Sebi bars Tijaria Polypipes, its directors for up to 7 yrs
Jun 23 2014 , Mumbai
The market regulator has also prohibited 2 independent directors for 3 years, besides directing the company to call back Rs 20.40 crore of IPO proceeds that were diverted to certain entities.
The capital market watchdog's final order pertains to irregularities in the company's IPO.
The Securities and Exchange Board of India (Sebi) in a order dated June 20 has prohibited Tijaria Polypipes and its directors -- Alok Jain Tijaria, Vikas Jain Tijaria, Vineet Jain Tijaria and Praveen Jain Tijaria -- "from raising any further capital from the securities market, in any manner whatsoever, for a period of seven years".
The company and its directors have also been restrained from dealing in the securities market for seven years.
Besides, Sebi has barred Tijaria's independent directors -- Santosh Kumar and Padam Prakash Som Prakash Bhatnagar -- from accessing the stock market for three years.
Sebi said the period of prohibition undergone by Tijaria Polypipes, its directors and independent directors pursuant to the regulator's interim order on December 28, 2011, would be taken into account for the purpose of computing the period of prohibition given under the latest ruling.
At the same time, Sebi has asked the firm to take urgent and effective steps to "call back Rs 20.40 crore from entities to whom IPO proceeds were found to have been diverted".
The market watchdog has also asked the company to report to it the progress in calling back the funds by August 20, 2014, "on the basis of which, further directions shall be considered".
According to Sebi, "Tijaria Polypipes and its directors have diverted IPO proceeds inter alia through repayment of ICDs, which were subsequently used to partially fund certain entities/individuals who traded in Tijaria Polypipes scrip".
"Thus, they have indulged in fraudulent activities and have thus violated the provisions of...The FUTP (Fraudulent Unfair Trade Practices) Regulations," Sebi added.
In addition, Sebi has found the firm and its directors and independent directors had failed to disclose certain details and made wrong disclosures in the IPO prospectus.
The non-disclosures were related to decision of the firm to raise funds through ICDs (Inter Corporate Deposits), while it had given wrong information about procurement of plant and machinery, among others.
In its order, Sebi said that the fraudulent activity of Tijaria Polypipes and its directors had "its origin prior to the IPO". The funds were diverted to certain entities who had allegedly provided an exit to the retail allottees/Qualified Institutional Buyers.
Tijaria Polypipes IPO had begun on September 27, 2011 and closed on September 29, 2011.
Sebi had initiated a probe into the IPO after noticing fall in price in the firm's shares soon after its listing.