In a matter pertaining to issuance of global depository receipts (GDR), Securities and Exchange Board of India (SEBI), the markets regulator, has imposed a fine of over Rs. 72 crore on Winsome Textile Industries Limited, its Directors and two other individuals.
Ashish Bagrodia, Manish Bagrodia and Satish Girotra,Directors of this Chandigarh-based company, have faced this action.
Winsome Textile, a more than four-decade-old firm, is known for its variety of yarns and fabrics.
As per the reports, the company issued 1.29 million GDRs amounting to US $9.99 million on 31 March 2011 and Pan Asia Advisors Limited was the lead manager of the issue.Arun Panchariya was the Managing Director of Pan Asia Advisors.
Investigation revealed that Vintage FZE was the sole subscriber of the GDR issue. Mukesh Chauradiya was Vintage’s Managing Director and Arun was its 100 per cent beneficiary. Vintage availed loan from EURAM Bank in order to subscribe to the issue. Notably, for the loan, Winsome had pledged the GDR proceeds as collateral.
Further, FII-sub-accounts connected to Arun converted the GDRs and Aspire Emerging Fund sold converted equity shares worth Rs. 1.11 crore in the Indian securities market. The company made misleading corporate announcements and also failed to inform the SEBI about the delisting of the GDRs from the Luxemburg Stock Exchange.
The market regulator said that Winsome caused the investors in the securities market in India to believe that the full consideration for GDRs had been received by it which was not true and, thereby, induced the investors in India to deal in securities, and committed fraud on the investors in India.
The Directors also acted as a party to the fraudulent scheme of GDR issuance. The company and its three Directors have been barred from the securities market for varying time periods.