sebi:WTM/MB/IVD/13306/2021-22
Facts / Headnote
CHL and Noticee Nos. 2-4 restrained from accessing securities market and associating with listed public companies/intermediaries for 3 years; Noticee Nos. 5-7 restrained for 2 years from date of order, for inflated financial results and non-disclosure of related party transactions; Clause 49 board-meeting charge not established.
Provisions invoked
- s. 11
- s. 19
- s. 12A
- s. 12
- s. 21
- s. 49
Regulations relied on
- SEBI (PFUTP) Regulations, 2003 — 3
Parties
- Coral Hub Limited
- Mr. G.S. Chandrashekar
- Mr. Dilip C Parekh
- Mr. G.S. Vishwanatham
- Mr. D M Shirodkar
- Mr. Harish Sahu
- Mr. Ghanshyam Joshi
Holding
CHL published false, inflated sales and profits for FY 2008-09 and 2009-10 and failed to disclose sales to related party Raydox in FY 2009-10 Annual Report, violating PFUTP Regulations and Clause 32, with liability on directors Noticee Nos. 2-7; violations regarding Avington, Rochelle as related parties and Clause 49 board meetings were not established, and graded debarment was imposed.
Full text
Order in the matter of Coral Hub Limited Page 2 of 46 2003 (hereinafter referred to as “PFUTP Regulation”) and Securities Contracts (Regulations) Act, 1956 (hereinafter referred to as “SCR Act, 1956”).
Order in the matter of Coral Hub Limited Page 3 of 46 5.3. Food And Agriculture Organisation, UN (FAO UN): 5.3.1. FAO UN contributed 16.82% (Rs. 10,27,66,020) and 38.71% (Rs. 29,42,58,799) of the total sales for FY 2008-09 and FY 2009-10 respectively. Total sales contributed by FAO UN for FY 2008-09 and FY 2009-10 was approx. Rs. 39.70 crore. 5.3.2. As per FAO UN email dated October 23, 2013, total amount paid to CHL from July 2001 till December 2009 under the contract was US$ 2,98,301.50. (Taking the conversion ratio @ Rs. 50/dollar), the total amount paid to CHL in Rs. comes up to Rs.1,49,15,075/-. 5.3.3. Thus, the amount of sales to FAO UN by CHL for FY 2008-09 and FY 2009- 10 were inflated and incorrect to the extent of Rs. 38.22 crore.
Order in the matter of Coral Hub Limited Page 4 of 46 Allegation in respect of Related Party Transaction: 5.7. It is observed that three entities viz., Raydox Technologies FZ LLC (hereinafter referred to as “Raydox”), Avington Solutions Ltd. (UK) (hereinafter referred to as “Avington”) and Rochelle Associates Ltd. (UK) (hereinafter referred to as “Rochelle”) together have contributed to 37.57% and 33.32% of the total sales during 2008-09 and 2009-10 respectively. 5.8. M/s Tutis Technologies Ltd. (hereinafter referred to as “TTL” / “Tutis”) is promoter entity of CHL. Mr. Anthony Lopes, Manager-Administration with TTL was director in Raydox, Avington and Rochelle. 5.9. As per Mr. Anthony Lopes written statement dated June 5, 2013 and Mr. Suthesh Nair, Vice President Finance of CHL written statement dated April 23, 2013, Raydox, Avington and Rochelle were companies set up and controlled by the directors of CHL namely G.S. Viswanathan, G.S. Chandrasekhar and Dilip C Parekh. Hence, these companies were related to the Directors of CHL. 5.10. Thus, it is alleged, being related parties of CHL, the sales made to Raydox, Avington and Rochelle should have been disclosed in the Annual Report (2009-10) under related party transactions, which CHL had failed to do so. Hence, it was alleged that CHL and its directors has violated provisions of clause 32 of the Listing agreement read with Section 21 of the SCRA, 1956.
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Source: SecMarx — sebi:WTM/MB/IVD/13306/2021-22. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.