TaxTMI 
TaxTMI 
2019 (5) TMI 1173
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....Assistant Manager of Securities and Exchange Board of India (referred to hereinafter as 'SEBI') dated 20th March, 2019 wherein interalia the appellant was directed to revise the offer price for acquiring 26 percent of the shares of the target Company to Rs. 608.46 from the proposed offer of the appellant of Rs. 400 per share. Appeal bearing no.182 of 2019 filed by Mr. Chandra Prakash Tripathi is filed to challenge the very same order however, on different grounds. He claims that he is an investor in the target company. According to him the target company has exclusive patented technology solutions to meet the emission norms and improve fuel efficiency. Taking into consideration the price the appellant Tenneco Inc has paid for acquisition....
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.... valuers for valuing the shares of this company. These valuers were MSKA and Associates (MSKA) and J.D. Jhaveri (JDAA). These valuers determined the per share fair value at Rs. 372.10/- and Rs. 397.66/- respectively. The appellant therefore rounded up the value to Rs. 400 per share as a fair price and public announcement was made. As per the SAST Regulations, the appellant filed a draft letter of offer with the respondent SEBI on 16th October, 2018. On receipt of this draft letter of offer it was scrutinized by the respondent SEBI. According to the respondent, some complaints from various shareholders were also received by it. The respondent SEBI therefore resorted to the provisions of Regulation 8(16) of the SAST Regulations and appoint....
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....ondent's role is to protect the interest of the investors. The valuation reports submitted by the appellants would show that the very valuers followed different methods of valuation and, therefore, there is a huge variance. By book value method, the price is arrived at Rs. 110.1/- while by market value method the price is arrived at Rs. 534.2/-. The subsequent exercise undertaken by these valuers also suffers from the same vice. Therefore, in terms of Regulation 8(16) of the SAST Regulations, the respondent has rightly appointed Haribhakti as an independent Chartered Accountant for computation of fair price of shares of the target Company in terms of the parameters specified under Regulation 8(4) of the SAST Regulations. On the basis of Har....
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....ught to address certain issues with regard to the determination of fair value. He was allowed to make oral submissions. He submitted that fifty acre land owned by the target Company at Bengaluru is going to be monetized as pollution control board is increasingly issuing orders for relocation of the factories from the area. He submitted that the market value of the said land have now reached an astronomical level which factor is not taken into consideration even by Haribhakti. 6. Mr. Chandra Prakash Tripathi, the appellant in Appeal no.182 of 2019 submitted that the offer price directed by the respondent SEBI is too low. According to him the proper peer group is not taken into consideration by respondent SEBI. Considering the exclusive pa....
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.... For purposes of clause (e) of sub-regulation (2) and sub-regulation (4), the Board may, at the expense of the acquirer, require valuation of the shares by an independent merchant banker other than the manager to the open offer or an independent chartered accountant in practice having a minimum experience of ten years." 8. Considering the report of the two valuers submitted by the appellant Tenneco Inc. alongwith the draft letter, respondent SEBI took the course of appointing an independent Chartered Accountant Haribhakti. On the basis of this third valuation report in its direction/observation has revised the offer price to Rs. 608.46/-. 9. The record of SEBI as produced before us would show that after communicating these observation....