The stock of Gillette India surged 10.4 per cent to Rs 2,253 in early trade on Thursday as SEBI allowed the Poddar group - its domestic promoters - to be reclassified as public shareholders.

In a stock exchange filing, Gillette India today said that SEBI has accepted its proposals, which include reclassification of the Poddar group shareholding from promoter to non-promoter.

SEBI nod, however, is subject to several conditions.

SEBI said the Poddar group will have no special rights in Gillete India through any formal or informal arrangements other than that of normal public shareholder.

Entities belonging to the Poddar group cannot hold any key management personnel position in Gillette India and the other group companies of Procter & Gamble (P&G) through any formal or informal arrangements, SEBI added.

"If entities belonging to the Poddar group promoters want to be classified as promoters of GIL again in future, they shall be required to make an open offer and no exemption shall be given in this regard," SEBI said.

Poddar group has also been directed not to acquire any Gillette India shares for a period of one year from the date of reclassification.

To fulfill SEBI conditions, Soraj Poddar will have to step down from chairmanship and also give up his other powers.

Currently, Soraj Poddar is the founder director and chairman the company and he also has ability to nominate one more director on the board.

The promoter holding in Gillette India stands at 88.76 per cent with Procter & Gamble controlling 75.9 per cent and the Poddar group owning the remaining 12.86 per cent.

To meet minimum public shareholding norm of 75 per cent, P&G will sell 0.99 per cent stake through the offer for sale route and the Poddar group 6 per cent of its holding. The remaining 6.86 per cent stake of Poddar’s will be classified as public holding.

After the reclassification, P&G will be the sole promoter in Gillette India. SEBI has exempted P&G from making an open offer as the intent behind this was to comply with the shareholding norm.

Earlier in July, the Securities Appellate Tribunal had dismissed Gillette’s appeal to reclassify the shares of one of its promoters as public shareholding, as SEBI had frozen the voting rights and the right to corporate benefits (dividend, rights, bonus, share splits, and the like) of the Gillette promoters and promoter group, till they comply with minimum public shareholding norm.

Gillette India will also pay a severance compensation' to Poddars for giving away their rights but such compensation will have to be paid by P&G “without any recourse to Gillete India and interest of the existing minority shareholders”, SEBI ordered.

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