In a significant corporate development, Vardhman Holdings Limited, a prominent member of the Vardhman Group, has formally entered into a Shareholders Agreement (SHA) with Aichi Steel Corporation (ASC) and other promoters of Vardhman Special Steels Limited (VSSL). This strategic agreement, finalized on June 2, 2025, follows the recent increase in ASC’s stake in VSSL from 11.33% to 24.90% on a fully diluted basis, and is aimed at redefining the mutual obligations and rights between the key stakeholders of VSSL.

The execution of this agreement was approved by the Board of Directors of Vardhman Holdings in a meeting held on the same date, commencing at 11:00 a.m. and concluding at 11:20 a.m. The disclosure has been made in accordance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, and SEBI's Master Circular dated November 11, 2024.

Key Parties Involved

The SHA is executed between:

• Non-Individual and Individual Promoters of VSSL (including Vardhman Holdings Limited)

• Aichi Steel Corporation (ASC)

Together, these entities are collectively referred to as the "Promoters" in the agreement, though ASC is a strategic investor rather than a traditional promoter.

Purpose of the Agreement

The primary intent behind the SHA is to formally define the mutual rights and obligations of the Promoters and ASC as shareholders of VSSL, now that ASC’s shareholding in VSSL has significantly increased. This framework is designed to:

• Clarify governance roles

• Protect strategic interests

• Prevent conflicts

• Lay out contingencies for future share transfers and operational decisions

Salient Features of the SHA

1. Share Transfer Provisions

   • Promoters are restricted from transferring VSSL shares to ASC competitors, except for a designated liquidity portion (7%), which is still subject to specific restrictions.

   • ASC cannot transfer its VSSL shares acquired under the Share Subscription and Investment Agreement (SSIA) dated May 29, 2025 without the prior consent of the Promoters:

     • For 3 years: No transfer to any third party

     • After 3 years: No transfer to VSSL competitors

   • Additional provisions include:

     • Right of First Refusal

     • Investor Tag-Along Right

     • Drag-Along Right

2. Non-Compete and Non-Solicitation Clauses
   Both Promoters and ASC are bound by standard non-compete and non-solicit obligations, effective as long as they remain shareholders of VSSL.

3. Representations and Warranties
   The SHA includes binding representations and warranties from both ASC and the Promoters. Any breach triggers indemnification clauses.

4. Indemnification Provisions
   The non-defaulting party can seek compensation for losses due to:

   • Breach of representations/warranties

   • Violation of obligations or undertakings under the SHA

5. Termination & Fall-Away Clauses

   • The SHA automatically terminates if ASC’s holding in VSSL falls below certain pre-agreed thresholds.

   • Alternatively, it can be terminated by mutual consent or when either party ceases to hold any VSSL shares.

   • Survival clauses ensure that certain provisions remain effective even after termination.

Shareholding Details

Vardhman Holdings Limited, as a signatory of the SHA, has no direct shareholding in ASC. The agreement merely aligns rights and obligations between ASC and VSSL’s promoter group.

Regulatory & Conflict of Interest Check

• The transaction does not constitute a related party transaction.

• It has been executed at arm’s length and in good governance compliance.

• There is no conflict of interest reported as a result of this SHA.

• No nomination from ASC or the Promoter Group to the board of directors of VSSL has been disclosed at this point.

Context and Strategic Significance

This development holds importance for multiple stakeholders:

1. For ASC:
   By increasing its stake and entering into a formal SHA, ASC consolidates its influence and protects its strategic interests in VSSL, a key player in the special steels segment in India.

2. For Vardhman Holdings and Promoters:
   The SHA allows the Promoter Group to maintain control while collaborating with ASC for growth, technology transfer, and innovation.

3. For VSSL:
   This alliance is a strong step towards operational synergies, improved governance, and sustainable growth, leveraging ASC’s international expertise.

Conclusion

The execution of the SHA between Vardhman Holdings, other promoters of VSSL, and ASC marks a pivotal corporate governance milestone. By embedding clear and structured rights and obligations, the agreement sets a collaborative foundation for the future of VSSL. It also reflects a growing trend among Indian corporates to institutionalize promoter-investor relationships, especially when strategic stakes are involved.

This agreement not only reaffirms ASC’s commitment to the Indian steel industry but also strengthens VSSL’s position as a global steel manufacturer with a stable governance model and future-ready strategy. The market is likely to view this agreement as a positive signal of stability and transparency, crucial for long-term shareholder confidence.

As per the disclosure, the SHA will be made available on the official website of Vardhman Holdings Limited (www.vardhman.com) for public access and investor awareness.

The Upcoming IPOs in this week and coming weeks are Ganga Bath Fittings, Victory Electric Vehicles International, Wagons Learning.

The Current active IPO are 3B Films.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.