Sebi charges incorrect; will clarify soon: Tayal Group

Responding to the Securities and Exchange Board of India's (Sebi) charges, the Tayal Group promoters today said they have not mis-declared their shareholding in the Jaybharat Textiles and Real Estate, a company allegedly used as one of the front entities to corner shares of private sector lender Bank of Rajasthan (BoR).

"We will send our clarification to the Sebi soon. We have been given 21 days to respond," said Pravin Tayal, promoter of the Tayal Group while answering questions on Sebi's interim order, which banned 30 related entities, including Jaybharat, from trading in stock market.

He said that the Tayal Group promoters "hold only 68 per cent equity in the Jaybharat Textiles, while the rest is owned by about 30-35 promoters, who had initially invested sums ranging from Rs 30,000 to Rs 75,000 in the company".

The stake invested by independent promoters, he said, had grown over time through issuance of bonus shares. "The other promoters still hold the shares in the physical form and the company, which had a net worth of Rs 25 lakh in 2000," he said, adding the company has grown over the years.

In its order on Friday evening, the Sebi said, "...It is clear that the shareholding of promoters (in Jaybharat Textiles) as disclosed to the public at large gives a false and misleading impression that the promoters hold only 67.05 per cent as on December 31, 2009, whereas the promoters have an effective ownership of 96.99 per cent."

Jaybharat Textiles was one of the several entities through which the Tayal Group allegedly used to corner the shares of BoR.

The Sebi, in its earlier orders, had banned about 100 entities connected with the Tayal Group for trading in equity market for fraudulently raising stake in BoR through various front entities, including the Jaybharat Textile.

Tayal also denied the Sebi charge that promoters of the Jaybharat Textiles "acted in concert" and said it would be incorrect to say that Tayal Group owns 97 per cent equity in the company.

Moreover, he added, the holding of Tayal Group in BoR is only 28 per cent and not 55 per cent, as had been pointed out by the Sebi.

The regulator in its first order against the Tayal Group had said that it held 55 per cent shares in BoR through several front companies which were controlled by the promoters of the Group.

The action by regulator came shortly after the Reserve Bank imposed a Rs 25 lakh fine on the bank charging violation of various norms and appointed Deloitte Haskins and Sells to conduct a special audit of BoR's accounts.