Sebi Penalizes Yashovardhan Birla and 6 Others in Zenith Birla RDA Case

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Capital markets regulator Sebi on Thursday imposed a fine totaling Rs 10.80 crore on seven entities, including Zenith Steel Pipes & Industries Ltd (formerly Zenith Birla (India) Ltd and Yash Birla), in a case over alleged irregularities in global certificates of deposit issued by Zénith Birla.

In its order, the regulator fined Rs 10 crore on Zenith Birla India Ltd (ZBIL), Rs 20 lakh each on PVR Murthy and Arun Panchariya, and Rs 10 lakh each on Yashovardhan Birla, MS Arora, AP Kurias and Mukesh Chauradiya. , and asked them to pay the fine within 45 days.

These four people – Murthy, Birla, Arora and Kurias – sat on ZBIL’s board of directors throughout the GDR (Global Depository Receipts) issuance process.

While Panchariya was the director and sole beneficial owner of Vintage who signed the loan agreement of the GDR issue and Chauradiya was the authorized signatory of Vintage addressed to EURAM Bank repaying the loan amount taken by Vintage.

All were part of ZBIL’s fraudulent scheme and arrangements to facilitate the underwriting of its own GDR, in accordance with the order.

The order came after the Securities and Exchange Board of India (Sebi) conducted an investigation into alleged irregularities in GDRs issued by ZBIL during the period May 2010 to June 2010.

The regulator, in its investigation, found that ZBIL had issued 1.81 million GDRs (for $22.99 million) and that the issue had been underwritten by an entity Vintage FZE (now known as of Alta Vista International FZE).

“It is observed that ZBIL had pledged the entire proceeds of the GDR issuance as collateral for the loan granted by Vintage to EURAM Bank. However, the same was done through a loan agreement between Vintage and EURAM Bank, a pledge agreement between ZBIL and EURAM.” “Of the total amount of the loan, Vintage repaid up to $8.53 million and subsequently defaulted on the repayment of the loan for the remainder of the amount ($14.5 million) which was later adjusted by the ‘EURAM from the GDR proceeds from ZBIL,” Sebi said. said G. Ramar.

He also noted that the shares were converted from these GDRs which were then sold in the Indian market and effectively acquired by Vintage at no cost. The underwriting of the GDRs by Vintage was financed by ZBIL itself.

According to Sebi, the subscription to the GDR was structured so that the subscriber controlled by Panchariya, Vintage acquired the GDRs without spending a penny through the pledge of the GDRs and the proceeds of the GDR against the loan used for the subscription.

“Therefore, the entire GDR issuance scheme was fraudulent and Notices No. 1-7 (ZBIL and other entities) acted as a party to the fraud and violated… PFUTP (Prohibition of Practices fraudulent and unfair trading) and listing conditions,” the order reads.

In another order, the regulator fined Anand Rathi Share and Stock Brokers Ltd Rs 30 lakh for misuse of client securities.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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