The Securities and Exchange Board of India's (Sebi) investigation into the 23 firms associated with or controlled by Ketan Parekh, has bared a combined default by these entities to the tune of Rs 3,218 crore.
The Sebi probe has also indicated that funds given to a clutch of Parekh-linked entities appear to have been utilised for stock market operations.
In its interim report submitted to the Joint Parliamentary Committee (JPC) in December, Sebi has said: "....large funds were given to these entities of Ketan Parekh and associates with a view to hide the nexus between the source of the fund flow, i.e., by corporates/companies and ultimate user of these firms in the stock markets. It was observed that funds were received by certain entities from banks as loans and overdrafts which were diverted to other entities for acquiring shares/meeting other obligations."
Dissecting the nature of fund flows, Sebi pegged the default to the corporate sector at Rs 1,200 crore, to banks at Rs 1,425 crore, and to overseas corporate bodies (OCBs) at Rs 450 crore.
Senior Sebi officials said around Rs 1,200 crore was received by various Parekh entities from four corporate houses -- Zee Telefilms, Himachal Futuristic Communications, Adani group and DSQ group.
On funds sanctioned by the banking sector to Parekh entities, Sebi said the outstanding amount to the Madhavpura Mercantile Co-operative Bank is Rs 888.25 crore.
Besides, the outstanding amount to Mukesh Babu, a sub-broker with Parekh entities, is Rs 225.63 crore. According to the Sebi report, funds received by Parekh entities from ICICI Bank, Centurion Bank and Bank of Punjab as on March 31, 2001, were to the tune of Rs 65.47 crore. The outstanding amount to Global Trust Bank was around Rs 250 crore and Bank of India it was Rs 138 crore.
The Sebi investigation also pointed out that the Triumph Group -- another entity alleged to have Parekh links -- did not provide for non-payment of sales proceeds of around Rs 450 crore to a set of OCBs.
The Sebi probe into two associate companies of Parekh -- Panther Fincap Management & Services and Classic Credit -- has revealed that between January 2000 and March 2001 around Rs 1,480 crore and Rs 1,330 crore, respectively, were transferred to Kolkata-based entities by these firms.
According to Sebi, a final picture around the deals will emerge only after all the bank accounts are analysed -- an exercise which will take time.
Meanwhile, Sebi's probe unravelled a nexus between Parekh and three Kolkata-based broking entities -- A K Poddar group, D K Singhania & Co and Sanjay Khemani.
These brokers had excessive purchase positions marked for delivery and on account of their failure to meet pay-in obligations the settlement process was disturbed.
The Sebi probe also indicated that Singhania had received around Rs 828 crore from Parekh and associate entities, the Khemani group received around Rs 1.248 crore and the Poddar group around Rs 887 crore.
