Search the Internet          Tips  Sites: Finance, Investment

Khemkas barred for five years

BS Markets Bureau

The Securities and Exchange Board of India has barred Ravi Prakash Khemka, Rajkumar Khemka, Ratan Kumar Khemka, Tirupathi Kumar Khemka, Madhusudan Khemka and their group companies from accessing the capital market for 5 years over violation of the takeover regulations and listing agreement.

The five Khemkas had acquired 12,50,000 equity shares of Damania Airways Ltd representing 3.89 per cent of the capital of the target company from its promoters, Pervez Damania and others, on May 16, 1995.

The name of the company was subsequently changed to Skyline NEPC Ltd on December 27, 1995. Subsequent to the acquisition of shares, the Khemkas entered into a strategic alliance with the Damanias in terms of which six directors belonging to the acquirers side were inducted into the board of the target company consisting of a total of eight directors. With the said induction, a change in the control of the management of the target company took place, from Damanias to Khemkas of the NEPC Group. As such, a takeover as construed under Clause 40-B of the listing agreement and regulations was said to have taken place. Hence, the acquirers were directed to make an open offer to acquire 64,66,800 equity shares of the target company constituting 20 per cent of the voting capital of the target company.

The acquirers made a public announcement on September 24, 1995, to acquire the shares at the rate of Rs 19.60 per share. Since this price was lesser than the price paid by the Khemkas at the time of acquisition of 3.89 per cent of the capital, the offer was directed to be made at the price of Rs 35.25 per equity share. The dispatch of the letters of offer to the shareholders of the target company was completed on January 16, 1996, and the offer opened and closed on February 1, 1996, and February 29, 1996, respectively.

The total consideration payable for 64,66,800 shares amounted to Rs 228 million. The acquirers agreed to pay the consideration by March 28, 1996, in terms of the regulations as well as the disclosures made in the letter of offer but could not comply with the same and sought for extension of time. As the regulations do not provide for extension of time, the acquirers were directed to complete the payment along with an interest of 15 per cent for the period of delay.

Despite the assurances to Sebi for payment of money along with interest, the acquirers failed to adhere to their commitments and the aforesaid non-payment was detrimental to the interests of several shareholders who had offered their shares because not only were the shareholders of the target company deprived of the share certificates which had been surrendered by them pursuant to the open offer but they also did not receive the consideration for the same.

Consequently, a show cause notice was issued to the acquirers and pursuant to the show cause notice, opportunity of personal hearing was granted to the acquirers, who clearly admitted to the fact of non-payment of consideration and also the delay in the payment of consideration to the shareholders who had accepted the offer. The reasons advanced by the acquirers for the delayed payments did not absolve them from the obligation to make the payment within the time specified.

Powered by

YOU MAY ALSO WANT TO READ:
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report