MUMBAI: The Securities and Exchange Board of India on Tuesday asked PK Ruia group to make an open offer to minority shareholders of Falcon Tyres and Dunlop India.
“It is clear from the facts of this case though the direct acquisition by the acquirer took place in Singapore, but indirectly this acquisition led to acquisition of shares and control of the target companies, which were incorporated in India,” the Sebi order said.
“Since the entire indirect acquisition has taken place with respect to two companies listed in India, whose securities are listed in Indian bourses, it has become a person associated with the securities market within the meaning of Section11B of Sebi Act,” the order said.
In November ’05, the PK Ruia group, through its holding company Wealth Sea, had bought out Mauritius-based Dil Rim and Wheels Corporation from Jumbo World Holdings, a Manu Chhabria group company.
Dil Rim and Wheels held 74.50% of equity shares of Dunlop India and 68.98% of Falcon Tyres, both companies being listed on Indian bourses. Singapore-based Wealth Sea had argued that since both Jumbo World Holdings and Dil Rim and Wheels were also incorporated outside India, the provisions of Indian laws were not be applicable to the transaction.
“I do not agree with the acquirer’s contention that the direction, if any, will affect detrimentally the inherent right of the equity shareholders of a company and negate the decision of the shareholders and render the proviso infructuous,” the Sebi order said.
“In this regard, I find that any offer made to shareholders cannot be detrimental to the inherent right of the equity shareholders of the company as it is just an offer not a compulsion to tender anybody’s shares. Moreover, the offer gives an opportunity to shareholders, who wish to exit, to do so at a fair price,” the order said.
Falcon Tyres shares on Tuesday ended at Rs 108 on the BSE, a gain of 5% over the previous close. Trading in the loss-making Dunlop India shares have been suspended for a long time now.
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