Small shareholders rap Schneider exit offer

Shareholders with combined holding of over 10% say offer price does not accurately reflect value

Several minority shareholders are unhappy with the exit offer provided by French energy major Schneider Electric, parent of Schneider Electric President Systems (SEPSL), alleging the company has deliberately undervalued the local business.

Last month, the company announced an offer of Rs 200.4 a share; the offer closes Friday. "We will not tender our shares in the offer. We will wait for the full value to be realised," said Pawan Kumar Saraf, a Delhi-based shareholder. "Price discovery should be done in a fair way."

Saraf says the process mandated by the Securities and Exchange Board of India (Sebi) does not foresee all scenarios and ways in which small shareholder could be short-changed by the move intended to help him. "Sebi should have been more careful." Saraf and his family have around 43,000 shares in the company.

Parasmal Pancholi, who owns about 20,000 shares, said he, too, would not tender the shares at the offered price. "This is not our only investment. We can afford to wait and fight for what is legitimately due."

According to them, the fair value of SEPSL shares should be over twice the offer price. Several others like them, whose combined holding is over 10 per cent, have come together by forming a WhatsApp group. They are discussing options and talking to lawyers. A senior lawyer is said to be advising them.

The company says its offer is and according to Sebi guidelines. It has seen about 300,000 shares already tendered. According to the terms, the company would have about a year to accept any tender of shares after the offer period at the same price. The total of shares outstanding is 6.04 million and the promoters hold around 4.5 mn. In 2011, Schneider had purchased 55 per cent stake from the promoters at Rs 195 a share and made an open offer for 20 per cent.

Sugata Sircar, finance head at Schneider Electric, told this newspaper the company had spoken to several shareholders and explained its position. He said he hoped more would tender their shares.

In a statement in response to Business Standard questions, Schneider said: "Following the derecognition of the Pune and Bangalore stock exchanges, trading of the equity shares of SEPSL was suspended in May 2015. Subsequently, several rounds of discussion were held with the regulators, after which the shares were moved to the Dissemination Board of the National Stock Exchange (NSE), the interim platform, in July 2016."

According to the company, in the backdrop of a Sebi circular dated October 10, 2016, prescribing the guidelines applicable to companies on the Dissemination Board, the shares of SEPSL could not be listed either on the BSE or NSE, the two major bourses, as the company did not qualify to be listed under the Sebi rules.

"This is because the paid-up capital is less than that required for a company's shares to be listed on BSE or NSE, and the company did not make profits during the past three years. Taking cognizance of the facts, the majority shareholders of the company assessed the options at this stage and decided to make an offer to minority shareholders, a legal option available to the majority shareholders," Schneider said.

It added the offer price is not fixed by the majority shareholders -- it was done in line with the Sebi guidelines applicable. "As stipulated (by these), a valuer registered under the NSE's panel was appointed by the majority shareholders to arrive at a fair price per share to be offered to minority shareholders. The offer is the price arrived at, by the valuer, as per the guidelines. This has been intimated to the stock exchange."

Adding: "We have had a significant number of shareholders who have offered their share for repurchase and are working towards making this transition a seamless one."