Castrol India Ltd. announces an acquisition

The offer price is ₹199.45 per share, versus the 60-trading-day VWAP of ₹194.04 per share. This represents a ₹5.41 premium, or approximately 2.8%, to the 60-day VWAP. The ₹194.04 figure was the initial offer price before the subsequent enhancement and dividend adjustment. ^{[1] [1]}

For the acquirer’s acquisition-price benchmark, the DPS reports “Not applicable” for the volume-weighted average price paid or payable during the preceding 52 weeks. It also reports “Not applicable” for the separate highest-price-paid parameter covering the preceding 26 weeks. Accordingly, no numerical 52-week acquisition price is available for comparison. ^[1]

The 26% open offer requires maximum cash consideration of ₹5,129.29 Cr, assuming full acceptance. The offer covers 25,71,71,820 shares at ₹199.45 per share, and the consideration is payable in cash. ^{[1] [1] [2]}

Financial-capability arrangements disclosed

• 100% bank guarantee: PAC 5 furnished an unconditional, irrevocable and on-demand bank guarantee of ₹5,129.29 Cr, equal to 100% of the Maximum Consideration. It was issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC) on 3 November 2026 in favour of the Manager to the Offer. ^[2]
• Validity and enforcement: The guarantee remains valid through completion of the offer and for an additional 30 calendar days after payment to successful tendering shareholders, subject to a long-stop date of 3 August 2027, with specified extension provisions. The Manager is authorised to realise the guarantee under the SEBI (SAST) Regulations. ^[2]
• Cash escrow: PAC 5 and the Manager entered into an escrow agreement with HSBC on 30 October 2026, creating the “Project Viscosity Escrow Account.” PAC 5 deposited ₹51.29 Cr, an amount in excess of 1% of the Maximum Consideration, and HSBC confirmed the deposit on 3 November 2026. ^[2]
• Potential replacement: PAC 5 may replace the bank guarantee with a cash deposit equal to 100% of the Maximum Consideration, subject to SEBI regulatory compliance. ^[2]
• Funding source and certification: The acquirer and PACs stated that the required funds would come from their own funds and offshore borrowings, backed by an undertaking to meet the payment obligations. ^[2] Bansi S. Mehta & Co. separately certified that adequate and firm financial resources through verifiable means were available, and the Manager stated that it was satisfied regarding resource adequacy and payment arrangements. ^{[2] [2]}

Key distinction: the ₹51.29 Cr escrow is the initial regulatory cash deposit; the ₹5,129.29 Cr bank guarantee is the principal disclosed security covering the full offer consideration.

Under full acceptance of the open offer, Castrol India’s projected public shareholding would fall to approximately 23.0%. The calculation is: existing promoter holding of 51.0% plus the maximum offer acceptance of 26.0% = 77.0% promoter/PAC holding; residual public holding = 23.0% ^{[1] [1]}. The actual post-offer public holding could range from 49.0% if no shares are tendered to 23.0% if the offer is fully accepted.

MPS implication

SEBI’s applicable requirement is at least 25.0% public shareholding on a continuous basis under Regulation 38 of the SEBI LODR Regulations read with Rule 19A of the SCRR ^[1].

Therefore, no MPS action is required merely because the indirect acquisition of Castrol Limited was completed: that transaction changed control of the promoter but did not itself transfer shares held by public shareholders. However, if more than 24.0% of Castrol India’s equity is accepted in the open offer—and particularly under full acceptance—the company would fall below MPS and corrective action would be required within the prescribed regulatory timelines ^[1].

The DPS does not specify the eventual corrective mechanism or a precise timeline in the cited passage; it states that necessary steps will be taken if the offer causes public shareholding to fall below 25.0%. Institutional rotations within the public category do not change this conclusion, because FII, DII, mutual fund and retail holdings are all components of public shareholding rather than additions to it.