New Delhi: Questioning the Securities and Exchange Board of India’s (SEBI) ban on its two entities for raising money through a debenture instrument without informing the regulator, Sahara Group said the matter is out of the jurisdiction of the watchdog, reports PTI.
“It is a ministry of corporate affairs matter,” Sahara said in a statement.
Citing the opinions for former Chief Justice of India AM Ahmadi, former presiding officer of Securities and Appellate Tribunal (SAT) C Achuthan and others, Sahara said optionally fully convertible debenture (OFCD) was “definitely out of the jurisdiction of SEBI.”
SEBI on Wednesday asked two entities of Sahara Group not to mobilise funds from equity markets or from issuance of any security to the public while restraining group supremo Subrata Roy from approaching public for raising money.
The regulator also prohibited the promoters mentioned in the prospects of these two companies—Subrata Roy, Vandana Bhargava, Ravishankar Dubey and Ashok Roy Choudury—from issuing prospectus or advertisement soliciting money in any manner from the public till further directions.
SEBI issued show cause notices to Sahara India Reals Estate Corporation (SIRECA) and Sahara Housing Investment Corporation as to why action should not be initiated, including directions to refund the money raised by them through a debenture instrument OFCD.
Perusing the balance sheets of group entities, the regulator observed Sahara India Commercial Corporation Ltd had a balance of up to Rs7,000 crore for five years ending 2009 under the head “optionally fully convertible debentures” and under “unsecured loans”.
Prima facie, these Sahara Group companies were raising massive sums in the form OFCD that was characterised by lack of transparency, SEBI said, adding these two deliberately did not give the information pertaining to the issues.
SEBI further said that it appeared that such huge funds were raised by circumventing the applicable laws.
The regulator passed the order on a complaint from Professional Group for Investor Protection alleging that no disclosure was made about one of the housing companies of the group, SIRECA, raising money by issuing convertible bonds for many months.
Examining the matter under issuance of capital and disclosure requirement, the order said, “It is very clear that the companies have conveniently omitted the necessary statutory declaration of compliance.
“If companies are allowed to go ahead in such manner and raise vast amounts funds of in the guise of private placement it would be mockery of capital market and all established mechanisms to protect investors interest.”
Sahara said it has already clarified the reason why the particular information sought by the market regulator was not furnished.
It further said that SEBI had taken a wrong action against the company with sole “allegation that we have not supplied the document they asked for”. The order is very “unreasonable and arbitrary”, it added.
The domestic market is likely to witness a positive opening on strong global cues. Wall Street ended higher in the pre-holiday session as economic data signalled an improvement in the economy. But volatile trading can be expected on account of the expiry of the November futures and options (F&O) contract today. Markets in Asia were mostly in the green on positive economic indicators emanating from the US. However, fears of China implementing additional policy tightening steps still remain. The SGX Nifty was 15 points higher at 5,875 compared to its Wednesday’s close of 5,860.
The market opened higher on Wednesday brushing aside concerns about tensions in the Korean peninsula and the global economy. Jittery trade saw the indices dipping into the red for a brief period in morning trade. They soon bounced back to touch the day's highs but range-bound trading led to a sharp decline towards the close. The decline was triggered by the CBI raids on LIC Housing Finance and some banks. Finally, the Sensex closed 231.99 points (1.18%) lower at 19,460. The Nifty was down 69 points or 1.16% at 5,865.
The US markets closed with smart gains overnight, ahead of the Thanksgiving Day holiday, on positive economic data a sign of an improvement in the economy. The Reuters/University of Michigan consumer sentiment index rose to 71.6 in November, up from 67.7 last month, beating analysts’ expectations. The Labor Department’s data revealed that the number of US workers filing new claims for jobless benefits fell by 34,000 to 407,000 in the week ended 20th November, to the lowest level since July 2008. Besides, personal income grew at a faster pace than they have for much of the year and consumer spending expanded. On the flip side, orders for durable goods decreased 2.7% in October; the steepest decline in nearly two years, and new home sales fell for the fourth time in the last six months. The US market will be closed tonight for the Thanksgiving Day holiday.
The Dow surged 150.91 points (1.37%) to 11,187. The S&P 500 gained 17.62 points (1.49%) to 1,198. The Nasdaq gained 48.17 points (1.93%) to 2,543.
The Asian pack was mostly higher in early trade today on the back of strong economic data originating from the US, a positive sign for exporters in the region. Commodity related stocks surged on a rise in crude and metal prices.
The Shanghai Composite surged 0.59%, the Hang Seng gained 0.52%, the Jakarta Composite jumped 1.07%, the KLSE Composite was up 0.56%, the Nikkei 225 rose 0.36%, the Straits Times advanced 0.58% and the Taiwan Weighted rose 0.59%. On the other hand, the Seoul Composite was down 0.12% on account of the tension between the two Koreas. The SGX Nifty was 15 points higher at 5,875 compared to its Wednesday’s close of 5,860.
Back home, the government on Wednesday said the housing finance racket unearthed by the Central Bureau of Investigation (CBI), leading to the arrest of the CEO of LIC Housing finance and some senior officials of public sector banks, is a bribery case involving some individuals and not a large-scale scam.
After all the hype about the much-talked third generation (3G) services, a survey by The Nielsen Company revealed that only one out of five urban mobile subscribers in India is expected to opt for 3G services initially, despite its high popularity among people.
Despite high degree of awareness about 3G mobile services and its capability to deliver high speed internet, it may take as long as 8-10 years before a majority of mobile users are on a 3G plan, said a study by the company.
Development might have triumphed over petty caste politics in what was once a ‘backward’ state, but has the ruling party at the Centre and the NDA-led opposition learnt the right lesson?
The sweeping re-election of Bihar chief minister Nitish Kumar’s coalition government is a solid confirmation of the development he has worked to bring about in the hitherto poorly-governed, deeply caste-ridden state. The election verdict in what was once considered the poorest state in the country, will most likely reverberate across the states, ringing the warning bell for both the ruling Congress party at the Centre and the Bharatiya Janata Party (BJP), the main national opposition and the principal partner in Mr Kumar’s government.