Regulator Sebi has barred Taksheel Solutions and three others from the capital markets for three years for suppressing "material information" and diverting funds raised through the IPO.
The persons facing ban are Taksheel's Managing Director and Chief Executive Pavan Kumar Kuchana; his wife and a promoter group entity named Durga Kuchana; and the company's Vice President of business development Ravi Kusam, according to Sebi's order.
A probe conducted by Sebi found that Taksheel Solutions Ltd (TSL) had suppressed vital information and had made factually incorrect statements in its IPO prospectus which was highly misleading to the investing public.
The probe also found that it had siphoned off and diverted the IPO proceeds through different entities to deal in the shares of the company on its listing day.
Accordingly, in an order issued late last night, Sebi has prohibited Taksheel, Kuchanas and Kusum from accessing the securities market for a period of three years.
Besides, the regulator has warned the firm's CFO K Prasad Rao to be cautious and exercise "due care and diligence" in future while rendering services as a chartered accountant to any listed company.
Further, Sebi has revoked trading ban against the firm's director Ramaswamy Kuchana as show cause notice did not bring out any specific role played by him in the manipulative activities. He was debarred from transacting in securities market since Sebi passed its interim order on December 28, 2011.
"It is noted that TSL and its directors utilised Rs 34.50 crore from the IPO proceeds, constituting 43 per cent of the amount raised through IPO, to repay the loan raised in the form of ICD (Inter Corporate Deposits) without giving any hint about it in the offer document to the investors," Sebi Whole Time Member G Mahalingam said in an order.
Further, the firm made advance payment of Rs 5.07 crore to Wiselink Technologies from the IPO proceeds, which was a related party transaction and a material information, without making proper disclosure about it.
"Pavan Kuchana also suppressed material information about transferring 50 lakh shares of TSL for consideration other than cash to a company in which his relatives were directors. It is also noted that the IPO money was not utilised for the stated objects.
"Pavan Kuchana, Durga Kuchana and Ravi Kusum have used TSLs IPO as a medium to raise funds from the public to indulge in fraudulent and unfair practice," Sebi noted.
Taksheel had come out with an IPO of 55 lakh shares which opened for public subscription during September 29 to October 4, 2011.
The company had raised Rs 82.50 crore through issuance of 55 lakh shares of which Rs 80.50 crore were transferred to TSL's bank account maintained with Indian Bank.
The trading in Taksheel shares commenced on October 19, 2011 and witnessed major fluctuation in the price during the first day of its listing.
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