Sebi slaps Rs 8 lakh fine on Blue Circle Services, 3 others

Markets regulator Sebi has imposed a total penalty of Rs 8 lakh on Blue Circle Services and three individuals for disclosure lapses with regard to cancellation of a couple of deals by the firm.
The three individuals, Anil Purohit, Dhruva Narayan Jha and Pravin Sawant were holding different positions in the company at the time of the cancellation of the deals. Purohit was chairman and managing director, Jha was executive director and Sawant held the position of compliance officer.
According to a Sebi order, Blue Circle Services Ltd (BCSL) made a corporate announcement dated February 21, 2012 at BSE stating that it would get into the renewable energy space through its acquisition of Enelek Power Pvt Ltd and planned to invest about Rs 20 crore in the firm and grow its business.

BCSL made another corporate announcement dated December 12, 2012 at BSE stating that the board of directors of the company have decided to sign a joint venture with Aadhar Infra Projects Pvt Ltd.
The important terms of the joint venture included investment of Rs 150 crore for a period of 3 years and profit sharing ratio of 75 per cent for BCSL and 25 per cent for Aadhar Infra.
"... corporate announcements by the BCSL had bearing on its performance/ operations as well as they were price sensitive information as it dealt with major expansion plans of the company and executions of new projects by it," Sebi said in the order dated December 27.

However, the board of directors of BCSL decided to cancel the deal with Enelek in a meeting held on April 2, 2012 and terminate the one with Aadhar Infra in another meeting on February 14, 2013.

The regulator said the information regarding the cancellation of both the deals was "price sensitive information" as defined in the PIT (Prohibition of Insider Trading) Regulations and it was necessary for the company to inform the stock exchange about it immediately.
Since Purohit and Jha were directors of BCSL at the relevant time of cancellation/ termination of both the deals, they should have ensured "proper and strict" compliance with the regulatory norms, Sebi said.

According to the regulator since the disclosure of information regarding the cancellation of both deals were not made immediately to the stock exchange, the firm, Purohit and Jha violated the PIT Regulations and also the Listing Agreement.
Noting that the compliance officer is responsible to ensure that company complies with continuous disclosure requirement and also coordinates disclosure of price sensitive information, Sebi said Sawant failed to ensure disclosure of information regarding the cancellation of both deals immediately to the stock exchange and thereby violated the PIT Regulations.
For the violations, Sebi has imposed a penalty of Rs 6 lakh on BCSL, Jha and Purohit and a fine of Rs 2 lakh on Sawant.