Markets regulator Securities and Exchange Board of India (SEBI) on Wednesday slapped a fine of over Rs 72 crore on Winsome Textile Industries Limited, its directors and two other individuals in a matter pertaining to issuance of global depository receipts (GDR) by the firm.
The directors facing the fine are Ashish Bagrodia, Manish Bagrodia and Satish Girotra.
Winsome issued 1.29 million GDRs amounting to $9.99 million on March 31, 2011 and Pan Asia Advisors Limited was the lead manager of the issue. Arun Panchariya was the managing director of Pan Asia Advisors.
Investigation revealed that Vintage FZE was the sole subscriber of the GDR issue. Mukesh Chauradiya was Vintage’s managing director and Panchariya was its 100 per cent beneficiary.
Vintage availed loan from EURAM Bank in order to subscribe to the issue. For the loan, Winsome had pledged the GDR proceeds as collateral.
Further, FII-sub-accounts connected to Panchariya converted the GDRs and Aspire Emerging Fund sold converted equity shares worth Rs 1.11 crore in the Indian securities market.
In addition, the firm made misleading corporate announcements and also failed to inform the stock exchanges about the delisting of the GDRs from the Luxemburg Stock exchange.
“Winsome caused the investors in the securities market in India to believe that the full consideration for GDRs had been received by it which was not true and thereby, induced the investors in India to deal in securities, and committed fraud on the investors in India,” SEBI said.
The directors also acted as a party to the fraudulent scheme of GDR issuance.
The markets regulator has also barred Winsome, its three directors, Vintage FZE, Arun Panchariya, Mukesh Chauradiya, Pan Asia Advisors and seven funds from the securities market for varying time periods.
Also, Aspire Emerging Fund has been directed to disgorge illegal gains of over Rs 1.11 crore made by way of sale of equity shares, along with 12 per cent interest from the date of sale of equity shares till the payment of disgorgement amount.
For markets norms violations, SEBI has levied Rs 4.4 crore fine on the firm, Rs 67 crore fine on Mr Panchariya, Rs 59 lakh fine on the three directors and Rs 67 lakh fine on Mukesh Chauradiya.