 "SAT blow prompts Gillette promoters to mend fences")
P&G and Poddar have restarted talks to decide how much stake the two could sell to comply with the minimum public shareholding requirements.
This comes on the heels of the Securities and Exchange Board of India (Sebi)’s move to place restrictions on their shareholder rights after the Securities Appellate Tribunal (SAT) quashed an appeal against the regulator, which had rejected a plan entailing reclassification of promoter holdings to comply with the public shareholding norms.
Poddar, a Kolkata-based industrialist, told Business Standard on Monday he was willing to divest part of his stake, “but how much that would be is not decided”. Poddar said the previous agreement was that he would sell around four per cent stake in Gillette India “when needed”.
P&G is also said to be exploring the option of cutting a portion of its holding to bring the promoters’ shareholding below 75 per cent. In response to an email query, a P&G spokesperson said, “We are currently looking into the SAT and Sebi orders in detail and remain committed to complying with the new law and engaging with Sebi to achieve compliance with the minimum 25 per cent public shareholding requirement norm.”
Sources said Gillette would file a new proposal to bring down the promoter shareholding within the next two weeks. Differences between P&G and Poddar surfaced after they could not agree on how much stake each would sell to comply with the Sebi norms. Sources said P&G, advised by a global investment bank, was unwilling to cut its stake in Gillette India significantly; Poddar, too, did not want to part with his stake.
The buzz in investment banking circles was that P&G wanted Poddar to sell his stake to the multinational, though this could not be ascertained. P&G owns 75.9 per cent in Gillette India, while Poddar and his associates hold 12.9 per cent. Together, they own 88.8 per cent. This means their shareholding has to come down by 13.8 per cent to meet Sebi norms.
Earlier, both parties had reached a solution that proposed a three-stage approach, which included re-classification of certain promoters as public shareholders. The plan would have resulted in Poddar being classified as a public shareholder in Gillette, with an approximately eight per cent stake. This was struck down by Sebi, which said shuffling of shareholding was against the spirit of the norms. Gillette appealed to SAT against Sebi’s decision.
After SAT struck down the appeal, Sebi on Friday passed an order barring Gillette’s promoters from dealing in the company’s shares and froze voting rights, dividend and bonus shares, among others, as June 3 was the final day for private companies to comply with the public shareholding requirement.
Sources said Gillette will submit a fresh proposal to bring down the promoter shareholding within the next two weeks.