GDR manipulation: Sebi slaps over Rs 11 cr fine on Asahi Infrastructure and Projects, its MD

Markets regulator Sebi on Tuesday slapped a fine of over Rs 11 crore on Asahi Infrastructure and Projects Ltd and its senior official in a matter related to manipulation in issuance of global depository receipts (GDR). Laxminarayan Jainarayan Rathi is the managing director of Asahi.

Sebi noted that Asahi had come up with GDR issues in April 2009 and Pan Asia Advisors Ltd was the book running lead manager for the GDR issue. It was found that Arun Panchariya arranged the loans for the subscription of the firm's GDRs by Vintage FZE, another company wherein he was the managing director and 100 per cent shareholder.

Panchariya was the founder, director and 100 per cent shareholder of Pan Asia. Asahi, in turn, helped Panchariya in arrangement of those funds by signing a pledge agreement with Euram Bank, thereby, providing security for such loan taken by Vintage.

Thereafter, using certain foreign institutional investors, he got the GDRs converted into underlying shares and sold them in the Indian securities market with the help of certain entities connected to him. In addition, the firm had failed to submit certain information demanded by Sebi and also submitted false information.

Further, Asahi had failed to disclose details of outstanding GDRs in its quarterly disclosures of shareholding pattern to the BSE. "The issuance of GDRs by adopting the explained modus operandi and the consequential misleading and false disclosure renders the whole scheme of things a fraudulent act orchestrated by the Noticees (Asahi Infrastructure and Projects and Laxminarayan Jainarayan Rathi) with the help of AP (Arun Panchariya) and associates," Sebi noted.

For violating various market norms, Sebi slapped a total fine of Rs 10.15 crore on the firm and Rs 1 crore on Laxminarayan Jainarayan Rathi..