 "Some reprieve for Poddar in Gillette case")
Sebi and Gillette India were locked into a legal battle on Sebi’s refusal to accept the MNC firms’ proposal for achieving minimum public shareholding (MPS) requirement.
In a stock exchange filing, Gillette India today cited the Sebi letter, which has accepted its proposals. The proposal, among other things, included reclassification of the Poddar group shareholding from promoter to non-promoter.
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Sebi, however, has laid down several conditions.
Sebi has said the Poddar group will have no special rights in Gillete India “through any formal or informal arrangements other than of normal public shareholders." Further, all the entities belonging to Poddar group cannot hold any key management personnel position in Gillette India and the other group companies of Procter & Gamble (P&G) through any formal or informal arrangements.
To fulfil Sebi conditions, Soraj Poddar will have to step down from chairmanship and also give up his other powers.
Currently, Soraj Poddar is the founder director and chairman the company and he also has ability to nominate one more director on the board.
Sebi has said if the Poddar group entities want to be classified as promoters of Gillette India again, they will have to make an open offer. Also, they cannot acquire any shares of Gillette India for a period of one year from the date of reclassification of Poddar group as public shareholder.
Currently, the promoter holding in Gillette India is 88.76% with Procter & Gamble holding 75.9% and the Poddar group owning the remaining 12.86%.
In order to achieve 75% public float, P&G will sell 0.99% stake through the offer for sale (OFS) route and the Poddar group too will sell 6% of its holding. The remaining 6.86% stake of Poddar’s will be classified as public holding.
Shares of Gillette India were trading more than 10% higher at Rs 2,200.
P&G will be the sole promoter in Gillette India pursuant to this move. Sebi has exempted P&G from making an open offer as the intent behind this was to comply with the MPS requirement. In normal course, P&G gaining sole ownership in Gillette would have triggered an open offer.
Gillette India will also pay a ‘severance compensation' to Poddar’s for giving away their rights and promotership.
Sebi, however, has said the any such compensation will have to be paid by P&G “without any recourse to Gillete India and interest of the existing minority shareholders of Gillette India is safeguarded."