Companies & Sectors
H&M keeps exchanges in the dark about HC order reviving vMoksha case against company

The Bombay High Court, earlier this month, ordered the resumption of proceedings against Helios and Matheson in a case relating to the fraudulent acquisition of vMoksha

Helios and Matheson (H&M), the Chennai-based company that is involved in a battle with vMoksha Technologies over the fraudulent acquisition of its subsidiaries, appears to have failed to inform the stock exchanges of a recent Bombay High Court order restarting proceedings against H&M and its chairman.

Moneylife has learned that till date H&M has not informed either the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE), about the High Court order on 6 May 2011, setting aside the Sessions Court order and allowing a revision application by vMoksha's founder Rajiv Sawhney against H&M.

High Court judge JH Bhatia also ordered all the involved parties to appear before the Additional Chief Metropolitan Magistrate on 4 July 2011. (Read, 'Bombay HC allows proceedings against Helios & Matheson')

Mr Sawhney has written a letter to the NSE alleging H&M's involvement in conspiracy, cheating, fraud and forgery against vMoksha. He has also mentioned that H&M has not updated the stock exchanges about the court order against the company and he has appealed to the exchange to de-list the company and bar its directors from raising funds.

The case dates back to 2005, when shareholders of vMoksha, an IT company, decided to sell its three units. The company appointed PriceWaterhouseCooper, who found out H&M as potential buyer for vMoksha's three units. On 11 May 2005, both the companies signed a share purchase agreement under which V Ramachandran, chairman of H&M, was to pay $19 million for the three units. Of this, $4 million was to be paid as the earn-out to Pawan Kumar, the then chief executive of vMoksha and former CEO of the controversial DSQ Software. Although, Pawan Kumar and his family members were also stakeholders in vMoksha, Mr Sawhney later bought out their stake as well.

Mr Kumar was allegedly hand in glove with H&M. Mr Sawhney soon realised that he had been kept in the dark about many aspects of the deal.

For instance, he found that instead of receiving $19 million, a bank account had been 'fraudulently' opened in the State Bank of Mauritius in vMoksha's name and used to borrow $13.5 million, using a fake board sanction and false entries. That money was remitted to H&M ostensibly for subscription of redeemable preference shares on 28 June 2005.

Moneylife has previously reported about the bruising battle between H&M and Rajeev Sawhney. (Read, 'Helios & Matheson Under The Scanner'Moneylife has also reported on how the market regulator, the Securities and Exchange Board of India (SEBI), had fined H&M Rs50 lakh for making false announcements to influence the stock price and hiding information about acquisition of vMoksha. (Read, 'Helios & Matheson fined Rs50 lakh by SEBI for financial irregularities; vMoksha co-founder also penalised'

A detailed e-mail query was sent to H&M, the NSE as well to the BSE for their comments. The message was not answered till the time of publishing the story.

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Share prices may wilt further: Tuesday Closing Report

Watch out for 5,340 on the Nifty for possible support

A couple of negative corporate news reports pulled down the indices in trade today. The State Bank of India and ONGC emerged as the top losers as the country's biggest lender reported a huge decline in profit and the oil explorer was hurt by buzz that it would have to share more of the subsidy burden to offset the losses incurred by oil majors.

As expected, the market opened sideways, tracking weak cues from bourses across Asia. The Sensex opened 29 points up at 18,374 and the Nifty resumed trade at 5,496, down three points from its previous close. Even though headline inflation for April was lower at 8.66%, investors are worried that the government and the Reserve Bank of India (RBI) will continue to take harsh steps to moderate prices. The market touched the day's high at around 9.45am, with the Sensex at 18,436 and the Nifty touching 5,524.

After staying in the green for almost an hour, the indices lost steam and slipped into negative terrain. The market was range-bound in the absence of any major trigger. Oil & gas was the biggest sectoral loser on reports that the government has increased the contribution of upstream oil companies towards sharing the subsidy burden of fuel marketing firms to 38.5% of the Rs77,922-crore estimate for FY10-11.

The benchmark indices slipped further in afternoon trade, on lacklustre results from the State Bank of India. The news pulled down the banking sector, which ended as the second-biggest sectoral loser. The indices touched the day's low in post-noon trade, as the Sensex fell to 18,085, down 260 points, and the Nifty lost 78 points to 5,421.

The market staged a minor recovery in the last hour, but still closed in the negative for a second day in a row. The Sensex closed 208 points lower at 18,137 and the Nifty ended the session down 60 points at 5,439. The advance-decline ratio on the National Stock Exchange was a negative 438:948.

The market is losing ground and is expected to fall further. The next support for the Nifty lies at 5,340.

Among the broader markets, the BSE Mid-cap index declined 0.66% and the BSE Small-cap index fell by 0.61%.

BSE Oil & Gas (down 3.23%) BSE Bankex and BSE PSU (down 2.24% each), BSE Auto (down 1.02%) and BSE Capital Goods (down 1.02%) were the top sectoral gainers. On the other hand, BSE Consumer Goods (up 0.97%), BSE Fast Moving Consumer Goods (up 0.53%) and BSE IT (up 0.15%) were gainers till worth mentioning.

The top Sensex gainers were Jindal Steel (up 1.97%), Hindustan Unilever (up 1.60%), TCS (up 1.30%), ITC (up 0.83%) and DLF (up 0.64%). SBI (down 7.78%), ONGC (down 6.71%), Hero Honda (down 3.39%), Reliance Industries (down 2.53%) and Reliance Infrastructure (down 2.17%) were the top losers.

The government announced today that the new Index of Industrial Production has been approved by the Committee of Secretaries (CoS). It will come into effect from 10th June and have the base year of 2004-05.

The production trend in a 100 new items, including ice cream, fruit juices and mobile phones will weigh on measuring the pace of industrial production, as per the new index series approved by the government.

Markets in Asia closed mostly in the red, on concerns about a slowdown in economic recovery worldwide. Ric Spooner, Sydney-based analyst, said investors would remain cautious in view of the global developments. Concerns about the debt issues troubling countries in Europe and weak economic data from the US is also weighing on investor sentiments.

Recovering from early losses, the Shanghai Composite gained 0.13% and the Nikkei 225 added 0.09%. On the other hand, the Hang Seng declined 0.26%, the Seoul Composite fell by 0.08% and the Taiwan Weighted was down 0.31%. Stock markets in Singapore, Malaysia, Indonesia and Thailand were closed for holidays.

Back home, institutional participation in the equities segment was meagre on Monday. Foreign institutional investors were net buyers of stocks worth Rs47.07 crore and domestic institutional investors were net purchasers of shares worth Rs3.41 crore.

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SEBI plans to commence investor call centre with 10 agents

Besides complaints, the call centre would attend investor calls on issues like trading accounts and complaint status. Besides complaints, the call centre would attend investor calls on issues like trading accounts and complaint status

New Delhi: Market regulator Securities and Exchange Board of India (SEBI), which receives well over 100 investor complaints a day, plans to initially have about 10 agents at its proposed call centre to be managed by an outside agency to redress such grievances, reports PTI.

"It is estimated that the helpline services would require 10 persons initially to provide the nation wide helpline service to SEBI," the regulator said in an addendum to its tender inviting bids from agencies interested in setting up the call centre.

SEBI floated the tender early this month as it plans to outsource its investor helpline service to a third-party call centre. Besides complaints, the call centre would attend investor calls on issues like trading accounts and complaint status.

It will also provide assistance in matters like transfer and transmission of shares, IPOs, etc.

Besides, the call centre would also require to provide guidance on status of companies on whether they are unlisted, sick, vanished or delisted besides matters pertaining to other regulators that are not under the SEBI purview.

In the long run, SEBI wants a minimum 500-seat operation capacity for one shift and a 1,500-seat capacity for three-shift operations, with equal number of call centre agents.

The decision to outsource its investor helpline came within weeks of SEBI deciding to rope in third-party agencies for processing and maintenance of investor grievances.

Faced with the Herculean task of handling thousands of investor complaints, SEBI had taken a decision in this direction in March last week to resolve such grievances on a fast-track basis.

SEBI received more than 32,300 investor complaints in 2009-10, while the numbers are even higher at over 39,600 in the first nine months of the current fiscal. Since SEBI's inception, the total number of investor grievances has swelled to over 2.7 million.

Incidentally, SEBI is in the process of finalising a set of regulations for outsourcing of work by various market intermediaries such as brokers, mutual funds and investment bankers.

The regulator is, however, said to be against outsourcing of the market entities' core and investor-sensitive activities.

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