Castrol India Open Offer: SIREN Petitions SEBI to Restore Price to Rs 210.95 Over Dividend Dispute

In a significant development for minority investors in the Indian equity markets, the Small Investors' Welfare Association (SIREN) has formally petitioned the Securities and Exchange Board of India (SEBI) to challenge a downward revision in the mandatory open offer price for Castrol India Limited.

The investor body has asked the market regulator to mandate an open offer price of Rs 210.95 per equity share instead of the revised Rs 199.45 per share published in the detailed public statement, arguing that the acquirer's deduction of Rs 11.50 per share as a dividend adjustment breaches investor protection safeguards under takeover laws.

Genesis of the Takeover and Open Offer

The open offer stems from a multi-billion-dollar global transaction first announced in December 2025, in which British energy major BP agreed to sell a controlling stake in its global lubricants business to a joint venture vehicle, Motion JVCo Limited, backed by private equity manager Stonepeak Infrastructure Partners and Canada Pension Plan Investment Board (CPPIB).

Because the underlying transaction involved the indirect acquisition of 100% of Castrol Group Holdings Limited—which holds 100% of promoter entity Castrol Limited, owner of a 51.00% controlling stake (50,44,52,416 shares) in Castrol India—it triggered a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

The acquirer launched an open offer to acquire up to 25,71,71,820 fully paid-up equity shares, representing 26.00% of Castrol India's total equity capital, managed by UBS Securities India Private Limited.

The Dispute Over the Dividend Adjustment

The pricing dispute centers on how the offer price was adjusted between the initial public announcement and the detailed public statement:

• Initial Price Disclosed: In the initial public announcement dated December 24, 2025, the base open offer price was fixed at Rs 194.04 per share under SEBI formula norms.
• Time-Lag Enhancement: Because of the time required to complete the global transaction—which eventually closed on October 30, 2026—the offer price was enhanced by 10% (an increase of approximately Rs 16.91 per share), lifting the gross price to Rs 210.95 per share.
• Dividend Cut: In the detailed public statement issued on November 6, 2026, the manager to the offer deducted Rs 11.50 per share to adjust for corporate dividends paid by Castrol India during the intervening period, bringing the net open offer consideration down to Rs 199.45 per share.

At the revised rate of Rs 199.45 per share, the maximum payout for the 26% stake stands at Rs 5,129.29 crore. SIREN highlighted that the difference of Rs 11.50 per share represents a potential loss of approximately Rs 295.75 crore for public and retail shareholders if the offer is fully tendered.

SIREN's Arguments Before SEBI

In its representation submitted to SEBI, SIREN argued that the Rs 11.50 per share deduction fails to satisfy the legal tests laid down under Regulation 8(9) of the SEBI (SAST) Regulations, 2011.

Regulation 8(9) allows acquirers to reduce the offer price by dividend payouts only when the dividend declared exceeds the average annual dividend per share paid over the three financial years preceding the public announcement.

SIREN's primary contentions include:

Financial Year Attribution vs. Payment Date: SIREN asserted that historical dividend benchmarks must be computed based on the financial years to which the dividends pertain, rather than the arbitrary calendar dates when the payments were disbursed. For Castrol India, the relevant historical dividends amounted to Rs 6.50, Rs 7.50, and Rs 13.00 per share across the three previous financial years. SIREN argued that the intervening payout of Rs 11.50 does not breach the statutory ceiling that permits deductions.

Alternative Calculation: The association argued that even if the regulator evaluates the threshold strictly by transaction payment dates, the acquirers are at most entitled to deduct only the excess portion of Rs 1.25 per share. Under this alternative formulation, the open offer price should be set at Rs 209.70 per share rather than Rs 199.45.

What Lies Ahead for Investors

SIREN has urged SEBI to inspect the statutory basis of the dividend adjustment and require the acquirer and merchant banker to submit a transparent, reasoned justification before final approval.

According to the open offer timeline, the Draft Letter of Offer (DLOF) is scheduled for filing with SEBI, after which the market regulator will review the offer documents before the formal tendering window opens on the stock exchanges.

For institutional and retail shareholders in Castrol India, SEBI's decision on the complaint will determine whether they receive the original gross consideration of Rs 210.95 or whether the dividend deduction of Rs 11.50 per share will stand.