Regulations
SEBI bans seven entities for unfair trade practices

SEBI barred Chandra Financial Services, Kundan Leasing & Finvest, Jay Investrade and Maruti Securities besides three individuals -- Harsh Shirish Maniar, Jay Shirish Maniar and K Varadarajan from stock markets for allegedly indulging in unfair trade practices

 
New Delhi: Securities and Exchange Board of India (SEBI) has restrained seven entities, including three individuals, from the securities market for allegedly indulging in unfair trade practices in the shares of Temptation Foods, Bang Overseas, Cals Refineries and two other companies, reports PTI.
 
The banned entities are Chandra Financial Services, Kundan Leasing & Finvest, Jay Investrade and Maruti Securities besides three individuals -- Harsh Shirish Maniar, Jay Shirish Maniar and K Varadarajan, according to the SEBI order.
 
The market regulator found these entities were involved in circular trading of shares of five companies -- Temptation Foods, Bang Overseas, Confidence Petroleum India, Cals Refineries and Shree Precoated Steels (presently known as Ajmera Realty & Infra India).
 
Chandra, Kundan, Jay, Harsh Shirish Maniar, Jay Shirish Maniar and Maruti have been restrained from the securities market till 3 June 2013.
 
Considering the facts and circumstances of the case and quantum of trading done by them, SEBI said it would be appropriate to restrain them from "buying, selling and dealing in securities and accessing securities market for a period of four years from the date of interim order dated 4 June 2009".
 
Since Varadarajan was not covered in the interim order dated 4 June 2009, the market regulator has also restrained him from the securities market for three years. The same would be effective from the date of this order.
 
SEBI had found inter-linkages among certain entities dealing in these five scrips in the form of off-market transactions as well as synchronised deals. All these transaction happened between August 2007 and February 2009.
 
Meanwhile, SEBI has discontinued the directions passed by it against HSM Financial Services and Shanti Financial Services related to these five scrips.
 
In the order, SEBI has also made references to market rigging by broker Ketan Parekh.
 
The market regulator in a separate order also barred Anita Deepak Dalal from accessing the securities market for 18 months over alleged trading irregularities in the scrips of three entities -- Bang Overseas, Confidence Petroleum India and Cals Refineries.
 
"... hereby restrain Anita Deepak Dalal from accessing the securities market and further prohibit her from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner for a period of 18 months." SEBI said.
 
As per the order, Dalal was found to be involved in creating artificial volumes in the scrips of the three entities.
 
SEBI noted that Dalal was not covered under the ad interim ex-parte order passed by the regulator in June, 2009 that restrained certain 'connected clients' from accessing the securities market and further prohibited them from dealing in them.
 
The regulator observed that "the trades of the noticee (Dalal) have to be considered as part of overall plan of manipulative trading in the five scrips amongst the connected clients".
 

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COMMENTS

NSriramamurty

4 years ago

In USA,they might have been Penalised by $ 10-50 Million .In India- SEBI's Action of simply Banning Illegal Activists -Causing Heavy Losses to small Investors - is nothing short of Favouring them avoiding Heavy Penalties.

Vaibhav Dhoka

4 years ago

SEBI's action is eyewash for a common investor.SEBI should come out with data about how much money of ordinary investors is lost in SHARE GHOTALA by brokers,how much money was recovered from such scamsters and how much is lost.God save us from these SHARKS.

Blue blooded crooks of Dalal Street and NCDs or khokas

Be aware, companies are once again raising money through unsecured NCDs and they are being hawked by well-known market intermediaries. At a time when the government and its regulators are doing their best to lure investors into the capital market, it makes good sense to look in the rear-view mirror

 
Industry is the modern temple of India, Jawaharlal Nehru used to say. But when these temples turn into rogue durbars, is a matter of time and faith? This story is about shattering of that faith and should work as a lesson.  Recent non-convertible debenture (NCD) issues of India Infoline, Muthoot Finance, Shriram City and others to collect Rs2,150 crore in unsecured debentures in September alone, has made me to write these few paragraphs.
  
The biggest losers of the declining share market are the corporate houses.  Not only their market capitalization or net worth reduces, their cheating ability also gets greatly hampered. A booming market creates exuberance, lifts sentiments and attracts hoards of people out of which some can be easily fooled.  In bad markets, they cannot find enough investors to sell their dream projects at exorbitant premiums nor can they raise debt in equity linked schemes or at low interest rates.   
 
Over two decades ago, industrialists, past and present, had created a sort of fashion of raising money through secured debentures, equity linked or partly convertible.  The money was being collected as if they don’t have to return, almost like now. Securities and Exchange Board of India (SEBI), regulators, ministry of corporate affairs, ministry of finance were like a traffic police without a challan book. That was the time I was posted to UK on a long duty with good foreign allowance and salary being deposited in India. I could not have asked for more, till a friend of mine, son of an Indian stock broker, visited me and advised me that I should buy NCDs or khokhas, as these were popularly known then, to gainfully deploy my funds.  I had no idea, his noble advice, will bring me face to face, with the stark reality of India’s “blue blooded crooks” of Dalal Street.
 
On my behalf, my friend bought every NCD (khokha) that came for selling. And by the time I landed back in India, the file contained NCDs of 169 companies in assorted numbers. I almost had to make a compendium to keep record of interest payments, redemption dates and so on. Willy nilly, my friend had thrust a full time job on my head and made me capable of joining CII, FICCI, Assocham or ministry of corporate affairs as a company adviser.  After all, who could know more than me about these companies?   
 
Before I expose the misdeeds of each of these companies, some headed by people of greatest eminence and national award winners, occupying chairs at IIMs, honoured at glittering functions of industry, CII, FICCI and Assocham lecturing the nation in print and television media and generally being photographed with our president, prime minister and other honourable ministers, there is also an excellent experience.
 
The best and most remarkable outcome of this ordeal was a great lesson to me.  I observed that the only companies, who paid interest and redemption amount on time, were that of Tatas.  In fact they posted the cheques four to five days in advance so that on due dates the amount is in our accounts.  That is the reason, Tatas earn highest regards and honour in India and abroad. Being fare and honest is the greatest asset of any company in the long run. Even if investors lost in Tata companies shares, no one has ever doubted the integrity of Tata management.  No other business house of India stands up to that test.
 
Reliance Industries, owned by Mukesh Ambani, the richest man in India,  paid interest and redemption amount, but posted the cheques on due date to be received by us three to four days later. This and other difference between Tatas and Ambanis are reflected in valuations of the companies today. With millions of investors, Reliance saved millions of rupees every six months in four to five days interest cost and may have been enough to finance at Boeing 727! A 27-storey house for six people, consuming Rs70 lakh every month in electricity bill, made Ratan Tata say, “How can some people even think like that”—it reflected exactly what many ordinary Indians and Reliance shareholder felt. 
 
The JK group would dispatch cheques 20 days late payable only at Kanpur, gaining 20 days more.  But then Vijaypath Singhania breaks world record in microlite flying in hot air ballooning for which he was awarded a Padma Bhushan. One of the Singhanias was heading CII and FICCI advising government and business world—but what about ethics in ensuring that your debenture holders get due interest? 
 
DLF chief KP Singh celebrated his 80th birthday in Udaipur with the famous singer Shakira performing for his guests, while his projects are being delayed for over 18 months, creating untold miseries for buyers. Now look at the salaries that CEOs of family-run companies are taking away. Navin Jindal, also a member of parliament draws Rs73.4 crore (now makes news for getting cheap coal allocation and selling expensive power), Kalanithi Maran and his wife (in the news for the telecom scam), Rs114 crore, Vijay Mallya another MP earns Rs41.4 crore for sinking Kingfisher, Kumar Mangalam Birla pays himself Rs39.7 crore, Pawan Munjal Rs34.5 crore, Sunil Mittal Rs21.3 crore respectively. This is in addition to the seven star lives that are all paid for by their companies. Some may argue, that if David Beckham gets $5 million for kicking a ball, why not a hard working CEO.  But remember these salaries are in addition to what they earn with other shareholders as dividends. 
 
The fact is that they fuel the kind of resentment that leads to an “Occupy Wall Street” sort of agitation.  My appeal to corporate world is to pay attention to public perception. Only then, your charity, donation to temples, educational trusts, and philanthropic ventures will please God and have true and lasting effect on you, your family and the society. Instead, support NGOs who speak against the wrongdoing in India.
 
Farishton se insaan banna hai behtar, magar usme lagti hai mehnat zyada
 
So what does an investor do about non-payment or late receipt of interest and redemption amounts? Complaints to SEBI had no effect at all. The market regulator used to respond three or four months later with a routine printed postcard carrying some reference number that matter is being taken up with the company. Nothing happens. The ministry of corporate affairs and ministry of finance won’t even respond, despite repeated reminders. Companies do not care, many have changed registrars and addresses as well; and imagine we are talking of secured debentures.  It was open loot. That was the shameful state of affairs. In Dubai, I happened to meet Rajinder Singh Batra, chairman of Rajinder group of companies who looted Rs1,600 crore through NCDs and Rs3,000 crore from Indian banks, who was laughing at Indian procedures. (For the record the Rajinder Steel group, which began life in Kanpur is among those companies which simply dumped their Indian operations and walked away in the last 1997, when a slew of steel majors turned defaulters and were bailed out by the banking system—banks in turn are bailed out by the exchequer. None of the lenders have made any attempt to trace Mr Batra who is apparently living comfortably in Dubai). No wonder, India’s face is completely blackened today in coal, 2G & other scams. Unchecked animals and animal spirit. Financial crime, even of the scale that Rajinder Steel indulged in, goes unpunished, because it would expose the complicity of the lending organisations and their employees. 
  
Be aware, companies are again raising NCDs and that too unsecured. Many of these are in the realty sector offering dubiously high returns are hawked by well known market intermediaries. SEBI and the government should be pro-active to avoid reoccurrence of loot.  If companies can deploy funds gainfully and regularly pay the investors, it is a noble and nation building activity. 
 
First time in the history of mankind, so many people are retiring or becoming senior citizens at such a pace. In India alone, 22,000 people turn 60 every day and about two lakh state and central government employees retire every month, many in lakhs from the private sector. Imagine the scope for tour and travel, wealth management and insurance companies. This is unprecedented and their money needs to be productively channelized. Creating vibrant debt market therefore, is urgent.  
 
Ideally, NCDs must be listed and pay monthly or quarterly interest, not yearly and report their net worth or non-performing assets (NPAs) every quarter to the RBI and SEBI. Their directors should deposit personal post dated cheques and passports as precautionary and deterrent measure.  In short, stringent and regular monitoring is paramount to avoid scams and unscrupulous entrants.  CII, FICCI, Assocham, ANMI and media can play heavenly role in encouraging investment led growth of our mother India.
  
First promoter on my list starting with alphabet A is the owner of Apple Industries (he is a regular on Page 3 along with his wife), who also owned Atash Industries. He is now the MD of Hexaware, a poster boy of business channels. Apple Industries would not pay interest on time and we got our 1st and 2nd instalment of debenture redemption after many reminders. The third instalment never came no matter what we tried, even visiting his office at Fort, Mumbai. Probably the company became sick, but the promoters are hale and hearty and in brand new avatar. For more details on all these companies please access www.watchoutinvestors.com  
 
Hamse poochho izzat walon ki izzat ka haal kabhi, hamne bhi is shehar mein reh kar, thoda naam kamaya hai.
 
(Commander SS Kumar is a retired commander from Naval Aviation Branch. He is a gold medallist in Mechanical Engineering and had done his MBA from Jamnalal Bajaj Institute of Management Studies. He received his initial training in aviation in UK for three years. He was also posted in the US embassy for four years.) 
 

User

COMMENTS

suneel kumar gupta

4 years ago

Route cause of the problem is judiciary & lack of information .I often feel that people investing money in such enterprises are either driven by geed or their money is not hard earned

S,K Gupta

SHIVENDRA KUMAR

4 years ago

Dear Sir,

I am really thankful to Col S S Kumar for this straigt forward letter on Indian Crooks who are managing Big Fraud Companies, I myself work with Stock Market under a Share Broker and I find many times stock price movements without any justified reasons and poor retail investor trapped into it. In many cases we see investor looses everything. I saw in many cases investor takes loan and invest in these companies. This is a good website where we get good information. We are making this profession dirty, by recommending Fraudulent Investment Plans.

Dayananda Kamath k

4 years ago

jindals were geeting subsidised gas cylinders more than one per day. may be that is the reason govt limited it to 6 per family. but one perday was not for the entire jindal family i suppose.

shivkumar

4 years ago

Investors need to remember that not just NCDs, but even secured debentures can fail you. Normally Company's assets are already mortgaged to Banks and FIs, leaving little security even for secured creditors.
Few months back Moneylife had carried my article 'How secure are Secured Debentures'. Remember even genuine companies can let down the investors very badly; there are many such instances.

So dont fall for the higher rate of interest offered on such instruments.

Ramesh Poapt

4 years ago

There are many such Shree 420 companies...kindly expose details of the same..Salaam ML/Author for this!

Apoorva Raval

4 years ago

Yes I agree there is some Risk in NCD Investment, but all promoters or companies are not fraud, I think investor should check companies background before investment and also do regular checks on its financials, But as of now I can Say the company named above have not default on interest or on capatial

SUTANU GUPTA

4 years ago

Excellent article. A good and timely warning.

M Muralidharan

4 years ago

By sharing the personal experiences, the author has cautioned the public. THat is good. It only says what is generally known in whisphers. Few may have had good experiences as well. However, when individuals want to take a investing decisions, these write ups are inputs to decide. Finally, investors have to be responsible for their actions. We have a lot of work to do in FAIR law enforcement in India.

Hemant

4 years ago

Seems biased writeup,just to create sensation.Nowadays interest is credited by ecs.I have invested in Shriram transport/Shriram citi/Manapuram debentures & getting dues on due date only by ecs.This write up reminds me TV Media which creates sensational headlines to gain attention.This is not expected from MONEY LIFE.

sachchidanand

4 years ago

I also an investor in FD's/ NCD's / FCD's / PCD's of Roofit Industries ,Sunearth Ceramic, ( both from Advani group ) Rajinder Steel , Atash Industries, Mazda Industries ( where H.P. Ranina renowned Supreme Court Lawyer ,is a Director) BWL , Montari Industries ( Ranbaxy Group), GR Magnets , Topline Shoes ( Sunil Gavaskar is a Director), Motorol etc and have followed up with each of these companies for last ten yrs. My experience is similar. While the companies have become BIFR / Sick , the promotors have become filthy rich, healthy and socially active !
SEBI ia toothless tiger and have chosen to become mute spectator and may be in collusion with the dishonest promoter, Merchant Bankers have gone scot free, Auditors have never reported correct financial position to shareholders and are simply ineffective.Investors need to be very cautious

Pankaj Kapadia

4 years ago

The article says lot about irrelavant sensational statements."Beware" msg is well taken but naming company like India Infoline, Muthoot Finance, Shriram City without any evidence and comparing with his past experience is incorrect. The author should have explained what mis doing is happening with ncds of recent times. So many co. looted primary mkt in 1994-99. Do we stop investing in IPOs? India infoline pays monthly interest!!! .

REPLY

Sucheta Dalal

In Reply to Pankaj Kapadia 4 years ago

Maybe you should read Mr Paradkar's comment above which adds to what the article has said. As to your question --"Do we stop investing in IPOs?". The answer is yes. Not only in IPOs but also in the secondary market.
That is why India's investor population has dropped from 20 million to 8 million in 2 decades of liberalisation.

Nilesh KAMERKAR

In Reply to Sucheta Dalal 4 years ago

Ma'am

Contrary to the popular opinion, there are opportunities for making good profitable investments in the INDIAN stock markets.
I entirely agree with your views on investing in the IPOs, though would beg to differ on investing in the secondary market . . . because at all times there are opportunities to profit by investing ( & not by speculating) in listed companies at reasonable ( and sometimes at bargain) prices.
As an investor, one cannot afford not to invest in equities; though the extent of an individual’s exposure to equities may vary depending upon the risk appetite and the ability to withstand the consequences incase of a loss. For without risk, there is no return. . .
It is simply mouth watering to think that just 8 million Indians invest in the stock markets (Warren Buffett ‘s words are ringing aloud “What the fool does in the end, the wise do in the beginning). It is by far better to invest now in the Indian stock markets than come late to the party, though, there’s no reason to rush to invest into equities headlong.

Nilesh KAMERKAR

In Reply to Pankaj Kapadia 4 years ago

For the sake of investors nobody wants these companies to default. But, the question that must be asked: why do companies 'need' to borrow at a higher cost and that too from the retail public? especially in times like today when lower cost debt can be sourced from Banks, MFs and Insurance Cos. Or is the Co.

The correct way of saying it is . . . ABC Co has paid monthly interest so far.

The prudence lies in being careful rather than being hopeful about the future financial health of regular borrowers.




Pankaj Kapadia

In Reply to Nilesh KAMERKAR 4 years ago

Bank do not lend money at less than 15% except home loan. Shriram gets 24% on used truck finance. They are good at collection and that is why such rates are affordable for them. These comapanies bears 2% expenses on 5/6 year ncd. which work out around 0.40% pa. This is justified and also competitive enough to challenge fd rates.

jagadeeswaran deventhiran

4 years ago

The article is at best can be considered as a rant against industrialists rather than useful information for retail investors.....

A COMMON INDIAN MAN

4 years ago

the crux of the article is that our regulator is just HELPING looters like india infoline and muthoot,i was a victim of India infoline whose chairman Nirmal jain is just not better then rajinder singh,when i lost huge sum in trading due to wicked policies of infoline,and such persons are allowed to issue unsecured debentures by REGULATOR(to be understood as puppet to these scam makers).so just learn the lesson of "BEWARE OF BLUE BLOODED CROOKS"

kpushkar

4 years ago

this reminds me of the heydays of IPO's in '90s..harshad mehta time.

i had been to couple of companies in Baroda/Ahmedabad, where the factory was supposed to be there.it had a watchman, unpainted walls , no plaster/ no machinery .. and well issue got oversubscribed. some of these guys went to jail later on.

REPLY

MOHAN

In Reply to kpushkar 4 years ago

During the Harshad Mehta time I had investments in companies named THAPAR FOODS, PREMIER INDUSTRIES , OMEGA AGRO etc. etc., These companies later vanished into thin air !

Nilesh KAMERKAR

In Reply to kpushkar 4 years ago

Those who went to jail would have surely come back, but the retail investor's hard earned money just went; never to come back. . .

MOHAN

4 years ago

Chief Minister of Kerala, Mr. Oommen Chandy's daughter is married to Muthoot. There were allegations against Muthoot during the last Assembly by poll election. The Left front people caught Muthoot people red handed while giving away money to voters.

REPLY

MOHAN

In Reply to MOHAN 4 years ago


Talibanic circular from Muthoot to it's staff

http://www.haindavakeralam.com/HKPage.as...


Why is the Muthoot group to which OOMMEN CHANDY's son in law belongs given a stake in DSC and the Free economic zone at kochi?

http://www.harthal.com/php/writeToPartie...

US presidential elections: The importance of ‘Middle’ America

The November election for next US President will probably be decided by six states Ohio, Wisconsin, Iowa, Michigan, Pennsylvania and Indiana, located in the Midwest of America

 
The November Election, if it is close, is likely to be decided in one or more of the states in Midwest America. To win the election a candidate needs 270 votes in the Electoral College. A vote in the Electoral College is decided according to the population. The New York Times Electoral Map shows at present states with 237 electoral votes solid on leaning Obama and 191 electoral votes solid or leaning Romney, while 110 votes are a toss-up.
 
The toss-up states are Florida, Nevada, Colorado, Virginia, North Carolina, Wisconsin, Iowa, and Ohio. Ohio has 18 Electoral College votes, Wisconsin has 10 and Iowa has 6.Together they add up to 34 votes which should be enough to swing any close election. Also, in the Midwest are two states (Michigan and Pennsylvania) leaning towards President Obama and one state—Indiana—leaning towards Governor Romney. So these are actually six states in play in the Midwest. President Obama is ahead at present in Ohio, Wisconsin as also Iowa but the margins are not very large and are clearly reversible. He leads by more than 10 points in the latest Michigan polls. However, as Jim Messina, President Obama’s campaign manager said recently, President Obama seems to be polling better in the swing state polls than in the national polls. 
 
President Obama is from the state of Illinois which is in the vicinity and Governor Romney grew up in Michigan which is also in the vicinity. Romney’s father was a governor of the state of Michigan. Representative Paul Ryan represents the 2nd district of Wisconsin in the House of Representatives and has put Wisconsin which President Obama won handily in the last election in play. There was a recall election for Republican Governor of Wisconsin Scott Walker which was regarded as pivotal. However, Governor Scott Walker’s conservative policies of tax cuts, spending cuts and union bashing led to a very polarising election where there was a lot of outsider interest both from deep pocketed donors as also from trade unions. 
 
The state of Wisconsin in the process has become extremely energised. Governor Romney thinks he has an opportunity there and is ratcheting up his game in the state. Further the auto bailout, one of the signature achievements of the Obama presidency which helped to save Detroit, is a big issue in the election. There are a lot of ancillary industries to the auto industry in Ohio and President Obama has been tom-tomming his decision to save his auto industry. President Obama also claims that Governor Romney was opposed to a bailout and actually was ready to let the auto industry go under which is not exactly true. 
 
Governor Romney wanted a managed bankruptcy to save the auto industry. However, the problem with the managed bankruptcy is that it would have put a judge in charge of the bankruptcy and the auto companies and would not probably have been as efficient as the auto czar put there by President Obama. Further on there has been a nascent through distinct manufacturing revival in the Midwest and the state of Ohio has been a particular beneficiary of this trend. Up to a hundred thousand manufacturing jobs have come back to America for the first time since the nineties and President Obama is taking credit for that. To put the hundred thousand jobs in perspective, there are twenty three million unemployed people in America. 
 
But the Midwest economies seem to be doing better than the rest of America. Also, the selection of Representative Paul Ryan of Wisconsin has energised the Republican Party in the Midwest. They are ready to put up a good fight. It is also important to note that no Republican candidate has ever won the presidency without winning the state of Ohio. In that sense it is a true bellwether state and that is how large the stakes are for Mitt Romney.   
 
The picturesque Midwest was immortalised by Saul Bellow and the American heartland is all in play. This election will be probably decided by the Midwest of America and the Middle East.
 
(Harsh Desai has done his BA in Political Science from St Xavier's College & Elphinstone College, Bombay and has done his Master's in Law from Columbia University in the city of New York. He is a practicing advocate at the Bombay High Court.)
 

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