Sebi Asks Servotech Promoters to Make Offer to Buy More Shares

Sebi directed promoter group entities of Servotech Engineering Industries to make public announcement for acquiring additional shares.

Published: 25th January 2015 11:59 AM  |   Last Updated: 25th January 2015 11:59 AM   |  A+A-

SEBI2PTI

A file photo of Sebi Bhavan (PTI)

By PTI

MUMBAI: Sebi has directed promoter group entities of Servotech Engineering Industries to make public announcement for acquiring additional shares in the company from shareholders, and pay them 10 per cent interest along with the consideration amount for delay in making the offer.

The promoter group has to make the announcement within 45 days, Sebi said in an order.

The capital markets regulator found that Servotech promoter Radhey Shyam Lahoti had acquired one lakh shares of the company on September 26, 2012, which hiked the collective voting rights of the promoter group from 21.23 per cent to 26.41 per cent.

As this acquisition breached the 25 per cent threshold limit, the promoters were compulsorily required under the norms to provide exit opportunity to Servotech Engineering's public shareholders, which they failed to do.

Other than Lahoti, the company's promoters include Focus Investments & Traders Private Ltd, Lahoti Exports Pvt Ltd, Quality Products Marketing Pvt Ltd, Ram Awatar Lahoti and

Sitaram Lahoti.

Sebi noted that "since the public announcement now would provide a delayed exit opportunity to the shareholders of the target company, the noticees (promoters) should pay interest on the consideration amount to the shareholders who tender their shares in the open offer and who are eligible for

interest as per law".

Accordingly, Securities and Exchange Board of India has asked the company's promoters to "make a public announcement to acquire shares of the target company Servotech Engineering)...within a period of 45 days".

It added that "the noticees shall, alongwith the consideration amount, pay interest at a rate of 10 per cent per annum from December 19, 2012 to date of payment of consideration, to shareholders who were holding shares in the target company on the date of violation and whose shares are accepted in the open offer, after adjustment of dividend paid, if any".

Sebi noted that the acquisition on September 26, 2012 was at the price of Rs 4.28 per share and had the promoters made the public announcement, the offer price in the open offer could have been Rs 5.47 per share. It also said that all formalities with respect to their public announcement and the open offer would have been completed on December 18, 2012.

"However, since no such public announcement was made by the noticees and if they make the public announcement now the offer price would be Rs 6.74 per share," it noted.

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