Yash Birla, 8 others barred from securities market

MUMBAI: The Securities and Exchange Board of India (Sebi) has barred Birla Pacific Medspa(BPML),Yash Birla and eight other individuals from accessing the securities market for two years for diverting the IPO( initial pubic offering) proceeds.

The regulator alleged that the company made misleading statements in the prospectus in respect of objects of the IPO, diverted the IPO proceeds by giving it to third parties under the pretext of work contract, gave ICDs (inter- corporate deposits) to group companies and channelled IPO funds through intermediate entities for supporting the price of its own scrip on the listing day.

Sebi alleged IPO proceeds worth Rs 14 crore were diverted and mis-utilised by the company to support the price of its own shares on the listing day.The proceeds were channeled through two layers of entities.

In its show cause notice to the company, the regulator further alleged that IPO proceeds worth Rs 33.4 crore were disbursed to certain entities under the pretext of advances toward work contracts for IPO objectives.

“But in fact, no substantial work contracts were executed, rather the funds disbursed remained unreturned to BPML and thus it is alleged that the said proceeds were misutilized and siphoned off,” Sebi said in its order on Friday.

The regulator said proceeds of IPO worth about Rs 31 crore were disbursed to group companies as ICDs, which was in stark contrast to the objects of IPO or the interim use of funds as stated in the prospectus.

“The Prospectus permitted interim deployment of proceeds as investment in liquid instruments only and did not permit such deployment of funds as ICDs.Thus, it is alleged that the act of approving the deployment of funds as ICDs in the board meeting dated July 11, 2011, tantamounted to mis-statement in Prospectus and diversion and misutilization of IPO proceeds,” Sebi said.

Officials at the company could not be immediately reached for their comments.

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