SEBI bans Paramount Printpackaging, officials from capital markets for 5 years for IPO fund diversion
A probe by SEBI found that Paramount misutilised the proceeds of the IPO and also diverted the funds to entities that did not provide any service and goods as contracted.
New Delhi: Regulator SEBI has barred Paramount Printpackaging and its officials from the capital markets for five years for diverting the proceeds of initial share-sale and failing to make true and adequate disclosure in the IPO papers.
The officials that have been restrained are the company's chairman and managing director Divyesh Ashwin Sukhadia, whole time director Dharmesh Ashwin Sukhadia and former whole-time director Anuj Vipin Sukhadia.
Paramount came out with its Rs 46-crore initial public offer (IPO) in April 2011 and its shares got listed on the exchanges in May, 2011.
The Securities and Exchange Board of India (SEBI) noted that Paramount was owned by Sukhadia family and they collectively held 79.38 percent shares of the company before IPO and post initial share-sale, they owned 40.45 percent stake.
These three officials were in charge of the affairs of the company before and after the shares of the company got listed.
A probe by the regulator found that Paramount misutilised the proceeds of the IPO and also diverted the funds to entities that did not provide any service and goods as contracted.
“It is concluded that the noticees had a pre-determined plan where under it first raised money from the public through the IPO route by concealing material information, making false/wrong and inadequate disclosures regarding vendors, then transferred the IPO proceeds to pre-decided vendors within a few days and thereby misutilised and diverted the proceeds of the IPO.
"I therefore find that the noticees in the present case had misutilised Rs 35 crore and had diverted Rs 34.5 crore,” SEBI Whole Time Member Madhabi Puri Buch said in a 64-page order passed on Monday.
Accordingly, the SEBI has barred Paramount from the capital markets for five years.
This is subject to the direction of Bombay High Court or official liquidator appointed by the court in pursuance of the the liquidation or winding up proceedings pending in respect of the company.
Further, the regulator had prohibited these three official from the markets for five years. They have also been barred from being associated with any listed company in any capacity.
The company has also proposed to use Rs 375 crore to acquire land and their developmental right
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