Calcutta, Sept. 26: Sebi has granted a reprieve to Gillette India — makers of personal grooming products — from making an open offer to become compliant with the minimum public shareholding norm after reclassifying the Saroj Poddar family as a non- promoter.
Sebi’s reprieve comes after Calcutta-based Poddar Heritage Group agreed to offload nearly an 8 per cent stake in Gillette India Limited (GIL) and withdraw two directors Akshay Poddar and Saroj Poddar, who was serving the company as chairman.
Poddar Heritage and global major Procter & Gamble held a 12.86 per cent stake and 75.90 per cent stake, respectively, in Gillette as identified promoter groups.
The company was mired in a dispute with Sebi in order to bring down promoters’ holding to 75 per cent to remain listed.
Saroj Poddar, who owns and operates Adventz Group, had agreed to step down as the chairman, sell 6 per cent in the firm and forego all special rights as a promoter shareholder in Gillette.
Sebi accepted the offer but also attached more riders, including barring the Poddar family from buying any Gillette shares in the next one year.
“If entities belonging to the Poddar group promoters want to be classified as promoters of GIL again in the future, they shall be required to make an open offer and no exception shall be made,” Sebi stated in a letter to Gillette and Poddar.
The market regulator also barred entities belonging to the Poddar group to hold any key management positions in Gillette and other group companies of P&G through formal or informal arrangements.
The Gillette stock shot up 10.34 per cent, or Rs 210.75, to close at Rs 2,249.45 on the Bombay Stock Exchange when the benchmark Sensex was up marginally 0.19 per cent.
Poddar’s holding in Gillette will be around Rs 942 crore going by today’s closing price. If he is to bring down his holding below 5 per cent, the owner of Zuari and Texmaco would pocket around Rs 540 crore.
Moreover, he is also going to get severance compensation from P&G directly for agreeing to declassify himself as the non-promoter shareholder in Gillette.
However, GIL will not be involved in this to protect the interest of other shareholders.
Commenting on the development, S.K. Poddar said: “Once we complete the process, I will be declassified as a promoter and left with a little less than 5 per cent or 4.99 per cent in Gillette. I have done it in the interest of the company.” He added that the latest Sebi decision came after several rounds of discussion, and it was never a unilateral decision.
“We will call for an annual general meeting to inform the shareholders about the changes and all formalities should be over in two to two-and-half months time — by September or October. There is discussion between me and P&G on a severance package,” Poddar said.
P&G will also be selling around 0.9 per cent stake in the personal care firm for around Rs 66 crore.
The shares of P&G and Poddar Heritage will be sold through an offer for sale route in the exchange. The sale will be done in the next three months.