you are requested to please examine the whole matter very thoroughly with the seriousness that it deserve and take strict action against L&T for violating the regulations and acting in a mala-fide manner and misguiding investors and others.
Shall be obliged for your immediate action in the interest of investor protection and maintaining market integrity.
Thanks & Regards,
For Small Investors’ Welfare Association
Arun Goenka
Authorised Signatory,
1.
