Securities and Exchange Board of India (Sebi) has decided to intervene and oversee the process of dilution of promoters' stake in Srei Group outfit Indian Power to permissible levels after the market regulator found that a trust formed for this purpose might not be independent of the influences of the promoters.
Securities and Exchange Board of India (Sebi) has decided to intervene and oversee the process of dilution of promoters' stake in Srei Group outfit Indian Power to permissible levels after the market regulator found that a trust formed for this purpose might not be independent of the influences of the promoters.
The body, called the Power Trust, was formed by the promoters of India Power controlled by the Kanorias of Srei into which the promoters transferred shares of the power company with a purpose to sell these shares to public at a later stage when valuations would be favourable. Sebi has now objected to the composition of this trust saying it might not be independent of the influence of the promoters.
As a way out, the Calcutta High Court has now directed the market regulator to oversee the process of stake sale by appointing its own nominee into the body that would be holding the shares.
"It appears that the objection raised by Sebi as to the Trust may be taken care of if the shares held by the Trust are required to be sold by a transparent process such that the promoters of the company cannot be said to have any nexus with the buyers of the shares. It is suggested that the sale of the shares be conducted so that there is no further controversy and the Trust is brought to an end," Calcutta High Court said directing Sebi to indicate any nominee who may be included in the committee to supervise or undertake the sale of the shares.
Srei group company IPCL had acquired DPSC Ltd from state-owned Andrew Yule Ltd in 2010 during a government disinvestment programme, and then IPCL was amalgamated with DPSC and named the merged entity as India Power Corp.
Sebi then in June 2013 cracked down on 105 companies for not complying with its norm of a minimum public shareholding of 25% including India Power.
The company then told Sebi that it has complied with the minimum public shareholding norms by transferring 24.69% equity capital to a trust having independent board of trustees to bring down promoters' stake from 93% to 68.31%.
With the independence of this trust now being questioned, Sebi would now oversee the whole process of stake sale in India Power.
"We are ready to cooperate with Sebi in whatever way possible. If the regulator want us to set up a fresh trust with their representation or any such body having a composition according to their preference, we are okay with that. We have informed this to the court suo moto also," Somesh Dasgupta, president, corporate affairs of IPCL, told dna.
"The company says that the only object of the trust would be to hold the 25% shares in the company and sell it to the public at an opportune moment for the sale proceeds to be made over to the company. The company says that it is agreeable to allow the sale to be conducted by or at the behest of Sebi so that it cannot be said that the sale of the shares had been effected in favour of persons having any connection with the company or persons in control of the company," the court had earlier observed.
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