Ketan Parekh Firms Flouted Takeover Code

Entities related to Ketan Parekh, which had acquired more than five per cent in certain companies, failed to inform the stock exchanges of their holdings as required under the Securities and Exchange Board of India (Sebi) takeover code, the regulator has told the Joint Parliamentary Committee (JPC).

Sebi said Ketan Parekh and his related entities had acquired more than five per cent shares in companies such as Global Trust Bank, Aftek Infosys and Shonkh Technologies. Investigation in regard to other companies are in progress, Sebi said.

The probe by Sebi reveals that certain corporates had moved money to Ketan Parekh group entities.

In its lengthy presentation to the JPC, Sebi has documented that "Till date, the Zee Telefilms group has given around Rs 515 crore, the Himachal Futuristic group has given around Rs 700 crore, Adani Exports group has given Rs 100 crore and DSQ group has given around Rs 28 crore in the period January 2000 to March 2001".

The watchdog, in its preliminary investigation report, had said that the Himachal Futuristic group had given Rs 425 crore, Zee Telefilms group had given Rs 340 crore and the Kopran group had given Rs 78 crore to Ketan Parekh during this period.

Sebi says, "It appears that these funds were utilised for building up positions, taking deliveries and paying off margins."

Sebi in its reply to JPC has said details of the exact utilisation of funds is being collected by the department of company affairs.

Sebi's investigation also reveal that Ketan Parekh had sent out more than Rs 2,700 crore to brokers in Kolkata between January 2000 and March 2001.

Earlier Sebi had said that Ketan Parekh had sent around Rs 1,100 crore to Kolkata brokers. However, Sebi is still investigating the sources of these funds and how they were utilised.

Sebi said the pattern of investments/ trading transactions in scrips (said to be associated with Ketan Parekh), their timing and interconnections indicate prima facie misuse of the overseas corporate body (OCB) and foreign institutional investor (FII) sub-account route.