Regulations
SEBI directs Suraksha Agrotech Industries to refund money collected from investors

The company was engaged in fund mobilising activity through issue of Redeemable Preference Shares to more than 49 persons without complying with the provisions of the Companies Act, 1956, according to the SEBI Order

 

Market regulator SEBI (Securities Exchange Board of India) directed Suraksha Agrotech Industries to refund money collected from investors through the issue of RPS (Redeemable Preference Shares). The refund direction is commonly issued to Suraksha Agrotech and its directors Ranjit Daspattanayak, Barun Kumar Nandi, Indranil Das, Arunabha Mukhopadhyay, Akhil Chandra Saha and Subrata Das. The SEBI Order to refund also includes an interest of 15% per annum compounded at half yearly intervals, from the date when the repayments became due  to the investors till the date of actual payment.
 
The company and its directors are prohibited from accessing the securities market/ capital market uptil a period of four years after the completion of the refund process, according to the SEBI Order.
 
The company was engaged in fund mobilizing activity through issue of Redeemable Preference Shares to more than 49 persons without complying with the provisions of the Companies Act, 1956, according to the SEBI Order.
 
The SEBI Order notes with regret that the interim order was ignored by the company.  The interim order had directed the company and its directors to provide relevant and necessary information, as sought in SEBI letters dated July 26, 2013 and February 05, 2014. Though the Company, in its  letter  dated  August  14,  2013,  sought  extension  of  twenty  days  to  furnish  the information/  documents,  it  failed  to  do so. Thereafter, a reminder was sent in a SEBI letter dated February 05, 2014 to the registered office as well as the head office of the Company. However, these letters were returned undelivered. As on date, the SEBI Order points out that the company has failed to submit information/documents, as has been directed in the interim order.
 
Hence, the final SEBI Order directing the company to close the mobilising activity and make the refund for money already collected.
 
To make sure there is sufficient investor awareness on the refund order from SEBI, the SEBI Order specifies, “The company and its promoters and directors shall issue public notice, in all editions of two National Dailies  (one  English  and  one  Hindi) and  in  one local  daily  (in  Bengali) with  wide circulation,  detailing  the modalities  for  refund, including  details of contact  persons  including names, addresses and contact details, within fifteen days of this Order coming into effect.”
 
The SEBI Order concludes by saying, “This Order is without prejudice to any action, including adjudication and prosecution proceedings that might be taken by SEBI in respect of the above violations committed by the company, its promoters, directors and other key persons.”
 

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COMMENTS

Vaibhav Dhoka

1 year ago

SEBI The watchdog should give data about orders passed and their execution and amount of investors money paid back.SEBI just boast itself by passing such orders as shedding crocodile tears that it stands for investors safety.Pity Indian investors.

Nifty, Sensex may be headed lower: Wednesday closing report
If Nifty closes below 8220, it will be under pressure
 
We had mentioned in Tuesday’s closing report that Nifty, Sensex are struggling to head higher and that Nifty will remain in an uptrend as long as it is above 8,150. As expected the major indices in the Indian stock markets were moving sideways through the day and closed with marginal losses. Bulls were not able to move in large numbers with their value buying.
 
The trends in the major indices through the day are given in the table below:
 
 
 
A sudden fall in the Chinese markets and caution over the ongoing quarterly results, coupled with profit booking, led the major indices of the Indian equities markets to close flat after falling a bit in the post-noon session on Wednesday. Both the bellwether indices ceded their initial gains, as investors were seen reluctant to chase higher prices. By the end of the day, additional factors leading to subdued Indian stock markets include diminishing hopes of a European stimulus package and heightened chances of a US rate hike.
 
The Indian rupee too lost strength in the day's trade. It was down seven paisa at 65.13 to a US dollar from its previous close of 65.06 to a greenback. Both the domestic institutional investors (DIIs) and the foreign institutional investors (FIIs) were net sellers in the day's trade. According to data with stock exchanges, the DIIs sold stocks worth Rs.138.73 crore and the FIIs off-loaded scrip worth Rs.48.33 crore on Wednesday.
 
Analysts pointed out that investors' confidence was eroded as caution built up over the possibility of a US rate hike this month, diminishing hopes of European Central Bank (ECB) extending its stimulus package and receding Chinese markets. 
 
On Tuesday, the US housing data revealed a rise of 6.5% in ground breaking activity which stood at 1.21 million units in September from 1.13 million units in August. The data which showed a pickup in economic activity spooked investors as it can push the US Fed to raise interest rates in October.
 
The US Fed will decide whether to raise rates during its Federal Open Market Committee (FOMC) meet on October 27-28. The FOMC assumes significance as higher interest rates in the US are expected to lead away FPIs (Foreign Portfolio Investors) from emerging markets such as India.
The ECB will conduct its monetary policy meeting on Thursday.
 
In Asia, the Chinese equities retreated from an eight-week high to end the day with losses of over 3%. China's Shanghai Composite index declined by 3.47%.
 
Sector-wise, S&P BSE capital goods index plunged by 166.22 points, banking index receded by 156.18 points, healthcare index plummet by 142.16 points, oil and gas index fell by 50.56 points and reality index shed 25.99 points.
 
The S&P BSE metal index surged by 87.17 points, automobile index augmented by 50.15 points and information technology (IT) index gained by 47.80 points.
 
The top gainers and top losers of the indices are given in the table below:
 
 
The closing values of major Asian indices are given in the table below:
 
 

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IndiGo IPO: Promoters flying high with dividends to themselves

InterGlobe Aviation, which runs IndiGo airlines, turned a negative net worth of Rs139 crore due to an exceptional interim dividend of Rs1,500 crore paid to the promoters in FY15

 

InterGlobe Aviation Ltd that operates IndiGo airlines is planning to raise over Rs3,200 crore through its initial public offering (IPO) next week. The draft red herring prospectus (DRHP) filed by the company, however, raises several questions. It shows that since April 2010, the company has paid cumulative dividend of Rs3,700 crore to promoters, when its total profit after tax (PAT) was Rs3,914 crore. However, the PAT figure of Rs3,914 crore includes a credit of Rs473 crore for minimum alternate tax (MAT), so the real net profit of the company is Rs3,441 crore. In other words, the promoters took about Rs260 crore more than what was due to them during this over five-year period.
 
Further, a dividend tax outgo of Rs423 crore means not only the carrier company has dipped into its reserves (for paying to promoters) but also has a negative net worth with the commencement of its offering. 
 
InterGlobe Aviation, in its DRHP says, "On 19 June 2015, our Company declared an interim dividend (excluding dividend distribution tax) of Rs99.738 million (Rs99.74 crore) for fiscal 2015 and an interim dividend of Rs10,029.10 million (Rs1002.91 crore) for fiscal 2016, each for 307,000 equity shares. On 12 January 2015 and 23 March 2015, our Company declared an interim dividend of Rs5,932.37 million (Rs593.24 crore) and Rs2,260.23 million (Rs226.02 crore) for fiscal 2015, each for 307,000 equity shares, respectively. The restated financial statements provided in this Draft Red Herring Prospectus do not reflect these interim dividends. Any reliance by persons on the financial disclosures presented in this Draft Red Herring Prospectus without considering these interim dividend payments should accordingly be limited."

 

 
The company had turned a negative net worth of Rs139 crore due to an exponential interim dividend of Rs1,500 crore paid to the promoters for 2014-15. In a media report, Aditya Ghosh, President of InterGlobe Aviation, was quoted as saying that the company's turning a negative net worth was a 'non-event' and it still had 'a cash balance of over Rs3,500 crore'.
 
In addition, the promoter and promoter group entities would earn over Rs1,600-1,900 crore through their share sale (offer for sale-OFS). This is in addition to the Rs3,700 crore dividend they had already received.
 
In September, the airline firmed-up its earlier order of 250 Airbus A320 neo aircraft. The deal is expected to be worth a little over $25 billion. At present it has a total order of 430 airplanes. Apart from the recent order, InterGlobe Aviation had placed an order for 100 A320s in 2005 and 180 A320neo in 2011.
 
It added 17 new aircraft in its fleet during 2014-15. Currently it operates 97 aircraft offering 648 flights a day.
 
The company, in the DRHP says, "We receive non-refundable incentives from manufacturers. The application of these credits to our operating leases results in a net reduction in our aircraft rental payments which is amortized over the initial terms of the operating leases."
 
Accordingly, the company over the past five years has received Rs1,654 crore as incentives from Airbus. Its balance sheet, however, shows similar amount of Rs1,646 crore as still receivable. 
 
"The Company receives non-refundable incentives from manufacturers in connection with the acquisition of aircraft and engines. In case of owned aircraft or aircraft under finance lease, incentives are recorded as a reduction to the cost of related aircraft and engines. Where the aircraft is held under operating lease, the incentives are deferred and reduced from the operating lease rentals on a straight line basis over the period of the related lease. In case of return of an aircraft before the expiry of the lease term, the unamortised balance of deferred incentive is recorded in the Statement of Profit and Loss," InterGlobe Aviation stated in its Prospectus.
 
Our emails sent to Mr Ghosh and the company Chief Financial Officer remained unanswered till writing the story. When we contacted their office, we were told that both these officials are not in the office. We received a call from the company's PR agency, which promised to send us replies by 3pm. However, there is still no reply. We will incorporate InterGlobe Aviation's reply as and when we receive it.
 
The IPO will open between 27th and 29 October 2015 with a price band of Rs700-765 per share.
 

 

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