1.1 NHN Corporation Ltd [formerly known as Atco Healthcare Ltd] (hereinafter referred to as the "Target company") is a company incorporated under the Companies Act, 1956 and having its registered office at Plot No. 2, Kurla Industrial Estate, Off. L B S Marg, Nari Seva Sadan Road, Ghatkopar (W), Mumbai - 400086. The target company is primarily engaged in the business of manufacture of mineral water and poly carbonated bottles.
1.2 The equity shares of the Target Company are listed at the Stock Exchange, Mumbai and OTC Exchange of India.
1.3 Shri Vikram A Doshi alongwith persons acting in concert (Shri Vineet A Doshi, Shri Sharad A Doshi, Shri Vikram A Doshi (HUF), Shri Vineet A Doshi (HUF), Shri Sharad A Doshi (HUF) and Smt Leena V Doshi) [hereinafter referred to as 'Acquirers'], who are the part of promoters group of the Target Company proposes to acquire 1,37,84,000 equity shares of the Target Company representing 71.79% of the total paid up capital of the Target Company from the proposed seller, which is another promoter group entity namely M/s Atcom Technologies Ltd. (ATL) at a price of Rs.10/- per share.
(2.) APPLICATION FOR EXEMPTION
2.1 The Acquirer made an application dated August 12, 2002 to the Securities and Exchange Board of India (hereinafter referred to as SEBI) under sub-regulation (2) of regulation 4 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the Regulations") seeking exemption in terms of Regulation 3(1)(l) from the applicability of Regulation 10 and 12 of the Regulations.
2.2 As per the application seeking exemption, the shareholding pattern of the Target company, pre and post acquisition would be as under:
Submissions IN THE EXEMPTION APPLICATION
In the aforesaid application, the Acquirers, inter-alia, submitted as under:
3.1 As on the date of the application, ATL is holding 71.79% of the paid up equity capital of the Target Company. Therefore, as per Regulation 2(1)(h)(i) of the Regulations, Atcom Technologies Ltd is in control of the Target Company.
3.2 Doshi family alongwith Persons acting in concert hold 40.78% of the paid up capital of Atcom Technologies Ltd . Therefore as per Regulation 2(1)(h)(i) of the Regulations, Doshi family is also the promoter of Atcom Technologies Ltd.
3.3 As per the Offer for sale document dated June 29, 1993 of Atcom Technologies Ltd, Doshi family are the promoters of Atcom Technologies Ltd.
3.4 As per Offer for sale document dated February 23, 1995 of the Target Company, Shri Vikram Doshi, Shri Vineet Doshi and Shri Sharad Doshi are promoters of the Target Company. Therefore, as per Regulation 2(1)(h)(ii) of the Regulations, Doshi family is also the promoter of the Target Company.
3.5 Atcom Technologies Ltd is holding more than 10% of the shares of the target company and Doshi family is holding more than 10% of shares of Atcom Technologies Ltd. Hence, both the Acquirers and Sellers are part of the promoters' group.
3.6 There will be no change in control and management including Board of directors consequent to the proposed acquisition.
3.7 The Acquirers will be able to infuse cash flow in the Target Company pursuant to the abovementioned proposed transfer of shares.
(3.) CONSIDERATION OF THE APPLICATION
4.1 The said application dated August 12, 2002 was forwarded to the Takeover Panel in terms of sub-regulation (2) of regulation 4 of the Regulations. The Takeover Panel in its meeting held on August 22, 2002 considered the application and sought further clarifications from the applicant. Accordingly a letter dated August 23, 2002 was sent to the acquirers.
4.2 From the reply received from the applicant vide letter dated August 28, 2002 it was observed that the sellers and acquirers were a part of the same promoter group.
4.3 It is noted from the status of compliance with the provisions of Chapter II of the Regulations furnished by the Acquirers, there was a delay of 16 days in making disclosures under Regulation 6(1) and 6(2) for the year 1997.
4.4 Further, as per the disclosure made by the target company to the stock exchanges in terms of Regulation 8(3), ATL was holding 1,46,48,000 shares (76.29%) in the target company on March 31, 2001.
4.5 it was also observed, inter alia that ATL which was holding 76.29% shareholding in the target company had acquired 2,00,000 shares representing 1.04% of the Target Company on April 05, 2001, increasing its shareholding in the Target Company to 77.33% and that no public announcement was made by ATL in terms of Regulation 11(2) of the Regulations.
4.6 A show cause notice was issued by SEBI to ATL on January 24, 2003 seeking its explanation as to why action should not be initiated against it for violation of Regulation 11(2) and 14(1) of the Regulations.
4.7 The reply to the show cause notice was received on February 25, 2003. ATL submitted that "the whole transaction is only in form of the simple security created by placing the shares and no consideration is paid during the transaction thus no acquisition or further addition was taken place". This submission was not found acceptable as it was observed that the said shares had been in fact credited to the demat account of the acquirers and remained there for a period of one year. In light of these findings, Adjudication Proceedings have been initiated against the ATL for the said violation.;