Gillete India might have got a nod for its shareholding plan to comply with the minimum public shareholding (MPS) norms but this has not gone down well with the pressure groups and capital market experts.

Amit Tandon, founder of Delhi-based activist firm IIAS Solution, said that currently there are no clear guidelines or clarity by the market regulator which could explain the definition of a ‘promoter’.

“How will someone know when you are a promoter and when you are not,” Tandon said citing the infamous spat between Anil Ambani and Mukesh Ambani.

Wrong signal

Another independent market expert, a former executive director with SEBI, ridiculed the SEBI order saying that a ‘promoter’ cannot become ‘public’ overnight just by taking a severance package. He further added that the deal will send a wrong signal to others who are planning to comply with the MPS norms and that it is bad corporate governance.

SEBI, after a series of meetings with Gillette India, had approved for the reclassification of S.K. Poddar Heritage Group, the Indian promoters of the company, as a public shareholder. Now, consumer goods major Proctor and Gamble will be the sole promoter of Gillette India after S.K. Poddar relinquishing control for an undisclosed severance package.

Poddar, along with his son Akshay Poddar, will have to terminate the Shareholder’s Agreement, amend the Articles of Association and resign as the chairman.

However, SEBI and Gillette had locked horns over the same issue for months after which the Securities Appellate Tribunal has rejected Gillete’s three-stage plan wherein it wanted the promoter holding to come down to 75 per cent by making S.K. Poddar a public shareholder, diluting his holding to 4.99 per cent from 12.86 per cent. According to the tribunal, the same would be “ex-facie in breach of law” and the proposal was termed a “contentious and circuitous method”.

Interestingly, SEBI had also rejected the proposal before coming to the tribunal.

Earlier, the promoter shareholding was pegged at 88.9 per cent, with P&G accounting for 75.9 per cent and the Poddar Group holding 12.86 percent. Gillette had proposed that Poddar would dilute his stake to 8.9 per cent from 12.86 per cent and sell the 4 per cent shares to P&G at 25 per cent premium.

> priyanka.pani@thehindu.co.in

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