The Securities and Exchange Board of India (Sebi) has said that the fund flow between the Essel Group and the Ketan Parekh entities started only when the price of the Zee Telefilm scrip was on the descend and not during the period of price rise.
According to the regulator, while the Essel group had provided Rs 706.40 crore to the KP entities, the latter returned Rs 251.55 crore to the Essel group between May 2000 and March 2001.
In its second interim report on the stock scam, the regulator has also noted that the Essel group has submitted that while making inter-corporate deposits with KP, the group took a firm undertaking from KP that he would not use the money provided to make share purchases in Zee Telefilms and Essel Packaging.
Sebi, however, has said that analysis of the bank accounts of the various entities involved is in progress and the utilisation of the funds by the KP group is being looked into separately.
The group has submitted to Sebi that the decision to enter into an agreement with KP for acquiring shares in media companies like B4U and ABCL was taken since their businesses were synergetic to the Essel group. Also, the value of these companies' shares had dropped considerably due to adverse market conditions.
"What Essel group contemplated at the time of entering into the transactions with KP was that since KP was in liquidity problems, Essel group could make a double bargain of helping out someone who has substantial stakes in ZTL shares with which he could cause considerable instability to the company's shares in the market and at the same time taking advantage of it by acquiring certain investments at attractive valuations," the group has told Sebi.
However, the subsequent events showed that the group had underestimated the extent of problems of KP at the time of entering into the transactions.
"But this subsequent realisation is part of the wisdom bestowed by adverse turn of events," the Essel group has submitted to Sebi.
Also, taking advantage of the adverse turn of events, companies like ABCL and B4U in which KP had reportedly acquired holdings began shifting their positions as regards the money received by them from KP. For instance, B4U in which the KP group had applied for 6.25 lakh shares on firm allotment basis, proposed to allot debentures instead. Again, the acquisition of 24.5 per cent equity in ABCL was disputed by the company taking advantage of the new developments.
