While Procter & Gamble would sell 0.9 per cent stake, worth about Rs 66 crore at current market value, Poddar Group would also bring down their holding to below 5 per cent through part sale of equity, the company said in a statement.
"Subsequently, the process for termination of the shareholders agreement between the Poddar group and the P&G group shall be initiated, pursuant to which the Poddar Group will have no special rights in Gillette India other than that of a normal public shareholder," it added.
Further, S K Poddar and A Poddar will step down from the Gillette India board and on approval of the resolution passed by Gillette India shareholders in a general meeting or a postal ballot. The remaining shareholding of the Poddar Group shall be considered as public shareholding, the company said.
"SEBI has mentioned that they will not insist on P&G making an open offer as a result of the above mentioned events, in view of the intent behind the transaction, which is to comply with the minimum public shareholding requirements," it added.
SEBI has also imposed several restrictions and provided guidelines to the company to adhere to achieve the minimum public shareholding requirements.
"There shall be no acquisition of shares of Gillette India by Poddar Group for a period of one year from the date of declassification of Poddar group as public shareholder," SEBI said.
Commenting on the development, S K Poddar told reporters on the sidelines a press conference: "Once we complete the process, I will be declassified as promoter and left with little less than 5 per cent or 4.99 per cent in Gillette. I have done it in the interest of the company."
He added that the latest Sebi decision came after several rounds of discussion and it never a unilateral decision.
"We will call for an annual general meeting to inform the shareholders about the changes and all formalities should be over in two to two-and-half months time that is by September or October. There is discussion between me and P&G on a severance package," Poddar said.
Gillette India is jointly promoted by The Procter and Gamble Co and Poddar Group. Promoters hold 88.76 per cent in Gillette.
In 2012, the company had proposed a three-stage plan to bring down the promoter holding to 75 per cent, which was turned down by Sebi as it involved re-classification of a top company executive as non-promoter entity.
Following Sebi's refusal, Gillette had filed an appeal with SAT, which had directed the market regulator "to pass a speaking order".
Accordingly Sebi had issued a letter to the company rejecting its proposal and advising Gillette to comply with the minimum public shareholding norms within the stipulated timeline.
On July 3, responding to Gillette's plea SAT upheld Sebi's decision that rejected the company's proposal and also vacated an interim stay given on May 30.
Sebi had directed all listed private companies to have at least 25 per cent public shareholding by June 3, 2013.
In its order, Sebi noted that promoters and directors of were "mainly responsible" for the non-compliance of companies with the minimum public shareholding norms.
According to the market regulator, promoters of non-compliant companies "would have an advantage on account of their disproportionate stake compared to the public in their respective companies and also place them in more advantageous position as compared to the promoters of the compliant companies on account of violating the regulatory requirement".
Sebi said that the disproportionate advantage arising out of non-compliance of the norms should not be permitted to be vested with the promoter/promoter group.