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.

ZENOTECH

TEXT OF THE LETTER WRITTEN TO SEBI & ORS.

The unanswered questions-- Corrigendum dated 23 August,2010 –Open offer of Zenotech Laboratories Limited.
It seems that with an idea to scare Dr. Jayaram Chigurupati into submission, in the above corrigendum it has been written in Bold & In Caps under the Title IMPORTANT INFORMATION that The acquirer do not intend to acquire any share outside the offer or to come out with a follow on offer or a delisting offer etc.

What is required to be stated has not been stated, but the Acquirer & Merchant Bankers have otherwise gone much beyond in making a futuristic statement.

On the lighter side, it reminds me of the popular Hindi Film-ARADHANA & a song in the film wherein the heroine says “MAIN SAB KAHUNGI LEKIN WOH NAA KAHUNGI JISKA TUMKO INTAJAAR HAI…” (I will say everything but not what you are waiting for)

It is difficult to understand why are they shying away from making a simple admission of a mistake that although it has been stated in The letter of Offer (LOO) dated July 26, 2010, that Dr. Jayaram Chigurupati can tender the shares, actually he cannot tender them in view of the CLB order dated August 3, 2010 and that even if he tenders in violation of the said order it will not be considered in terms of Letters of Offer (13 December 2007 & 26 July 2010) .

I have tried my best to get the mistake corrected but failed till now. I hope at least SEBI will not allow them to consider any shares tendered by the old promoter in contravention of CLB order and terms of Letters of Offer (13 December 2007 & 26 July 2010)

You may take whatever action you may deem proper.

MY SUGGESTIONS ACCEPTED-SAST

Some of my most significant suggestions to the SEBI committee for the review of Takeover Regulations were accepted.

SEBI had notified minimal changes in the Code –only 4. Vide notification dated November 06, 2009,
The amendment in Regulation 11 (1) is as per my suggestion.

Similarly I believe I was the first proponent of disallowing Non Compete fees. In the new draft My suggestion for disallowing Non-compete fees has been accepted.

Yet I am not happy because one of my main points – defining control & company so as to bring into the net asset sale route—Piramal, Gwalior chemicals, Orchid chemicals, Eicher motors, Zicom etc. involving G 1000+ Crs. has not been taken care of. I have brought this to the notice of SEBI time & again. I call it “THE BYPASS ROUTE TO SEBI TAKEOVER CODE”

I aired my feelings in an interview with NDTV.

You may simply click the link below to watch the interview which took place on 20 July 2010.
http://www.ndtv.com/news/videos/video_player.php?id=153390

The Businessline ( 21 July 2010) in its editorial also pointed this out as one of the three critical failures of TRAC.

GOLDEN TOBACCO

Ref. Open Offer of Golden Tobacco Ltd.

The above referred Open offer is now pending for a long time. The date of PA is 12th Nov 2009.

I wish to bring the following to your notice for further examination & necessary action for early completion/disposal of the Offer:

1. The offer is made by Mr Promod Jain and Pranidhi Holdings Pvt Ltd. Who hold 1,000 & 48,002 shares respectively, they had acquired 71,034 shares but have sold 22,032 shares (Ref: Para 1.3 of PA). The activity is trading in nature & not that of a person with serous intent to acquire.
2. PAC- JP Financial Services Pvt Ltd holds 10.9 lac shares together the acquirer and PAC hold 11.39 Lac shares or 6.47% of the equity of the target company.
3. Pramod Jain whose educational qualification is not given but his age and experience is given as 43 years and 25 years of experience in financial consultancy service. It will be interesting to find what kind of financial consultancy he was giving at the age of 18 and who were his clients.
4. Pranidhi holding although reporting losses have substantial amount as reserves. How was this reserve built up is a point to be examined. In case the reserve was built up from share premium account, who are their subscribers/share holders to take share at such hefty premium for a company who is reporting losses.
5. JP Financial is the major holder but it is not the main acquirer, it is acting only as a PAC. Why the prominent player is assuming a secondary role?
6. The objective for the offer is stated to be “ in the nature of strategic investment for diversification and growth and to reap the benefits of corporate opportunities” (Para 4.3)
7. Pranidhi holding is currently engaged in activities of investment in shares and securities and real estate projects.
8. JP Financial is engaged in engaged in activities of investment in shares and securities and providing loans and advances. JPFSPL is registered with RBI as an NBFC having Reg No: 0501828
9. It will be interesting to find whether these finance and investment companies have changed their object clause to start industrial activity for manufacturing of cigarettes.
10. Has JP Finance Informed RBI about its proposed Diversification and obtained its consent?
11. PAC has pledged 10Lac shares of Techno electric (clause 7.3) however there is not sufficient liquidity in these shares and the net worth of the acquirer is 151.25 lacs only.
12. The PAC – JP Financial not only holds More than 20 Times the number of shares held by the acquirer they have also almost entirely made the financial arrangement for the open offer. Why are they playing second fiddle as PAC rather than as an acquirer?
13. The Acquirers have time and again displayed that they are not seriously interested in the Open offer or the takeover of the company. They have resorted to this tactic for some other reason. The PA originally announced on 12 Nov 2009 has not been acted upon or pursed vigorously. From some media interview it is clear that the Open offer has been announced just to put some pressure on the management in order to settle some other score.

In the light of the above you are requested to please investigate the matter and ask the Acquirer to pursue the Open offer in an honest manner and conclude it at the earliest and in case you find that there is lack of seriousness or the actual purpose of the offer is other than what has been stated, you may ask the acquirer to withdraw the Open offer. Another significant point to be noted is that the market price of share is constantly higher than the offer price of Rs. 101/- and the Acquirers presently hold only 6.47% shares with no hope of getting any shares in the Open offer.
CC
VC CORPORATE ADVISORS PRIVATE LIMITED
SEBI Registration No. INM000011096
(Contact Person: Mr. Anup Kumar Sharma)
31, Ganesh Chandra Avenue, 2nd Floor,
Suite No –2C, Kolkata – 700 013, Ph: (033) 2225-3940/ 3941/ 4116

SPICE JET

Lptp/MYDOC/takeover/spicejet

21 June 2010

To,

Shri C.B. Bhave,
The Chairman
SEBI
SEBI Bhavan, 3rd Floor, B Wing,
Plot No. C-4A, G Block
Bandra Kurla Complex
Mumbai: 400051


Dear Sir,


Ref. Open Offer of Spice Jet Ltd.

The PA of Spice Jet Open offer is an dishonest attempt to make believe full compliance of regulations while circumventing it .

1) An illegal attempt has been made to save the foreign entity(WLR) from its legal obligation.
It is an acknowledged fact that WLR has triggered Open offer upon conversion of warrants. The PA clause 2 mentions that it is a mandatory Offer. However legal obligations of 2 separate & distinct entities have been clubbed together to This certainly cannot be allowed.
 Legal obligations cannot be compromised.
 Legal obligation is not a transferable commodity --WLR’s obligation cannot be passed on to Kal Airways Private Limited. & Mr. Maran
 2 different & distinct legal obligations cannot be merged . They have been triggered on
o 2 different dates
o By 2 different transactions
o against 2 different persons.
o Under 2 different regulations- as per PA by the Acquirers under
regulations 10 and 12 by PAC regulation 10
2) WLR has been illegally termed as Person Acting in Concert (PAC). Regulation 2(1)(e)(1) is quoted as below:
(e) "person acting in concert" comprises, -
(1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company.
The definition of Person Acting in Concert given in Regulation 2(1)(e)(i) does not fit WLR who is not acting “for a common objective or purpose of substantial acquisition of share or voting rights or gaining control over the target company” as stipulated in the regulation. Rather WLR’s objectives are just the reverse. WLR is selling and Mr. Maran & his co. are buying voting rights/control in the target company. The objective of a buyer & a seller are just the reverse of each other and by no stretch of imagination can be said to be same. WLR as such can not become Person Acting in Concert of the acquirer.
WLR, the so called PAC is not acquiring the shares, it is only the Acquirer i.e. Maran & co. who are acquiring the shares and have made all the financial arrangements.
The main objects of the Acquirer & PAC are also different. While The uundateAcquirers objective has been given as aviation services, that of PAC is Investment.

3) The undated document

PA clause 1.8 (ii) states “RHSL shall deliver or cause to be delivered to the RHSL depository participant , duly executed original undated,….(emphasis supplied). A document cannot be duly executed if it has not been dated. Moreover this practice of undated documents is highly deplorable and unethical if not illegal and should not find place in such agreements.

In the light of the above you are requested to please examine the matter in full detail and if thought fit,

a) Direct WLR to come out with an independent Open offer
b) Direct The Acquirers to remove the name of WLR as PAC
c) Direct The Acquirers to properly execute all the documents and undated executed documents should not find any place

Thanking you,

Yours truly,



Arun Goenka

THE BYPASS ROUTE TO SEBI TAKEOVER CODE GAINS POPULARITY

Orchid chemicals – a company with a market cap of about 1500 Crs. (as on close of business on 15th December 2009) was taken over for $400 Million Roughly Rs. 1860 crs.) yet no Open offer is triggered.

Incidentally this is not first such case. Orchid management has just followed other such deals. Notable amongst them is Eicher Mootrs (December 2007 deal valued at USD 350 Million) and Gwalior Chemicals (June 2009, Deal valued at Euro 82.4 Million) Such deals valued at hundreds of crores were all able to BYPASS the SEBI Takeover Rules which were promulgated to protect the interest of small shareholders.

Some small shareholder who keep an eagle’s eye on such M & A activities designed by the corporates to short change the small shareholders, did complain to SEBI but it seems that no action has been taken by SEBI resulting in encouraging more and more management to resort to such BY PASS.
Lets examine what the SEBI Takeover code says :
SEBI TAKE OVER CODE REG 12 STATES:
Acquisition of control over a company
12. Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the Regulations.

It defies any logic in all such cases. Just examine Orchid case


1. A company with a market cap of Rs.1500 Crs. Is being taken over at more than its Market cap –Rs.1860 Crs. and it does not amount to TAKEOVER?
2. If 15% of the shares were bought of the same co.—amounting to Rs. 225 Crs. –it will be take over.
3. Regulation 12 says Acquisition of control over a company—how then acquisition of control over substantial parts or whole of the company’s assets is not “ Acquisition of control” ?
4. A basic question that comes up is what is a Company? Is the BOARD ROOM a company? Or the place where the real business is done, is the company ? Sale of the business earning in hundreds of crores with about 450 employees at a price of Rs. 1860 crs. Is not a sale/ transfer of control over the company?

SEBI needs to wake up to such deals and Block the By-pass by taking immediate & firm action and directing the parties concerned to follow the Takeover code in letter and spirit. If this loophole is not plugged, soon we will have many dud or KHOKA companies listed on our exchanges.

Why would a Mylan takeover a company like Matrix and come out with an Open Offer & later delisting offer? When an easy escape route is available in the present format with SEBI not making any effort to block the BY PASS, it will be foolish not to exploit it. By buying just the assets the Acquirers takes care of 2 steps at one go—avoids making an Open offer and also subsequent delisting exercise