Home / News / India /  SEBI penalises 10 firms for diverting IPO proceeds in Birla Pacific case

Capital markets regulator, Securities and Exchange Board of India (SEBI) has imposed penalties totaling 3.42 crore on 10 entities, including Birla Pacific Medspa and Yashovardhan Birla, for violating listing agreements as well as diverting proceeds from the initial public offer of Birla Pacific Medspa Ltd, according to the news agency PTI.

Among the total amount of fine, Birla Pacific Medspa Ltd charged 1.07 crore, Abhijit Desai 32 lakh, PVR Murthy 26 lakh, and Yashovardhan Birla Rs, Venkateshwaralu Nelabhotla, Mohandas Adige, Anoj Menon, Rajesh Shah, Upkar Singh Kohli and Tushar Dey with 25 lakh each.

This came after SEBI conducted an investigation into the initial public offer of Birla Pacific Medspa (BPML) for the period July 7-15 in 2011.

The scrip of BPML was listed on BSE on July 7, 2011, after the IPO was open for subscription from June 20-23, 2011. The price of the scrip had seen sharp volatility on a listing day, closing at 25.35, 154% more than the issue price of 10 per share, Sebi said in an order on September 28 as quoted by PTI.

The order stated that BPML received IPO proceeds of 65.17 crore, however, funds received in the IPO were not utilized for setting up of the 55 'Evolve' healthcare across India as stated in the prospectus by the firm, and funds to the extent of 34.91 crores were actually siphoned off by the company.

It has also been observed that out of the balance IPO proceeds, funds to the extent of 31.54 crores were extended to various group companies as Inter Corporate Deposits (ICDs), out of which Rs. 18.54 crores were not paid back by the said companies to BPML, the order read.

Further, the agency reported that BPML did not receive interest of 6.39 crores from the said companies. Therefore, BPML, Desai, and Murthy violated provisions of SCRA (Securities Contracts and Regulations Act) rules.

Meanwhile, in a separate order, Sebi slapped fines totaling 71 lakh on 35 entities for violating market norms in the matter of First Financial Services Ltd.

The order came after Sebi conducted an investigation into trading and dealings in the scrip of First Financial Services Ltd and observed abnormal movement in the price and trading volume of the scrip on BSE during the period May 2012 to March 2014.


(With PTI inputs)










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