sebi:WTM/PS/45/ID9/DEC/2011
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Facts / Headnote
Interim order with prima facie findings of violations; directions prohibiting noticees from operating in the securities market and barring the merchant banker and its officials from taking up new assignments until further directions
Provisions invoked
- s. 19
- s. 372
- s. 21
- s. 171
Regulations
- Reg. 3(a)
- Reg. 60(4)(a)
- Reg. 57(2)(a)
Holding
SEBI found prima facie that RDB, its promoters/directors, and the BRLM made false statements and non-disclosures in the IPO prospectus regarding the proposed loan to group company RDBRIL, and that RDB mis-utilized IPO proceeds by routing them through a circuitous chain of entities to fund trading clients who incurred losses on the listing day. SEBI issued interim directions prohibiting the noticees from operating in the securities market and barring the merchant banker and its officials from new issue assignments until further directions.
Full text
Page 2 Issue Period: Sep 21, 2011 - Sep 23, 2011 Issue Type: 100% Book Built Issue IPO Issue Size: 4,500,000 Equity Shares of `10 Issue Size: `35.55 Crore Face Value: `10 Per Equity Share Issue Price Band: `72 - `79 Per Equity Share (Final price was `79/-) Market Lot: 80 Shares Listing At: BSE Book Running Lead Manager: Chartered Capital and Investment Limited Registrar to the Issue: Link Intime India Private Limited IPO Grading: ‘BWR IPO Grade 2’, indicating ‘Below Average Fundamentals’.
Page 3 3.2. Out of `27.82 crore for expansion, `2 crore is the security which was to be furnished to West Bengal State Electricity Distribution Company Limited (WBSEDCL) for electricity connection at the proposed manufacturing unit. 3.3. The scheduled of implementation of the project as given in the prospectus (page 26) shows that the company proposed to place orders for Plant & Machinery during September 2011 receive delivery of the same during December 2011. Further, the company proposed to keep security deposit with West Bengal State Electricity Distribution Company Limited (WBSEDCL) during October – November 2011. RDB vide email dated December 02, 2011 has informed SEBI that the order for Plant & Machinery is yet to be placed by the company. As may be seen from discussion in the later paragraphs regarding the utilizations of IPO proceeds by the company, RDB has not kept security deposit with WBSEDCL.
Page 4 subscription to the extent of 382% in the retail category. Also, all the applications in NII category were received on the third day only. 4.3. The following table shows the application status across category: Table showing applications statuses across category Category No. of shares offered No. of allottees No. of shares applied No. of shares allotted Subscription Ratio QIB 2,250,000 NIL NIL NIL 0 NII 675,000 9 506,240 480,240 75% Retail 1,575,000 2,643 60,16,320 4,019,760 382% Total 4,500,000 2,652 65,22,560 4,500,000 145%
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Source: SecMarx — sebi:WTM/PS/45/ID9/DEC/2011. 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.