WTM/PS/56/CFD/DEC/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM : PRASHANT SARAN, WHOLE TIME MEMBER
ORDER
Under sections 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India
Act, 1992 read with section 12A of the Securities Contracts (Regulation) Act, 1956 in the
matter of non-compliance with the requirement of minimum public shareholding by listed
companies
In respect of Pushpsons Industries Limited
1.

Securities and Exchange Board of India (hereinafter referred to as 'SEBI') had passed an
interim order dated June 04, 2013 (hereinafter referred to as the 'interim order') with respect to 105
listed companies who did not comply with the Minimum Public Shareholding ('MPS') norms
as stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957
(hereinafter referred to as 'SCRR') within the due date i.e., June 03, 2013. The interim order was
passed without prejudice to the right of SEBI to take any other action, against the noncompliant companies, their promoters and/or directors or issuing such directions in
accordance with law. The interim order was to be treated as a show cause notice by those
companies for action contemplated in paragraph 18 thereof.

2.

Pushpsons Industries Limited (hereinafter referred to as 'the Company') is one such company
against whom the interim order was passed. The equity shares of the Company are listed on the
Bombay Stock Exchange Limited ('BSE').

3.

The Company filed its replies to the interim order vide letters dated June 22, 2013 and
November 09, 2013, wherein the following submissions were inter alia made:
a. Due to unhealthy financial results, accumulated losses and uncertain export market, the
Company could not comply with the requirements of MPS.
b. At the meeting of the Board of Directors of the Company on November 09, 2013, it was
decided, to explore the process of delisting of equity shares from BSE.

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4.

In the interest of justice, the Company was afforded an opportunity of personal hearing on
July 02, 2014, when its authorised representatives, Mr. Sunil Bansal, General Manager, Finance
and Mr. Rakesh Verma, Chartered Accountant appeared and reiterated the submissions of the
Company, made vide its letters. Thereafter, the Company also filed its written submissions
vide letters dated July 03, 2014 and July 17, 2014, September 19, 2014, wherein it inter alia
made the following submissions:
a. The modes as prescribed under Clause 40A of the Listing Agreement for meeting the MPS
requirement were not applicable in its case as it had tried to convince various categories of
investors/ consultants for investing in the Company. However, due to poor business
prospects and poor financials of the Company, none of them showed any interest. The
Company has no reserves, out of which, it could have declared a bonus issue.
b. The non-compliance of MPS norms was beyond the control of the Company.
c. The Company has accumulated losses of `2.66 Crores as on March 31, 2013 and the book
value of the equity share was `6.19. There is no trading in its shares.
d. Absence of export orders, orders received for low prices and the 'not so good' domestic
market were the reasons for its losses.
e. The Company in the meeting of Board of Directors held on November 09, 2013, had decided
to explore the possibility of delisting of shares, however, in the meantime one board member
started living abroad and had resigned.
f. Further, its founder promoter and Chairman, Dr. M.R. Jain had expired on April 03, 2014 and
the Company is trying to recoup from the loss and to assimilate everything.
g. The promoters of the Company in view of the small structure and nil trading for almost two
decades, have decided to go for the voluntary delisting of its equity shares under the 'Special
Provisions for Small Companies' in accordance with Chapter VII of the Delisting Regulations.
h. The Company in its meeting of Board of Directors held during August 08, 2014, decided to
proceed with the delisting of its shares from BSE.
i. As per the schedule for the delisting of shares, it will make an application to BSE for 'in
principle' approval by November 07, 2014.

5.

I have considered the submissions of the Company. The interim order was issued against the
Company as it was non-compliant with the provisions of Rule 19A of the SCRR and Clause
40A of the Listing Agreement read with Section 21 of the Securities Contract (Regulation)
Act, 1956 ('SCRA'), by not maintaining atleast the minimum level (of 25%) of public

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shareholding as of June 03, 2013. I note from the shareholding pattern of the Company for
the period ended June 30, 2013, that the promoters held 82.50% and the public shareholders
were holding 17.50%. As per the shareholding pattern of the Company as disclosed to BSE,
for the quarter ended June 30, 2014, the promoter holding is at 82.28% and the public
shareholding was at 17.72%. From the above, it can be seen that the Company was noncompliant with the MPS requirements at the time of passing of the interim order and such noncompliance continues till date.
6.

The Company in its reply and in the personal hearing had stated that it proposes to delist its
equity shares from the BSE. I note that the Company had informed SEBI about this proposal
on November 09, 2013. The Company vide its letter dated July 17, 2014, has submitted that in
the Board of Directors' meeting to be held on August 08, 2014, it proposed to pass the
requisite resolution regarding the delisting of shares and approve the postal ballot notice for
the delisting of the shares. Vide another letter dated September 19, 2014, the Company
intimated SEBI about its Board of Directors' decision regarding approval of the proposed
delisting and provided a tentative time schedule for the delisting of its shares, according to
which it had to make an application to BSE for 'in principle' approval by November 07, 2014.

7.

From the above and on perusing the last communication of the Company i.e. email dated
November 26, 2014, it is clear that the Company had not taken concrete steps either towards
complying with the MPS norms or towards the proposed delisting, even after a period of
more than one year from the date of passing of the interim order. Only on August 08, 2014, the
Company decided to proceed with the delisting of its shares from BSE and has not even
completed the postal ballot process for seeking approval of the public shareholders for
delisting of the shares. In view of the same, it can be said that the Company has not
maintained its own timelines set for the purposes of completing the delisting process. These
facts suggest that the Company and its promoters are adopting delaying tactics for complying
with the MPS requirements and are not serious about the proposal for delisting of its shares.

8.

In view of the non-compliance by the Company with the MPS requirements, till date, in the
breach of Rule 19A of the SCRR and Clause 40A of the Listing Agreement read with Section
21 of the SCRA, such non-compliance being continuous in nature and also the fact that the
Company has failed to take concrete steps towards the proposed delisting, it becomes

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necessary for SEBI, for the proper regulation of the securities market, to confirm the
directions issued against the Company, its directors and promoters/ promoter group.
9.

Further, considering the non-compliance by the Company with the MPS norms and also the
fact that such violations are being continued by them, SEBI may also initiate other action, as
appropriate in law, against the Company, its directors and promoters.

10.

Accordingly, I, in exercise of the powers conferred upon me under section 19 of the Securities
and Exchange Board of India Act, 1992 read with sections 11(1), 11(2)(j), 11(4) and 11B
thereof and section 12A of the Securities Contracts (Regulation) Act, 1956, hereby confirm
the directions issued vide the interim order dated June 04, 2013 against Pushpsons Industries
Limited.

11.

This Order shall remain in force till further directions.

12.

Copy of this Order shall be served on the stock exchanges and depositories for their
information and necessary action.

DATE: December 17, 2014

PLACE: Mumbai

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PRASHANT SARAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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