Sebi exempts Mehta trust from Saurashtra Cement open offer
India's market regulator has waived an open offer requirement for a family trust restructuring shares in Saurashtra Cement, preserving the current ownership structure and avoiding a potential payout for minority shareholders.
India’s capital markets regulator has granted an exemption to the Mehta Family Trust from making a mandatory open offer to shareholders of Saurashtra Cement Ltd. The waiver clears the way for an internal reorganisation of the cement company's promoter group.
The proposed transaction involves two separate transfers. Industrialist Jay Mahendra Mehta will move his 49.99 per cent stake in Galaxy Technologies Pvt Ltd to the trust. His wife, actor and entrepreneur Juhi Chawla Mehta, will concurrently transfer her 50.04 per cent profit sharing and voting rights in Omna Enterprises LLP to the same trust.
Galaxy and Omna, both part of the Saurashtra Cement promoter group, collectively hold a 24.04 per cent stake in the listed cement producer. Transferring ownership of these holding vehicles to the family trust would ordinarily trigger a mandatory open offer under India's takeover regulations.
Sebi opted to waive this requirement after concluding the transaction is purely a succession planning exercise. The regulator noted the trust, registered in 2019, is composed exclusively of promoters, their immediate relatives and lineal descendants. This makes it a direct mirror image of the existing promoter holding structure.
The regulatory decision ensures there will be no change in control at Saurashtra Cement. For existing investors, this means the company's ownership dynamics remain entirely static. The promoter group will continue to hold a commanding 66.62 per cent of the equity, while public shareholding will stay flat at 33.38 per cent.
Had the waiver been denied, the trust would have been forced to make an open offer to public shareholders. Such offers typically require the acquirer to buy a minimum stake from the public, often at a premium to the market price, fundamentally altering the company's shareholding pattern.
The exemption is not unconditional. Sebi has mandated that the trust file a formal report within 21 days from the date of acquisition. Furthermore, the waiver is strictly limited to open offer obligations and does not waive any other compliance requirements under applicable securities laws.
The acquirers must also adhere to a strict timeline. The exemption is valid for exactly one year from the date of the order. If the family fails to complete the internal transfers within that window, the regulatory waiver will automatically lapse.
