SEBI bars Sunplant Forgings, directors from mobilising funds

Pulling the plug on illegal mobilisation of funds by Sunplant Forgings, the market regulator said the company and its directors raised more than Rs17 crore from 6,662 investors, a clear violation of its CIS rules 


Market regulator Securities and Exchange Board of India (SEBI) has barred Sunplant Forgings Ltd (SFL) and its directors from raising money by issuing securities.


Citing the Sahara case and the Supreme Court's order in this regard, SEBI said that Sunplant Forgings raised more than Rs17 crore from 6,662 investors amounted to a public offer and not a private placement.


"...SFL is prima facie engaged in fund mobilising activity from the public, through the issue of redeemable preference shares (RPS), which is a public issue made to 50 persons or more," SEBI said in its order.


The regulator has directed the company and its directors not to mobilise funds from investors through the issue of RPS or any other securities to the public.


SEBI also directed SFL to provide a full inventory of all assets and properties of the company. The company has been barred from disposing of any of its properties without prior permission from SEBI. Besides, it cannot divert any funds raised from the public which are kept in bank account(s) and/or in the custody of SFL.


The directions would take effect immediately and would be in force until further orders.


The regulator received a communication from Ministry of Corporate Affairs (MCA) saying that certain companies including SFL were collecting monies from the public through issue of debentures and redeemable preference shares allegedly allegedly in violation of the Companies Act.


SEBI noted that although the issue of redeemable preference shares is stated to have been made on a private placement basis, "yet, through the same offer, SFL circulated 11,904 application forms inviting subscription towards the issue of redeemable preference shares".


"Out of which it admittedly allotted redeemable preference shares to 6,662 investors and mobilised funds amounting to approximately Rs17.51 crore," SEBI noted. Since the offer was made beyond the limit of 49 persons as prescribed under Companies Act, the offer qualified as a public issue.


The directors of the company against whom the order has been issued are Abhinandan Kumar Singh, Sumanta Sinha and Neeraj Pathak.


Ethanol blending made mandatory - but needs enforcing!

The bench mark price of ethanol has been fixed at Rs44 per litre and the government had made it mandatory for OMCs to blend 5% ethanol with petrol, which has now been increased to 10% but actual lifting has been unsatisfactory


Oil Minister, Dharmendra Pradhan, admitted in the Lok Sabah recently, that the OMCs (Oil Marketing Companies) were able to "achieve" only a 1.37% blending of ethanol with petrol against the target of 5% which, had recently been increased to 10%.


The Indian Sugar Mills Association (ISMA) had assured the government of their willingness to reach 10% blend level across the country, but sought flexible ethanol blending with petrol, ranging from 5 to 25%, depending upon sugar cane availability.


The sugar mills are currently realising about Rs32 per kg for sugar.They can produce only 95kgs of sugar for every tonne of cane crushed and 45kgs of molasses yielding about 10.8 litres of ethanol. However, if the entire juice from cane is used for fermenting into alcohol, there would be

no production of sugar but 72 litres of ethanol could be obtained.


The bench mark price of ethanol has been fixed at Rs44 per litre and the government has made it mandatory for OMCs to blend 5% ethanol with petrol/diesel, which, as reported above, had now been increased to 10% but actual lifting has been unsatisfactory. Moneylife had reported earlier, that while the sugar mills had a stock of 65 crore litres of ethanol, only 35 crore litres had been lifted by OMCs, resulting in huge blocking of funds. If such a situation should continue, nothing prevents state governments from permitting sugar mills to convert sugar cane juice to alcohol.


It has been reported in the press that higher ethanol blending would hit the liquor industry, a fear that may have caused lower blending rate.OMCs must realize their responsibility and ensure that they lift ethanol from mills on a regular basis and also make available blended petrol/diesel at all

government transport depots besides all major bus terminals. In fact, every pumping stations must be asked to ensure availability blended petrol/diesel so that the consumption is increased.


The ISMA, in a press report, has stated that the estimate for the current season, 2014-15 is expected to be 25.3 million tonnes of sugar, a mere 4% increase over last year, with both UP and Tamil Nadu showing a shortfall but offset by increase in Maharashtra, Karnataka and Gujarat. The carryover sugar stock at 7.5 million tonnes is more than the required buffer and should take us through comfortably to the next season, even after providing for exports.


Luckily, the monsoon's progress, as advised by IMD (Indian Metrological Department) shows that they expect the rainfall to be well distributed and there will be adequate showers throughout the country, which will reduce the deficit predicted earlier due to an El Nino effect.


In the meantime, it is imperative for the government to take serious steps against the OMCs for not complying the required blending programme that have been made mandatory. One way of enforcing such a rule is to tell the OMCs that unless they lift and blend ethanol from mills, they won't be given the subsidies committed by the government.


Such a threat alone will work with OMCs, who must also be forced to focus on setting up ethanol blended petrol/diesel units in all the pumping stations throughout the country. As a start, this could be enforced in all the sugarcane producing states where the mills are established. If such actions are not taken, sugar mills may start looking for export market to sell their ethanol.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Madhusudan I. Mistry

3 years ago

A formula can be envisaged to link the payment of the subsidy amount to the OMC based on the certification of ethanol blending percentage. If Less ethanol is blended, proportionately less subsidy will be worked out. It should be ensured that no compensation can be available in the future for such less payment and for OMC it has to be construed as an opportunity lost for lifetime against lower blending for that particular period. Also such notification given to OMC should also provide sufficient time need to indicated for effective implementation, after which the clause for such lesser subsidy payment shall become applicable. Strict adherence through such clause can make the system effective.The onus should similarly be implemented with sugar producing companies as well. Export of ethanol should have a big NO-NO by the government. If Brazil can go upto 25% ethanol blending,we must be blamed for our poor mannagement for such implementation. Ultimately, we are losing expensive foreign exchange with such laxing attitude and action as well. Should it not help us to make CAD more favourable as the volume of blended ethanol is huge and it can help India in a very big way to reduce foreign exchange outgo.

Why scam mails in the name of RBI are fooling so many people?

Those who are aware about the modus operandi of such scamsters tend to blame it on the greed and ignorance of victims. It is time for policy makers to stop blaming people and do some thinking on putting an end to these scams


The deluge of e-scams that are ensnaring Indians everyday, suggests that we have become a soft target for such fraudsters. While those who are aware of the modus operandi of such scamsters tend to blame it on the greed and ignorance of victims, it is probably time for policy makers to stop blaming people and do some thinking.


Not a day passes without a new variation of fraudulent e-mails in the name of RBI governor Raghuram Rajan. The latest is to offer NEFT transfer of funds (see image below) - a telephone fraud – or what bankers call ‘vishing’ (like the email fraud which is called phishing). The Mumbai Mirror reported one such case on 20th July in Mumbai, where conmen posing as RBI officials got a couple of youngsters to part with their PIN number claiming to make income tax refunds directly to their accounts!


Does this indicate that Indians have become soft targets for such scamsters? We think so. It has happened because of three factors. On the one hand Indians are savvy enough to adapt to technology very fast, which is normally a positive. On the other hand, extremely poor financial literacy combined with the government’s push to force people to e-reporting and e-filing platforms, without making the time and effort to enhance awareness about the downside, makes fraud in the name of the IT department and the RBI easier to pull off.  



That people fall for the scam only indicates that people are not even aware of the role and function of the RBI. It also explains why engineers in leading technology companies fall for these scams.


Adding to this mess is the fact that government organisations are largely inaccessible, because they use e-mail mainly for one-way communication from them to the people and never to respond to queries. The RBI and other organisations also configure their email servers to throw out all emails with attachments over 1MB. This makes it impossible even for activists like Moneylife Foundation to warn them about new emails generated in their name so that corrective action is initiated swiftly. All nationalised banks have a strong technology department to identify phishing emails and block every new attack. Since our emails to the RBI keep bouncing, we have no idea whether the RBI works actively to block new phishing attacks in its name.


What it has done instead is to adopt a couple of easy options. Governor Raghuram Rajan’s email signature carries a warning about phishing attacks. It reads...



The RBI also spends money on warning advertisements. However, in our experience of meeting people over hundreds of seminars and workshops conducted by Moneylife Foundation (a not-for-profit sister entity) is, that financial literacy cannot work with sporadic advertisements from regulators. It has far more impact if financial literacy is imparted in a serious and systematic manner with an explanation of how scams work and their financial consequences.


Making the nation financially literate or even more careful is a herculean task, but a little nudge from the RBI to corporate CEOs would go a long way in ensuring that this becomes a part of the awareness training for all employees.


You may also want to read...


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shadi katyal

3 years ago

The sophistication these fraudster has adopted mislead the greed of our community. What can and how any Govt can do to save such greedy people.
Nigerian scammers openly operating in India while living or visiting India but people want to become rich overnight.
In USA some scammers do a better job by threats etc.Most of these call NRI and mode is simple. This is office of investigation and looking into your past due taxes, traffic tickets, county taxes etc and this to notify you that warrants of your arrest are on the way etc. thus shaking the person or will leave message on your phone to call certain number. They cajole and threat same time and will ask for immediate payment before they can stop such court orders. They even guide you where to go and get the payment card and read the numbers while the party collects the cash immediately and one cannot trace anything due to cyber world. We have read such cases.
I hve had 3 different calls and have just hung up been called back telling me line got cut etc so when will I pay and my reply is let the warrants be served and goodbye as I need not worry. The person on other side represent as attorney etc.
It is greed and fear of being arrested which makes people pay
It is a business of Billions and we are foolish to even listen to such calls.
In India new papers and media should not publish such adds. IGNORE SUCH LETTERS OR PHONE CALLS Be smart and trade will die.

Yerram Raju Behara

3 years ago

RBI has been repeatedly announcing in all language dailies and in all its communications that they would never seek such information from any client/customer. If people lend credence still to such communications it is their greed that is the driver of such frauds.

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