Sebi Begins Inquiry Into Cochin Malabar Deal

The Securities & Exchange Board of India (Sebi) is probing the possibility of an open-market acquisition of additional 11 per cent shares by Jimmy J Gazdar, a 32 per cent shareholder in Cochin Malabar Estates & Industries Ltd, to find out whether there has been a violation of the takeover regulations laid down by the securities watchdog.

The probe has come in the wake of information received by Sebi officials about the open-market negotiated deal entered into by Gazdar without informing Sebi. Sebi officials yesterday confirmed having received a letter from interested parties informing them about the open-market negotiated deal entered into by Gazdar, chairman and managing director, Cochin Malabar Estates & Industries Ltd.

 

The Calcutta-based B G Bangur combine holds another 15 per cent in the company. "We have asked the company officials and the other promoters to furnish details before deciding on the issue", said a Sebi official. He, however, refused to reveal further details on the subject. Gazdar was not available for his comments at his residence in Panaji.

Cochin Malabar Estates & Industries, incorporated in 1930 by the amalgamation of Eddivanna Rubber & Tea Co, Kinalur Rubber Co Ltd, and Kuttiadi Rubber Co Ltd, has an equity capital of Rs 1.77 crore.

It is believed that the controlling interest of the Cochin Malabar Estates & Industries is held by two distinct groups, one represented by Jimmy J Gazdar who holds 32 per cent in the company, and another by the B G Bangur combine.

Sources close to the Bangurs said one of the Bangur faction (not the B G Bangur combine) is reported to have quietly acquired nearly 10-11 per cent of the company's shares from open market over a period of time. Subsequently, the Bangur faction, reportedly under a severe financial crunch, made an offer to the major shareholder -- J J Gazdar -- for the entire 11 per cent stake at a negotiated price of Rs 200 per share. Gazdar acquired the additional shares at Rs 200 per share from the Bangur son.

Sources said proceeds from the sale of Cochin Malabar Estates shares will enable the Bangur faction to partly tide over the severe financial crunch.

Besides, Gazdar also appears to have picked up another five per cent stake from a domestic financial institution.

"The acquisition has been done without informing the securities watchdog or even seeking relevant permission or exemption from Sebi, thereby violating the rules and regulations of the takeover and acquisition code," the source told Business Standard on condition of anonymity.

Market insiders said Gazdar should have made an open offer to buy the shares and thus give other promoters an opportunity to increase their holding in the company.