SEBI clears Vadilal promoter trust restructuring without open offer

MUMBAI: Looks like the Gandhi family’s succession plan has got the regulator’s stamp without changing the recipe. SEBI has cleared a promoter family restructuring at Vadilal Industries and Vadilal Enterprises, allowing a newly created family trust to acquire promoter holdings without triggering a mandatory open offer.

In two separate orders dated 3 July, SEBI Whole-Time Member Kamlesh Chandra Varshney granted an exemption to IVG Trust under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, concluding that the proposed transactions form part of a succession planning exercise rather than a commercial acquisition.

The market regulator said the restructuring would not alter the promoter group’s overall shareholding, transfer control of either company or prejudice the interests of public shareholders, enabling the trust to proceed without making an open offer.

The restructuring centres on IVG Trust, an irrevocable discretionary private trust established in July 2025. Ila V. Gandhi is the settlor, while Virendrabhai Ramchandra Gandhi and Janmajay Virendrabhai Gandhi serve as trustees. The beneficiaries include Virendrabhai Gandhi, Ila Gandhi, Janmajay Gandhi and his lineal descendants.

For Vadilal Industries, the trust will directly acquire 2,81,458 equity shares, representing 3.92 per cent of the company. The transfer will follow the gifting of shares by Ila Gandhi and Janmajay Gandhi to Virendrabhai Gandhi, who will subsequently transfer the consolidated holding to IVG Trust.

The trust will also indirectly acquire promoter-controlled entities Vadilal International Pvt. Ltd., Vadilal Finance Company Pvt. Ltd., Veronica Constructions Pvt. Ltd. and Axilrod Pvt. Ltd., which together hold 47.2 per cent of Vadilal Industries.

SEBI noted that the promoter group’s aggregate holding in Vadilal Industries will remain unchanged at 64.72 per cent, while public shareholding will continue at 35.28 per cent after the restructuring.

In Vadilal Enterprises, IVG Trust will directly acquire a 10.64 per cent stake through transfers from Virendrabhai Gandhi after he consolidates shares received as gifts from Ila Gandhi and Janmajay Gandhi. It will also indirectly acquire another 5.02 per cent through the acquisition of an 88 per cent stake in Axilrod Pvt. Ltd., a promoter entity holding shares in the company.

Following the restructuring, the promoter group’s holding in Vadilal Enterprises will remain at 51.06 per cent, while public shareholders will continue to hold 48.94 per cent, SEBI said.

The exemption application was originally filed in August 2025 and later revised after the trust withdrew a proposed Hindu Undivided Family (HUF) partition. During its review, SEBI sought clarifications over inconsistencies in the names of the settlor, trustees and beneficiaries across KYC documents, the trust deed and stock exchange disclosures. The trust subsequently amended the deed and furnished fresh undertakings.

SEBI also observed that IVG Trust complies with the conditions laid down in its February 2023 circular governing exemptions for family trust transfers. These include maintaining a mirror image of promoter holdings, restricting trustees and beneficiaries to promoters and their immediate family members, prohibiting the transfer or encumbrance of beneficial interests, requiring annual certification by an independent auditor, and ensuring timely disclosure of any changes involving trustees or beneficiaries.