Acquirers Intend To Make An Open Offer

Chartered Capital and Investment Ltd (Manager to the Offer), on behalf of Mr Nandakishore Divate and Mr K Chandramouli (Acquirers), has issued this Public Announcement (PA) to the Shareholders of Mafatlal Finance Company Ltd (Target Company), pursuant to Regulations 10 & 12 and as required under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as SEBI (SAST) Regulations, 1997) and subsequent amendments thereto.
The Offer:

The Acquirers intend to make an Open Offer to the shareholders of Target Company to acquire 88,74,480 equity shares of Rs 10/- each representing 20% of the voting capital of Target Company at a price of Re 1/- (Rupee One Only) per fully paid up equity share, payable in cash subject to the terms and conditions mentioned in the PA.

Schedule of Activities:
Specified Date - June 20, 2008
Date of Opening of the Offer - July 18, 2008
Date of Closing of the Offer - August 06, 2008

Sebi Allows Short Selling Of Shares By All Institutional Investors

In a major development market regulator on Wednesday, 19 March 2008, the Securities and Exchange Board of India (Sebi) allowed short selling of shares by all institutional investors from 21 April 2008.

It will also introduce a scheme for lending and borrowing securities from the same day, Securities and Exchange Board of India (Sebi) said.

Currently, only individual retail investors are allowed to short sell, or sell shares that they do not hold but expect to buy later.

Institutional Investors Must Pay Margins: SEBI

Mumbai: Institutional investors will now have to pay margin on their share transactions in the cash segment from April 21, in the same way as applicable to other investors, the Securities and Exchange Board of India said in a circular issued on Wednesday.

SEBI also operationalised short selling and securities lending and borrowing from the same date, April 21. It had specified the broad framework for this in December 2007 but had not operationalised it, pending clarifications from the tax authorities.

Currently, margin payment in cash transactions is applicable to retail investors and to those who do proprietary trading. It is a percentage of the value of the stocks that investors have to pay upfront upon placing their order with their brokers.

This is being done “in order to provide a level playing field to all the investors in the cash market as in the case of the derivatives market,” said SEBI.

While some market players thought that this margin prescription for institutions was done keeping in mind the current fragile health of several financial institutions worldwide, sources close to SEBI said that the measure was thought about a long time ago.

This must be seen in the context of short selling and securities borrowing and lending being made operable from April 21, said a source close to SEBI.

“This has been done for greater balance and integrity in the markets,” he said. “With short selling we are encouraging a converse view of the market, and we feel that margins for cash trades provide a balance.”

“There is a fear that people may go berserk with short selling and exceed their limits,” he added.

All institutional trades in the cash market would be margined on a T+1 basis with margin being collected from the custodian upon confirmation of the trade, said the SEBI circular: “Subsequently, with effect from June 16, 2008, the collection of margins would move to an upfront basis.”

The stock exchanges shall issue the necessary guidelines in this regard and shall put in place the necessary systems said SEBI.

“Institutional investors will now have to make arrangements to pay margins. From a broker’s perspective it would be like handling retail trades and paying margin money to the exchanges. If brokers can collect money from custodians there is no extra cost, it is only an increase of administrative work,” said Anita Gandhi, head of institutional business at Arihant Capital Markets.

There could be a slight decrease in volumes, but in any case the margin money will be released on the T+2 date, said an official at a mutual fund.

Short selling by institutions resuming next month will help deepen and broaden the market, said analysts. Short selling had been banned by the regulator in the wake of the Ketan Parekh scam in 2001.

Short selling refers to the sale of stocks which the seller does not own at the time of selling.