IDBI Bank Open Offer by LIC

Reg. Open Offer for IDBI Bank—irregularities

With deep anguish I wish to state that SEBI is urning a blind eye towards the illegalities committed by Government of India (GoI) owned institutions.  The basic objective of SEBI is investor protection. Investors cannot be allowed to be  short changed simply because on the other side there is a Government owned body. The Acquirer is  pulling wool over your eyes.  

My main contention is that the GoI had acquired 1,09,73,26,649 Equity shares of the Target Company at a price of Rs.71.82  per share aggregating to Rs. 7881 crore, on 25^th  May 2018 and on 4^th October 2018, LIC, a GoI body announced an open Offer @ 61.73.

As per SAST 2011 Reg. 8(2)(c), the highest price paid for acquisition by the Acquirer or PAC, will have to be paid.

In this case the GoI is an Acquirer /PAC and the highest price paid of 71.82 on  25^th  May 2018 is applicable and should be paid. The definition of Acquirer u/r 2(1) (a) and that of PAC u/r/2(1)(q) should be examined in detail. It is obvious that GoI is an Acquirer/PAC. The GoI has played a duel role here—both of an Acquirer and that of a PAC. “Acquirer” means any person who directly or indirectly acquires shares or voting rights  by himself or through a PAC.  In this case GoI is acquiring through its PAC- LIC. 

The Acquirers have countered this argument by stating:

1.      In the shareholding pattern of IDBI, The acquirer (LIC)  is categorised as a “public shareholder” and the GoI is classified as “promoter” of the target company. ( MB Letter dated November 21, 2018)

2.      The GoI and LIC are not PAC because the GoI is “relinquishing management control “and LIC is “acquiring control”. They do not share a “Common Objective or Purpose” ( MB Letter dated November 21, 2018)

Both the above arguments are hollow.  Shareholding pattern submitted to a stock exchange  is not the place to find and determine if the 2 parties are PAC. Moreover it is a self declaration. Any mistake, purposely or otherwise cannot change the legal position and legal liability.   

Your kind attention is drawn to SAST 2011 Regulation 2 (1)(q)(2):

(2) Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be persons acting in concert with other persons within the same category, unless the contrary is established,—

SAST 2011 Regulation 2 (1)(q)(2)(i)

(i) a company, its holding company, subsidiary company and any company under the same management or control;

SAST 2011 Regulation 2 (1)(q)(2)(iv)

(iv) promoters and members of the promoter group;

This is a deeming provision. A plain reading of the above is clear that “unless the contrary is established”  must be read in the context of 2 (1)(q)(2) only.

Unless it is proved that  LIC is NOT  under the same management or control, or unless it is proved that LIC is NOT a member of the promoter or promoter group, it will be deemed to be a PAC.

DEFINITION OF PROMOTER

(Kindly not that for the sake of simplicity full text of the relevant regulation has not been reproduced here, You may refer to the same if so desired)

SAST 2011, Reg. 2 (1) defines PROMOTER as:

(s) ―promoter‖ has the same meaning as in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and includes a member of the promoter group;

(t) ―promoter group‖ has the same meaning as in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; Section 2(1) defines “Promoter” and “Promoter Group” as follows:

(za) ―promoter‖ includes:

(i) the person or persons who are in control of the issuer;

(ii) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to public;

(iii)the person or persons named in the offer document as promoters:

(zb) ―promoter group‖ includes:

(i) the promoter;

(ii) an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse); and

…………………..

…………………..

 (iv) in case the promoter is an individual:

(A) any body corporate in which ten per cent. or more of the equity share capital is held by the promoter or an immediate relative of the promoter or a firm or Hindu Undivided

In the present case the President of India is holding the shares and control of both the entities—the Acquirer—LIC  and the Target company –IDBI. There is no doubt that the above provisions are attracted and GoI and LIC are Promoters/ PAC.

As far as the argument by the Acquirers that the  “Common Objective or Purpose”  is  absent is concerned, since GoI is “relinquishing management control”  and LIC is “Acquiring control” it is not relevant here. It is  relevant only in cases attracting SAST 2011 Regulation 2 (1)(q)(1).

Even if for the sake of argument, without admitting, if the Acquirer’s contention is accepted, even then it cannot be said that they have absolutely opposite intention and objective. They still have the same common objective of  enhancing their shareholding in the target company and to continue to control the management of the same.   Moreover an Open offer is triggered not only on Acquisition of shares but also on acquisition of control. These two situation may be independent to each other.

SAST 2011, Regulation 3 deals with Substantial acquisition of shares or voting rights.

 There is no denying the fact that there has been a substantial acquisition of shares and voting rights which has triggered the mandatory Open Offer.   

SAST 2011, Regulation 4 deals with Acquisition of control.

In this case there is no acquisition of control. The Control was already with the GoI, the main promoter of LIC. The GoI of India decided that rather than controlling IDBI directly, henceforth it  will control the IDBI through LIC.

For the ease of better understanding, let us draw an analogy.

Let us say TATA sons (GOI) having subsidiary Tata steel (IDBI Bank) (73% holding)  and another company Tata Defence Ltd(100 % owned by Tata sons)(LIC of India).

Now Tata Defence )(LIC of India) taking over management control with fresh equity infusion upto 51 % in Tata Steel (IDBI Bank) and TATA sons (GOI) relinguishes management control in Tata steel (IDBI Bank. Then whether Tata Sons (GOI)  is PAC or not for PA for open offer by Tata Defence Ltd (LIC of India).

Unfortunately, small investors do not have any wherewithal to effectively fight  the mighty corporates and solely depend on SEBI for a fair treatment. I can only request you once again to not belie the hope and expectations of the investors and protect the interest of small investors by directing the LIC to revise the offer price to Rs. 71.82

OPEN OFFER OF FORTIS

Reg. Open Offer for Fortis Healthcare Limited

The investors and shareholders of the company are suffering a lot because of the delaying in completion of the above offer. The offer announced on July 13, 2018 was originally to be completed and investors would have received their payments by October 16, 2018. This date was subsequently revised to January 15, 2019. However there seems to be an indefinite delay in completion of the offer. The Merchant bankers have issued an Announcement dated December 15, 2018 Stating :

“The Equity Shareholders are requested to note that, on December 14, 2018, the Honorable Supreme Court of India has passed an order in the matter of Mr. Vinay Prakash Singh v. Sameer Gehlaut & Ors., whereby they have issued the following direction: “Status quo with regard to sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare Berhad be maintained”. In light of the above, the Acquirer and PACs will not be able to proceed with the Open Offer as per the timeline set out in the “Schedule of Major Activities of the Offer” contained in page 3 of the LOF. Once further order(s)/ clarification(s)/ direction(s) are issued by the Honorable Supreme Court of India and/ or SEBI, the Acquirer and PACs will decide on the next steps and the Equity Shareholders will be intimated accordingly”

You are requested to act immediately to protect the interest of the investors and issue necessary clarifications and directions to Merchant bankers/ Acquirer to complete the Offer formalities at the earliest. If so thought fit you may kindly seek clarifications form the Hon’ble Supreme Court. The points to be noted here are:

1.       The order is not any way restrains the Open Offer.  The SC order says  “Status quo with regard to sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare Berhad be maintained”.    By the Open offer the investors are not selling any CONTROLLING STAKE.

2.      The Open offer was triggered on July 13, 2018 when the Acquirers agreed  to acquire 31.1% shares in the target company. There have been several court rulings which said that actual acquisition may or may not be done but the fact of Agreeing to acquire is what triggers the Open offer.  This AGREEMENT  to acquire cannot be denied.

3.      CONTROLLING STAKE  has already been sold. The SC has not cancelled it but rather asked to maintain the STATUS QUO.

4.      This Open offer is a mandatory legal compliance and cannot be wished away. The Acquirers will have to complete this offer.

5.      The shareholders and small investors have been suffering a lot due to the notorious management and have seen the value erosion in their shares from 226.80 on May 2, 2017 to the current level of 135. If the Acquirers –IHH are not allowed to complete the Open offer the value will erode much further.

For the period of delay, the acquirer must be directed to pay adequately compensate the shareholders by paying interest at least @ 10% p.a.

IDBI TAKEOVER BY L.I.C.- TEXT OF LETTER WRITTEN TO SEBI CHAIRMAN

IDBI TAKEOVER BY L.I.C.- TEXT OF LETTER WRITTEN TO SEBI CHAIRMAN

Reg. Open Offer for IDBI Bank- irregularities

I have written to you with copies to the merchant Banker, 2 letter dated 5^th Oct.2018, and 2^nd November 2018  both of these letters remain unanswered till date.

The Offer price of Rs.  61.73 is absolutely  wrong and incorrect. I have given detailed grounds in my above letters. I now find that the Delhi High Court has directed SEBI to examine the offer pricing in detail and give an order within 15 days.

I would like to request you to please also examine my contention in detail and give a reasoned and appealable order.

Kindly consider the following points:

a.       The Acquirer, LIC was constituted by an Act of parliament--Life Insurance Corporation Act, 1956 . “It  is wholly owned by the Central Government”  (Refer Para 4.5 of Draft letter of Offer--DLOO).

b.      The Central Government is also the promoter of IDBI.

c.       In this context, the LIC and the Central Government are the Acquirers/ PAC.

d.      As per the letter dated 25^th May 2018, by the Company Secretary of IDBI, addressed to NSE and BSE,   1,09,73,26,649 Equity shares were issued to the Government of India at a price of Rs.71.82  per share aggregating to Rs. 7881 crore, through Preferential Issue on 25^th May 2018.

e.       The present  Offer  is being made by the Acquirer pursuant to Regulations 3(1) and 4 of the SEBI (SAST) Regulations. (Page 2 note 1 of DLOO)

f.      SAST 2013, Regulation 8 (1) provides for the  Offer Price. The relevant portion of Regulation is reproduced below :

Offer Price.

8. (1)

(b) the volume-weighted average price paid or payable for acquisitions, whether by the acquirer or by any person acting in concert with him, during the fifty-two weeks immediately preceding the date of the public announcement;

(c) the highest price paid or payable for any acquisition, whether by the acquirer or by any person acting in concert with him, during the twenty-six weeks immediately preceding the date of the public announcement;

The above provision 8(1) (c ) is clearly attracted. ( I have not examined 8(1) (b) ).

You are requested to please direct the Acquirers to immediately revise the Offer price to:

(i)      Rs. 76.77 if the contention of the other shareholder who had moved the Delhi High Court is found to be correct. or

(ii)    Rs.71.82 after  a detailed examination of the above points . Or

(iii)   To any other higher price if on a detailed examination it is established that  SAST 2011 Regulation 8(1) (b) was also attracted at a much higher price.

You will kindly agree that the conduct of the Government and its various bodies should be exemplary as far as, at least following the law , Rules and Regulations is concerned. 

Thanking you,

Yours truly,

CA Arun Goenka

CC.

1.    Shree Amarjeet Singh

The Executive Director, SEBI

The company and the merchant Bankers are requested to:

·       Please give the relevant data-

DATEWISE ACQUISTION BY THE GOVERNMENT OF INDIA DURING THE PERIOD OF LAST 52 WEEKS OF THE DATE OF PA.

·       Your views or if necessary your counter argument to the above points.

2.       Mr. Anurag Byas / Sameer Purohit

ICICI Securities Limited ICICI Centre, H.T. Parekh Marg, Churchgate, Mumbai - 400 020. Tel: +91 22 2288 2460 Fax: +91 22 2282 6580 Contact Person: Anurag Byas / Sameer Purohit E-mail: idbi.openoffer@icicisecurities.com SEBI Registration Number: INM000011179

The compliance officer of the Target Company is Mr. Pawan Agrawal. (022) 66552265 and email address is pawan.agrawal@idbi.co.in 

Golden Tobacco Ltd.- Open Offer

Ref. Open Offer of Golden Tobacco Ltd. DPS dated 1.1.18-

Sub.Investor protection and implementation of your Regulations

The above Open offer was initially announced on 12.11.2009. I had pointed out at the initial stage itself that the Acquirers have announced Open offer with ulterior motive. They do not have any intention of seriously acquiring  and reviving the fortunes the company. The actual motive appears to be , to  settle personal score with the promoters and to pressurize and take some undue advantage from the company.

 

The DPS dated 1.1.18 has many issues that are incorrect , irregular and against the interest of Minority Shareholders and against the SEBI regulations as well. Kindly examine these issues  for the protection of Investors and implementation of your own Takeover code.

1. The offer was first announced on 12.11.2009. This was voluntary offer yet it was delayed for many years by the Acquirers who sought to withdraw the offer. Interest is being paid w.e.f. 12.04.2012 . The reason given in Point no. 4 of DPS is that there was a delay in giving the clearance by SEBI. The observation letter was issued only on 23.04.12, hence all other dates have been calculated with reference to this date. The Acquires making SEBI solely responsible for this delay. This is not correct as would be clear from the subsequent action of the Acquirers who declared their attention to withdraw the offer. The Acquirers were not pursuing the clearance by SEBI sincerely which resulted in the delay. They have to own up their responsibility and pay interest from the original date when payment was due i.e. 02.02.10.
2. In Gross violation of the SAST 1997, interest is being paid only to Original shareholders. The Takeover code was amended w.e.f. 09.09.02 specifically to protect the investors from such unscrupulous Acquirers who delay the implementation of the Open offer and subsequently take shelter of some court cases. Such Court cases when initiated were not under the light of the amended section 44(i). This section is still valid and not been struck off. This must be respected and implemented.

3.    The PAC who is actually carrying out the obligations of the Open Offer was in fact not a PAC on the date of the Announcement of the open offer. The Acquirer along with PAC announced the  offer on 12.11.2009. However at para No. 6 of DPS it appears that the acquirer and PAC had entered into MOU only on 14.11.2009.

4. There is no disclosure on the Change of Merchant Banker (MB). We are all aware that in the process of Open Offer MB play a very significant role and the investors and the Regulator must be informed why the MB who was handling the Open offer earlier has been replaced.
5. There is an apparent dispute between the Acquirers and the PAC. It is an admitted fact that the PAC  wrote to SEBI to exclude the name of The Acquirer, this request was rejected by SEBI. This needs to re-examined by SEBI. How the fortunes of a company can be handed over to a warring group.

You are requested to please examine the above issue and give appropriate directions in the interest of the investors and securities market.  

Regards,

Thanking you,

Yours faithfully,

Arun Goenka        

THE GROWING SHAREHOLDERS VIGILANTISM – The day of “ an average Joe” has come.

When Mr. Narayan Murthy raised concerns about Corporate Governance which resulted in the resignation of the CEO & other Board members, he was acting not as founder but to use his own words “ an average Joe”

The present case is -- Polo Hotels Ltd. CA Arun Goenka has taken up the cudgels  on behalf of the shareholders of Polo Hotels Ltd. Investors meet is being organised at many cities—Mumbai, Delhi, Kolkata, Bangalore, Chandigarh etc.

This is one of the most unique case . The Acquirers/ Promoters have been  dodging their responsibility for past 18 years to come out with an Open offer. The case has  travelled all possible levels and stages of Justice delivery system -  CLB, High Court, Takeover panel, SEBI Chairman, SAT and Supreme Court. In Supreme Court, they lost not once, not twice but 3 times- Appeal, Review and the Curative Petition. The last Supreme Court order is dated 2 March 2017 . They had to bring the offer around 17 April 2017, yet there is no sign of the Offer.  It seems that the acquirers/promoters want to start the cycle of appeals and review petitions all over again and want to spend their and most of the investors’ lifetime in such appeals.

The Securities Appellate Tribunal (SAT) could see through their evil design and reprimanded them and placed a penalty of 50,000/-   on them. The operative part of SAT order dated 29 August 2017  is reproduced below:

“5. In our opinion the present appeal is filed in gross abuse of the process of law

merely with a view to delay implementation of the order of SEBI dated 1.8.2003

….

6. In these circumstances, we grant extension of time for a further period of four

weeks for compliance of the order of SEBI dated 1.8.2003 subject to payment of

costs quantified at Rs.50,000/- to be paid by the appellant to SEBI within a period of 2 weeks from today”

Besides the above the company is thoroughly mismanaged.  On an  Asset size of about 135 Crores, revenue is not even 2%. For the whole year ended 31 March 2017 total income is shown as Rs.1.78 Crs.  CA Arun Goenka initiated a move to oust such an inefficient and corrupt management and their  collaborative auditors.  There is no transparent accounting for Rs. 74.91 Crs. Parked under the head “ Capital work in progress”.  Special Notices under Section 169 &  140 (4) of the Companies Act, 2013 for removal of some directors and appointment of Auditors respectively has already been served on the company.

The original complainant and many other shareholders have died or become too old. Some active shareholders under the guidance of Arun Goenka have decided to FIGHT for the RIGHT of such and other shareholders.

CA Arun Goenka is a shareholder activist and his efforts has been appreciated by WIRC-ICAI who has awarded him for such social service. He has also been featured by The Economic times. Mr. Goenka is  following up with all concerned authorities , very vigorously . He is confident that the Acquirers/Promoters have no place to hide now and will have  to come out with an Open offer wherein all the Shareholders will  get a per share Rs. 23.75 Plus interest @ 15% p.a. for the past 18 Years. Roughly the about Rs. 90 per share.

To educate all the investors in the company, a series of investors’ meet has been planned all over the country. For the purpose a core team of knowledgeable investors has been formed. Investors are advised to please contact us on: It will be appreciated if  a mail is sent to  polohotelsprotest@gmail.com   or whatsapp on 093230 91348

Please give the following details:

(a) Name of holder, (b) Folio No. (c) No. of shares held, (d) PAN No.

(e) Proxy—Please sign, scan the form and email and also send by courier to my above address.

Meeting of the Shareholders of the company in  Mumbai will be held on 15th September 2017 at 703 Meadows, SaharPlaza, Andheri-Kurla Road, Andheri (E)

Mumbai 400 059

Upon shareholders’ request, the meeting in any city can be organised/rescheduled.

All shareholders are requested to kindly attend the same.

RSVP : Heena – 022-2838 1348-9

Polo Hotels Ltd.

Sub.  Polo Hotels Ltd. – Open Offer Not announced.

Ref. Their letter dated January 24,2017 addressed to the Chairman SEBI CC to me

I have sent several letters/mails to the Acquirers & the Company- POLO Hotels Ltd. Many have remained unanswered even after the above referred letter. I have tried to compile them at one place for better monitoring of the response.

NO.	MY ALLEGATION	RESPONSE FROM POLO HOTELS AND THE ACQUIRER
1.	Partial or no reply received for my letters: a.    a. 18th February 2016 b.    b. 27th July 2016 c.    c. 21st December 2016 d. 11th January 2017	Almost after one year, for the first time they have responded with their letter dated 24th January 2017. This letter does not answer all the points.
2.	Balance sheet for the year ended 31.3.16 and notices not received by me.	No specific confirmation or proof of having sent such notices and Balance Sheet to me has been given although general Certificates from the registrar and Co. secretary have been submitted.
3.	The promoters have violated the Takeover code  as it existed earlier i.e. SAST 1997. Till the time they have completed their obligation under SAST 1997, for the Open offer triggered on 1.4.99 the “Offer Period” is supposed to continue and the SAST casts several obligations on the Acquirers as well as the target company during this period.	No response or confirmation that all the obligations cast upon the acquirers and the target company have been observed.
4.	The promoters have been selling their  Shares in all quarters since Sept. 2015. Their shareholding came down to 49.29% from 75. %. In Nov. 2016 new shares amounting to  133% of their existing holding, through CCPS were allotted to the Promoters. As against their holding of 66,46,874 shares they were allotted88,88,889/- shares. As per the Shareholding pattern for Dec.2016, filed with BSE Promoter’s holding came down further to just 57,25,839, thus the new shares allotted to them is 155% of their pre allotment holding.	No reply has been offered on why the promoters were first continuously selling the shares and subsequently why they got allotted new shares  amounting to about 133% or 155% of their pre-allotment holding.
5.	The Preferential allotment of shares happened in quite a weird manner. The resolution very clearly declared that the company does not have any resources to repay the loan or even the interest. The only option was to issue equity. Then why borrow as loan?	No response
6.	Why the sham of INTEREST FREE UNSECURED LOAN to be converted into CCPS , then again CCPS to be converted into equity? Why not straight equity? a.    On 26th September 2016  the relevant resolution was captioned—“TO APPROVE BORROWING OF INTEREST FREE UNSECURED LOAN FROM PROMOTERS CONVERTIBLE INTO EQUITY SHARES “ is passed. b.    On 14th November 2016 CCPS is allotted. c.    On 9th December 2016 CCPS is converted-i.e. in less than a month.	No response
7.	The ploy of INTEREST FREE UNSECURED LOAN is used for round tripping of funds. The promoters did not actually give 10 Crs.	No denial of round tripping.
8.	The fresh Acquisition of more than 5% has triggered yet another Open offer on 26th September 2016 since the promoter’s holding more than doubled. It went up to 155.35 Lakhs shares from their earlier holding of just 66.46 Lakhs shares.	They are playing with dates. They have stated that more than 5% shares were not acquired on 26th September 2016. It was never alleged  that they have acquired shares on this date. They triggered Open offer on this date because they agreed to acquire on that date.
9.	This is a very old case pending since 1999. No justice is being given to the investors although in the 16-17 years the case has  travelled all possible level and stages of Justice delivery system -  SEBI, Punjab & Haryana High Court, SEBI Takeover panel, SEBI Chairman, SAT and Supreme Court.  The acquirer has lost everywhere yet rather than fulfilling his legal obligations, it seems they are indulging in some wrong doing. Even when their review petition was rejected, they have again gone to Hon’ble Supreme Court with a CURATIVE PETITION.  In the recent past Hon’ble Supreme Court,has come down heavily on some litigants- a bench headed by Justice J Chalameswar imposed a heavy fine of about Rs.75 Lakhs ( Rs.25 lakhs each)  on a German company- Messer Griesham GmbH(MCG), Goyal Gases Ltd. And Bombay Oxygen Corporation Ltd.  For abuse of Judicial process.	No response
10.	Open Offer has been triggered for the second time on 26th September 2016	The reply given is bizarre. They have stated that : a.      the promoters were holding 67.54% of the total paid up capital as on March 31, 2016 and with this allotment the promoters shareholding rose to 69.44% i.e. less than 2%. Hence, this much increase in shareholding cannot be alleged to in violation of any provision of SAST Regulations. b.      as per Explanation (i) to Regulation 3 (2) of SAST Regulations, gross acquisitions alone shall be taken into account and our gross acquisition was around 1.90% since 31st March, 2016. c.            Hence, none of the provisions of SAST Regulations has been violated and we are of the opinion that no open offer has been triggered. Hence, there is no need for open offer announcement.

I would request SEBI to examine the whole matter very thoroughly. Point wise my counter reply or request to SEBI to obtain the following answers:

1.    Why the  company holds the investors with such contempt? Why they took almost a year and intervention of your good office to obtain a reply?

2.    Why specific confirmation is not given, if they have sent the Balance sheet and notices to me?

3.    Why no specific confirmation that all the obligations cast during the “ Offer Period” which is still continuing, have been observed?

4.    Why promoters have been continuously first selling their sharesand then more than 150% shares are allotted to them?

5.    When it is an admitted fact that the company did not have resources to repay any loan or even interest (The resolution very clearly declared that the company does not have any resources to repay the loan or even the interest.), then why they borrowed.

6.    Why the sham of INTEREST FREE UNSECURED LOAN to be converted into CCPS. Then again CCPS to be converted into equity? All these immediately one after the other within 3 months.

7.    No round tripping of funds should be allowed. The company’s Bank statement and a declaration for end use of funds must be obtained. The funds taken by the company must be used for that specific purpose and not be misused.

8.    When the second Open Offer was triggered? In my view it got triggered on 26^th September 2016, when the resolution was passed and the promoters agreed to subscribe to the Compulsory Convertible Preference Shares (CCPS).

9.    On a deeper study of the changes in promoter’s holding, it is observed that the Open Offer has been triggered on multiple times in addition to allotment of new shares.   On 6^th December 2016, their total acquisition of shares during the FY 2016-17 totalled  10,67,662 i.e. 7.92% much beyond the permitted 5%. They further acquired 3 lakhs shares on 3^rd January 2017 making their total acquisition through purchases 13,67,662 or 10.14%.

10. Why the company is indulging in abuse of the process of law as was observed   by the Hon’ble Supreme Court. The matter is being dragged on for about 18 years!

11.  The Acquirers / Company are giving bizarre explanations. They are insulting the basic intelligence of everyone.

a.    They are  manipulating facts and rather than saying what was their Pre- allotment holding, they are referring to their holding as on 31^st March 2016 to conclude that their holding has increased by less then 2%.  The fact is their holding increased from 57,25,839 (42.46%) to 146,14,728 (59.84%) or by 17.38% .

b.    They are quoting –“as per Explanation (i) to Regulation 3 (2) of SAST Regulations, gross acquisitions alone shall be taken into account and our gross acquisition was around 1.90% since 31st March, 2016.”

However the fact is as per the regulations the difference between pre-allotment and post –allotment percentage is to be taken as acquisition. The regulation 3(2)(ii) of SAST 2011 is reproduced below:

“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 .”

I humbly submit that from the conduct and tone and tenor of the reply it is quite clear that promoters are very mischievous and will have to be dealt with very firmly. Their voting rights should be frozen and a detailed investigation should be initiated in their conduct of the affairs of the company.

Your immediate strong action against them and also an appeal in the Hon’ble Supreme Court in their Curative petition, to dismiss the case with exemplary fine will be highly appreciated.

Sub. Second Open Offer triggered for Polo Hotels Ltd. But not announced

Further to my earlier letters dated 18^th February 2016, 27^th July 2016 and 21^st  December 2016  I regret to state that the offender has utter disregard for the rules and regulations and continues flouting them every time. While the implementation of their earlier Open Offer triggered on 1^st April 1999 is still pending in spite of the order of Hon’ble Supreme Court, they have triggered Open Offer once again and this time again, they have not come out with Open Offer.  Kindly note as follows:

The Preferential allotment to promoters is highly irregular. Some points to be noted are:

1.    The promoters have been selling their  Shares in the company. They kept on selling their shares in all quarters since Sept. 2015. Their shareholding came down to 49.29% from 75. %. In Nov. 2016 they allotted  themselves new shares amounting to  133% of their existing holding, through CCPS. As against their holding of 66,46,874 shares they allot 88,88,889/- shares to themselves.

2.    Promoters have been trading in their own shares very heavily, and have been selling them.

Quarter Ended	Promoter Holding Nos.	Promoter Percentage
Sep-15	101,15,967	75.01%
Dec-15	93,11,566	69.05%
Mar-16	91,08,408	67.54%
Jun-16	82,47,008	61.16%
Sep-16	66,46,874	49.29%
New allotment	88,88,889
Total	155,35,763
Nov-16	155,35,763	69.44%

3.    The Preferential allotment of shares happened in quite a weird manner.

a.    The resolution very clearly declared that the company does not have any resources to repay the loan or even the interest. The only option was to issue equity. Then why the sham of INTEREST FREE UNSECURED LOAN to be converted into CCPS, for this purpose the  Memorandum  and Articles of Association had to be altered to reclassify the Capital,  The CCPS will again be converted into equity? Why not straight equity?

b.    On 26^th September 2016  the relevant resolution was captioned—“TO APPROVE BORROWING OF INTEREST FREE UNSECURED LOAN FROM PROMOTERS CONVERTIBLE INTO EQUITY SHARES“ is passed.

c.    On 14^th November 2016 CCPS is allotted.

d.    On 9^th December 2016 CCPS is converted-i.e. in less than a month.

The caption INTEREST FREE UNSECURED LOAN FROM PROMOTERS gave an impression of most magnanimous attitude of the promoters who will lend money to the company free of interest.  But quite contrary to this “INTEREST FREE UNSECURED LOAN” was just a ploy for round tripping the money. As we are aware, in case of issue of fresh securities, the company will have to open a special bank account and the money cannot be touched till such time the issue is completed. To circumvent this provision, the ploy ofINTEREST FREE UNSECURED LOAN is used. The same money did round tripping and came back from the account of the promoters  to help them make it to Rs.10 Crores. This is quite obvious and the wording in the resolution gives it away very clearly-—“ to be procured in one or more tranches”

4.    The fresh Acquisition of more than 5% has triggered yet another Open offer on 26^th September 2016 since the promoter’s holding more than doubled. It went up to 155.35 Lakhs shares from their earlier holding of just 66.46 Lakhs shares.

You are requested to examine the matter in detail and enforce the implementation of the law, rules and regulations and to protect the interest of the investors.