A fine of Rs 20 Lakh each has been slapped on Ketan Vora, Proprietor of New Fashion, KV Impex, Jigar Vora, Proprietor of J C Enterprise, and Dinesh Vora, HUF Proprietor of Vora Associates(notices) for diverting proceeds from the initial public offer of Birla Pacific Medspa Ltd.
In the investigation conducted by the Securities and Exchange Board of India(SEBI) into the IPO of BPML for the period starting from July 7 till July 15 of 2011, it was found that the scrip of BPML was listed on BSE on July 7th, 2011 after the IPO was declared open for subscription from dates June 20-23 of 2011 with the price witnessing share volatility on the listing day, closing at Rs. 25.35 per piece with about a 154% rise compared to the issue price of Rs. 10 per share.
BPML managed to receive IPO proceeds of Rs. 64.17 cr with an amount of RS 34.91 being transferred to various entities by the company for the sake of purchase of medical equipment under its prospectus. But it has been found that while the order issued stated a fund transfer for purchasing medical equipment, the entities were engaged in the business of trading cloth and commission agent among others.
Thus it was concluded by SEBI’s Adjudicating Officer, B J Dilip that since the entities are interconnected and agreed to transfer huge funds and remitted to other beneficiaries on the same day which is a clear indication of the fact that they were in knowledge of the scheme of manipulation and have willingly been a part of a scheme which involved siphoning off the money by BPML for purposes other than that stated in IPO Prospectus. The noticees formed an important part of the scheme through which IPO funds were transferred from BPML to various other entities for siphoning it off. They also were able to retain an amount of about Rs &$ lakh which could be considered as ill-gotten gains since these funds were not returned to BPML. .