SEBI bans Yash Birla, others from market for 2 years
NEW DELHI: Markets regulator Security Exchange Board of India (Sebi) has barred Birla Pacific Medspa Ltd, Yashovardhan Birla and eight others from the securities market for two years for mis-utilisation of initial public offering (IPO) proceeds.
Birla Pacific Medspa Ltd (BPML), which came out with offer documents in March 2011, had floated its over Rs 65 crore IPO in June 2011. The regulator found that the company made misstatements in the prospectus with regards to the objects of the IPO.
While around 75 per cent of the proceeds were promised to be utilised in setting up of Evolve Med Spa centres under the ‘objects of the issue’ in the prospectus, no such centres have been set up ultimately, Sebi said. Similarly, 15 such centres were promised to be set up by the end of March 2012, but not a single centre was set up by that time, it added.
Sebi also said, 50 per cent of the proceeds or Rs 31.54 crore were deployed as inter-corporate deposits (ICDs) to group companies, out of which 60 per cent of ICD’s were never returned to the company.
This was in stark contrast to the objects of the IPO or the interim use of funds as stated in the prospectus.
The prospectus permitted the interim deployment of proceeds as an investment in liquid instruments only and did not permit such deployment of funds as ICDs. “The fact that funds of IPO proceeds would be deployed as ICDs to group companies of BPML as against the setting up of Evolve Centers was never disclosed in the prospectus. In fact, the prospectus never contemplated that funds would be deployed as ICDs to group companies within five days from the receipt of IPO proceeds without any event of exigency,” Sebi noted.
Through such acts, the entities violated the provisions of ICDR (Issue of Capital and Disclosure Requirements) Regulations, the regulator said.