INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Shareholder proxy advisory firm InGovern has petitioned Sebi to force promoters of Sterling and Wilson Solar Ltd to provide an
exit offer to minority shareholders alleging failure of promoters to keep the promise made in the IPO document.
Sterling and Wilson Solar
Ltd got listed on the BSE and the NSE on August 20, 2019, after promoters belonging to the Shapoorji Pallonji Group made an offer for sale
of shares.
"The offer for sale of shares resulted in promoters raising Rs 2,850 crore through the IPO," InGovern Research Services said in a
"While the objects of the IPO were to enable the promoters to repay loans amounting to Rs 2,563 crore to SWSOLAR within 90 days of listing,
the company has received only Rs 1,000 crore on December 31, 2019, i.e., 133 days after listing."
This non-fulfilment of obligations by the
promoters as per the objects of the offer has resulted in a loss of over 60 per cent in investment value for IPO investors as stock price
has fallen from the issue price of Rs 780 to Rs 310, resulting in a loss of Rs 1,700 crore for public minority shareholders, it
alleged.
Sterling and Wilson Solar hit back at the proxy advisory firm contending that the report is "malicious, misleading, defamatory" and
contains "factually incorrect and unverified statements".
"The author of the report has acted irresponsibly as he has neither found it
appropriate to ascertain the facts nor provide us with a draft of the report for our response
This appears an attempt to malign the reputation of the promoters using the media," the company said adding the objects of the IPO was to
provide liquidity to the shareholders.
"The utilisation of the proceeds was an added intent of the promoters and cannot be directly
construed to be the object of the offer
The Promoters would like to state that this intent is intact and is suitably demonstrated by facilitating repayment of Rs 1000 crore as
committed by December 31, 2019," it said.
InGovern said the non-utilisation of the IPO proceeds for the stated purpose was tantamount to
change of objects of the IPO from what was stated in the prospectus
"This has resulted in aggrieved minority public shareholders."
It said the SEBI (ICDR) Regulations, 2018, allow for the dissenting
shareholders to be provided an exit offer by the promoters, in cases where there is a change in objects of the issue/ offer in the IPO
In this case, where shareholders have suffered significant erosion in the value of their holdings solely due to the non-utilisation of funds
as per the objects of offer of the IPO, Sebi must force the promoters to provide an exit offer to shareholders at a price as per SEBI (ICDR)
Regulations, it said.
Shriram Subramanian, founder and MD of InGovern, said, "Overall, a huge loss of reputation for the promoters of the
With substantial -- over Rs 1,700 crore -- erosion of wealth of public minority shareholders, and loss of investor trust for a group that
seemed to have a stellar reputation
In order to redeem this reputation, the SP group should provide an exit option for public minority shareholders
This is a demand from minority shareholders and Sebi should force the promoters to provide an exit option for minority public
shareholders."
The company however denied any wrongdoing
"Being an offer for sale (OFS), the promoters were under no obligation to mention the utilisation of proceeds
In fact, the promoters made this disclosure in good faith even though it was not required by law
There is thus no legal default as is being sought to be made out."
It went on to deny the allegation of being uncooperative with credit
rating agency ICRA saying Sterling and Wilson Pvt Ltd is no longer rated by ICRA for the last few years
"ICRA was unable to withdraw its earlier rating due to its requirement to have an NOC from each and every consortium banker
This matter took time and has now been completely resolved and ICRA has withdrawn its rating of SWPL on January 6, 2020."
India Ratings is
the agency which does the rating of SWPL and in its report, there is no such comment of 'non-cooperation', it said.
The company said the
board of directors while approving the repayment schedule levied additional interest of 100 basis points and there is no financial loss to
Sterling and Wilson Solar Ltd on account of reschedulement and "it is illogical to link the stock price reduction to this aspect."
"The
sensationalism in this report is more an attempt to further erode investor wealth rather than its stated objective of working in the
interests of the investors," it added.