SEBI cracks the whip on Gammon India
22 Dec 2006
Market watchdog SEBI has barred Gammon India's MD, Abhijit Rajan, and the company's associates Nikhita Estate and Devyani Estate from accessing the capital market for one year, reports CNBC-TV18.
The regulator found that Rajan had used company funds to hike his stake through a rights issue. SEBI money trail reveals the modus operandi. In November 2001 when Gammon made a rights issue of Rs18.96 crore. On 13 November, Gammon paid Rs50 lakh to Reliance Silicones or RSPL.
On the same day, RSPL issued two cheques of Rs25 lakh each to Devyani Estates and Nikhita Estates.
Interestingly, Rajan was a signatory for Devyani and Nikhita Estate's accounts. On the same day, Nikhita and Devyani Estates each applied for the rights issue of Gammon India, thus using Gammon's funds to subscribe for the rights issue of the company.
The regulator also found that Devyani and Nikhita Estate were alloted more shares than they were entitled to. So SEBI has also barred the fourth party in this transaction — RSPL. Ajitabh Bachchan is the chairman of RSPL and there's another twist in this tale.
Gammon's associate, Gammon Infrastructure Projects, has filed a red herring prospectus with SEBI.
So, the regulator has also barred these three entities from divesting, transferring, selling or alienating their shareholding in Gammon Infrastructure Projects Ltd for a period of three years from the date of the allotment.
Gammon India says it will appeal against the SEBI order in the Securities Appellate Tribunal.
