The Hindu Business Line : Bank of Rajasthan moves SEBI on takeover law violation

BANK of Rajasthan has complained to the Securities and Exchange Board of India that Devyani Foods Ltd, an existing shareholder of the bank, has violated the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation of 1997. It has asked the market regulator to investigate into the alleged violation.

According to a recent communication to SEBI, Bank of Rajasthan has alleged that the violation of the SEBI regulation was noted on number of counts.

Mr P.K. Agrawal, Company Secretary of the bank said that the acquiring group had not disclosed their shareholding in the prescribed format within four days of acquisition/allotment of shares.

"In fact, their aggregate shareholding had exceeded five per cent even prior to the shares allotted through warrant conversion," Mr Agrawal pointed out.

According to the bank, the acquirer had informed it about the acquisition of over five per cent of the bank's paid-up capital through a letter dated February 6. It further said that the bank received the letter on February 20

The bank informed SEBI that the present aggregate shareholding of Devyani Foods in the company was nearly 14 per cent.

According to market persons, the bank is a possible takeover target. The management control over the bank is already a matter of sub-judice.

The Tayals of Shree Krishna group currently control the bank by virtue of their 40 per cent holding. However, the Tayal holdings, most of which came through a pledge route from Kolkata-based Bangurs in 1996, is liable to restoration of original ownership by Bangurs following full and final settlement of dues, according to SEBI.

Following the dispute raised by the Bangurs over management control, SEBI has referred the issue for adjudication. SEBI's move has been challenged by a minority shareholder of the bank in the Bombay High Court.

The acquisition by Devyani Foods, and the bank's management's allegation against it, further queers the pitch for an apparent three-way tussle over management control of the bank.

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