SAT order on Fresenius Kabi anti-investor: JN Gupta

The Securities Appellate Tribunal (SAT) on Tuesday set aside Securities and Exchange Board of India (Sebi) order on Fresenius Kabi on the stiff conditions to be complied with before delisting its shares. As per the new order, the company can now delist successfully once it acquires 90.5 percent of the total shareholding.

Investors have complained that the four large investors have colluded with the promoters to offload the stake through a pre-determined price. JN Gupta, former ED of Sebi and currently the founder and managing director of Stake Holders Empowerment Services called the order as ‘anti-investor’. The Sebi can now either appeal against it at the Supreme Court (SC) against the order or go back to the pre-OFS time and start the delisting again, he told CNBC-TV18. Also read: SAT comes to Fresenius Kabi's aid; gives nod for delisting Below is the edited transcript of his interview to CNBC-TV18. Q: What is your comment on SAT’s observation? SAT seems to think that there is no evidence of collusion. There is only a fear or a complaint letter? A: We have never said there is collusion. Collusion could be a secondary part. The first issue is this that even without collusion, it is patently wrong. We have brought out a report on this that the OFS was allowed only for top 100 companies as per the market capitalisation or for those companies, which are going for an increasing minimum public shareholding. So, the objective behind OFS was to comply with the minimum shareholding norm of 25 percent of public share holding. Halfway through if you have changed the plan, then what to do. For instance, if I am starting a hospital and taking subsidy from the government and halfway through I say that instead of hospital I will make a hotel. Will I be returning the subsidy to the government or not. Here I had gone on a premise that I will be increasing the shareholding of public to 25 percent. Sebi passed this order of A+B together. If Sebi was to pass an order -- you go back to first pre OFS norm and then do delisting. There would not be any challenge because Sebi would be right. What Sebi did, in order to cause least trouble to the company was to combine the two orders that rather than buying back the shares from the market and go back to pre OFS time, you delist as per this. This order is anti investor and I have seen the order in many places too, the observation of SAT is anti investor.  For instance, it says that the GMP needed to deal with in such that the appellate will have little time on its hand to try and maintain investor relation. What do you mean? Are they operating one person company where the person can either comply with the foreign direct investment (FDI) guideline? They are running a big corporate. It appears to be the similar argument with Sahara took in Supreme Court that our staff was on leave for the summer vacation and Justice Khehar rightly observed that they were not running a kinder garden. Q: Now what can Sebi do? A: Sebi can do two things, either Supreme Court or go back to pre OFS and go for delisting. Q: The worry is that this Fresenius case will set a wrong precedence for many other companies. Do you believe that that could be the issue? A: Collusion is a fiction of the mind. Similarly, the judges observations is very wrong in the sense stating that investors have bought these shares for profit.