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Sebi probe shows DLF disclosures inadequate

DLF has been denying that Sudipti was a group company

Palak Shah  |  Mumbai 

Investigations by the Securities and Exchange Board of India (Sebi) show that Ltd, which raised a little over Rs 9,000 crore through a public issue in 2007, had made inadequate disclosures in its then offer documents.

sources say their probe shows Sudipti Estates, against which a criminal complaint was registered with the Delhi Police, is part of group. Yet, the company had failed to give details about it in their initial public offering (IPO) prospectus.

has been denying that Sudipti was a group company. A criminal complaint was registered in April 2007 by a New Delhi-based businessman Kimsuk Krishna Sinha, who accused the company of duping him of Rs 34 crore. Sinha, in his petition to the court, had alleged intentionally made a false statement that it had no association with Sudipti Estates, so that details of the criminal complaint stayed hidden from prospective shareholders.

According to Sebi’s investor protection and disclosure guidelines, any company launching an has to disclose all details about criminal or civil cases registered against it or its group companies, in the red herring prospectus (RHP). Sinha had alleged that Sudipti, Home Developers Ltd and Estate Developers Ltd were sister concerns and part of the Group. A spokesperson did not respond to phone calls, a text message and an email on the matter.

is a subsidiary of Purandar Estates, which is held by Felicite Builders and Developers. As per Registrar of Companies filing, the shareholding of Felicite Builders and Construction as on Aug 2, 2011 
Shareholders No. of shares held 
(Rs 10 fully paid)
Pudmaja Sanka wife of (w/o) Ramesh Sanka, former group chief financial officer (CFO) of Ltd. Currently head of Facility Management and Utilities Business of DLF  2,04,000
Madhukila Basak w/o Surojit Basak CFO (Homes)  in Home Developers Ltd 2,03,000
Meenakshi Gupta w/o Adesh Gupta VP (Taxation) Ltd  2,00,000
Saroj Khanna w/o Manik Khanna Head Banking at Ltd  2,00,000
Ritu Chawla w/o Sourabh Chawla, Executive VP (Finance) at Ltd  2,00,000
Mukta Jindal w/o Vipin Jindal Sr. VP (Finance), Ltd  2,00,000
Nishi Goyal w/o Atul Goyal CFO, Universal Ltd 2,00,000
Sangeeta Gupta w/o Shiv Kumar Gupta Sr. VP (Finance) Ltd 2,00,000
Rima Hinduja, w/o Gaurav Monga Former VP (Finance) Ltd 2,00,000
Home Developers Ltd 2,03,000

Documents accessed by show that Sudipti is a subsidiary of Purandar Estates, which in turn is held by Felicite Builders and Construction. One of the shareholders of Felicite Builders is Home Developers, which is also the original promoter of the company. Spouses of senior executives of and its other arms hold majority stakes in Felicite Builders, a source said. had named these officials, which hold majority shares in Felicite Builders, as key management personnel in the public issue documents. Home was the original promoter of Felicite Builders but its shares were transferred on November 30, to a group employee's wife. (See Table for top 10 shareholders of Felicite Builders).

A source with said filings with the registrar of companies (RoC) also show Shalika Estate Developers, the erstwhile holding company of Sudipti, was merged with Purandar Estates with effect from April 1, 2008. But, since Purandar is controlled by Felicite Builders, which is controlled by key management personnel and associates of Group, the beneficiary of the assets of should be Group, said the source.

The registered office of Purandar Estates is at Jandewalan Extension, New Delhi, and belongs to Ltd. Many other group companies too, are registered at this address. Further, Utilities Ltd, a shareholder of Purandar Estates, shares its registered office address in Gurgaon with Ltd, the document with shows.

DLF, in its draft RHP filed for a public issue in May 2006, had mentioned that Sudipti was its associate company but withdrew it and in a fresh filing in January 2007, did not mention Sudipti as an associate.

The court then asked to investigate if Sudipti was an associate of or not and to ascertain if the company had deliberately dropped this information from the prospectus. Sebi, which sought DLF's filings with RoC as part of its investigation, found out that Sudipti was closely associated with the group.

DLF’s submission in court has been that “between the filing of aforesaid DRHPs, the company (DLF) had disassociated itself from the said companies (Sudipti and its holding companies) due to internal restructuring.” maintained Sudipti was a separate legal entity owned and controlled by different individuals.

Earlier, had moved the single judge-bench to quash Sebi's summons saying it was passed “erroneously and in blatant violation of the principle of natural justice.” The judge on January 3 this year had dismissed DLF’s plea against the market regulator's decision saying Sebi's order was “based on reasons”. Following this, approached a division bench of Delhi HC, which too ruled in favour of on November 20.

A top official said the regulator would take into account the judgement by Delhi HC Judge Vipin Sanghai, who had stated that “there is no dispute to the fact that spouses of key managerial persons of group are shareholders in Felicite Builders”, while passing the order.

First Published: Sat, December 08 2012. 00:31 IST