Regulator Sebi on Wednesday barred Midfield Industries and its officials from accessing the securities market for a period of two years for misutilisation of IPO proceeds.
Officials of the firm include M Madhu Mohan Reddy and Ashok Sagar Mudumba. At the time of IPO, Reddy acted as chairman and managing director of the firm while Mudumba was the executive and non-independent director of the company.
Sebi noted that Midfield made an initial public offering (IPO) through a prospectus in July 2010 with an issue size of 45 lakh equity shares, aggregating to Rs 59.85 crore.
As per the prospectus of the company, the IPO proceeds were to be utilized for expansion of capacities at its existing plants, setting up new facilities, augmenting long-term working capital requirement of the company, general corporate purposes among others, Sebi said.
Instead, the firm utilised the funds for purposes such as paying for company's existing overdraft dues, income tax dues, payments to suppliers not mentioned in the prospectus and payment of salaries, among others.
In this regard, Sebi said "the information disclosed in the prospectus regarding the objects of the issue was false because the manner in which the IPO proceeds were utilized was for purposes other than those stated in the prospectus."