sebi:WTM/SKM/EFD1-DRAIII/15/2019
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Facts / Headnote
Order finding diversion of IPO proceeds; directing return of diverted amount of Rs. 11,71,99,000 to Tarini
Provisions invoked
- s. 19
- s. 12A
- s. 27
- s. 186
Regulations
- Reg. 3
- Reg. 47
- Reg. 3(a)
- Reg. 55
- Reg. 57(1)
- Reg. 60(4)
- Reg. 200
- Reg. 60
- Reg. 301
- Reg. 301(2)(a)
Parties
- M/s Tarini International Ltd.
- Mr. Vakamulla Chandrashekhar
- Ms. Vakamulla Anu Naidu
Holding
The Noticees were found to have diverted approximately Rs. 11,71,99,000 of IPO proceeds to group entities and for purposes other than the stated objects in the prospectus, and failed to disclose the Hind Ispat loan of Rs. 5.50 crores by public notice as required under Regulation 60(4) of SEBI (ICDR) Regulations, 2009.
Full text
Order in the matter of M/s Tarini International Ltd. Page 2 of 51 Transmission and Distribution and Infrastructure. The company came out with a IPO in the SME segment and issued a prospectus dated May 23, 2014 for public issue of 39,78,000 equity shares of face value of ₹10 each (face value) at a price of ₹41 per share (fixed price), aggregating to ₹16,30,98,000. The issued shares got listed on BSE on June 26, 2014.
Order in the matter of M/s Tarini International Ltd. Page 3 of 51 variations between projected utilization of funds as disclosed in its prospectus vis- à-vis the actual utilization of funds. Under the circumstances the Company is alleged to have misled and defrauded the investors at large by providing wrong and misleading information/disclosure in its Prospectus and other filings. As regards the complaint against price & volume manipulation in the scrip, there is no adverse finding in the Investigation report.
Order in the matter of M/s Tarini International Ltd. Page 4 of 51 SCN based on the said fake complaint, b) the Prospectus was issued for the purpose of projects of Tarini group of companies and not for only Tarini, c) Tarini transferred amounts to group companies from IPO proceeds for executing projects. The IPO proceeds were transferred to the group companies by Tarini as loans on which Tarini has also charged interest, d) Mr. Vakamulla Chandrashekhar is the first signatory and subscriber to MoA and AoA of Tarini group companies, e) Tarini, its subsidiaries and associate group companies have same address, f) Mr. Vakamulla Chandrasekhar is the MD and Director of all Tarini group companies along with Ms. Vakamulla Anu Naidu who is also a director in Tarini and group companies, g) Tarini develops projects by itself and through its associate companies and as a major shareholder, Tarini was the actual beneficiary of all the said projects undertaken by its subsidiary and group companies, h) It was believed from the beginning that the proceeds of IPO would be utilized for Tarini as well as its group/associate companies, i) The loan that was availed from Hind Ispat prior to listing of shares was to meet some urgent requirement of working capital of Tarini group companies. The loan was taken on the basis of goodwill of Mr. Vakamulla Chandrashekar. No formal agreement was executed with Hind Ispat for availing the said loan and the loan was repaid from the IPO proceeds on June 27, 2014
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Source: SecMarx — sebi:WTM/SKM/EFD1-DRAIII/15/2019. 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.