1. This appeal is directed against the order made by the Chairman, Securities & Exchange Board of India, on 19-7-2001, under section 11B of the Securities and Exchange Board of India Act, 1992 (‘the Act’) and regulations 10, 12 and 44 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (‘the Regulations’). By the said order the appellant was directed to make a public offer to the shareholders of Albright & Wilson Chemicals India Ltd. at an offer price taking 14-3-2000 as the base date, and also to pay interest on offer price @ 15 per cent from 14-7-2000 till the actual payment of purchase consideration for the shares tendered in response to the offer.

2. For a better understanding of the issues involved, it is felt necessary to have a brief idea of various corporate entities involved and their interconnection/association with each other in the context of the acquisition of Albright & Wilson Chemicals India Ltd., and the related compliance of the statutory requirements. The particulars in this regard as available from the appeal records are briefly as follows:

3. Rhodia S.A., a French limited liability company (the Appellant) engaged in the production of a range of specialty chemicals was incorporated as a 100 per cent owned subsidiary of Rhone-Poulenc SA (Poulenc). Poulenc is a leading global life sciences and specialty chemicals company. Even though Poulenc was holding 100 per cent equity capital in the appellant, in June 1998 the holding was reduced to 67.35 per cent.

4. In the Donau group, Donau Chemie AG of Austria is the apex company. Said Donau Chemie AG is engaged in the production of a vide range of industrial chemicals and products with customer oriented applications. It has a 100 per cent subsidiary with the name Donauchem GmbH, which in turn has a 100 per cent subsidiary company viz. Danube USA(Danube). Danube in turn holds 100 per cent capital in ISPG Ltd. ISPG is a limited company incorporated in UK, specially for the purpose of effecting acquisition of another UK company viz. Albright & Wilson UK Ltd.

5. Albright and Wilson Plc incorporated in the United Kingdom (UK Company) is also engaged in the manufacture and selling of chemical and allied products. It has two wholly-owned subsidiaries viz., Albright & Wilson UK Ltd., registered in U.K. and Albright & Wilson Asia Pacific Holding Pte Ltd., registered in Singapore. Albright & Wilson UK Ltd. is engaged in manufacturing and selling of chemicals and allied products. Albright & Wilson Asia Pacific Holdings is a non-trading intermediate holding company in the Albright & Wilson Group of companies. These two subsidiaries together hold 72.79 per cent of the paid up capital of an Indian company viz. Albright & Wilson Chemicals India Ltd. (the Indian company). The paid up capital of the said Indian company is Rs. 33,756,000 comprising 33,75,600 fully paid up shares of Rs. 10 each. The shares of the Indian company are listed on the Bombay Stock Exchange and also traded on the National Stock Exchange. Albright & Wilson UK Ltd. and Albright & Wilson Asia Pacific Holdings Pte Ltd. hold 39.74 per cent and 33.05 per cent respectively in the paid up capital thereby leaving 72.79 per cent of the paid up capital indirectly with the UK company and thus making the company its subsidiary. The remaining 27.21 per cent shares are with the public. The interconnection/association of these companies is depicted graphically as follows:-

Thus it could be seen from the companies plotted in the map, that there are 3 groups involved in the transaction covered in the impugned order. These three groups are (i) Donau Group (ii) Rhone-Poulenc Group and (iii) Albright & Wilson Group.

6. The appellant acquired the UK company and as a result the Indian company also became its subsidiary. In that context the appellant made an application to the respondent No. 1 (SEBI) on 3-10-2000 under the Regulations seeking exemption from the requirem