It is said that an unkept promise is as good as a well-disguised lie.
When Sterling and Wilson Solar made a public offering of its shares, the prospectus said the company’s promoters will repay the 26 bln rupees they had borrowed from the company from the sale of their shares.
This amount was an inter-corporate loan extended by Sterling and Wilson to two promoter-owned companies.
Sterling and Wilson Solar promoters Shapoorji Pallonji and Co Pvt Ltd and Khurshed Daruvala sold a part of their stake and raked in 28 bln rupees through the initial public offering, but reneged on the repayment.
This disclosure was made by the company last week.
The disclosure said the promoters had “envisaged” to pay the loan back to Sterling and Wilson Solar within 90 days of the listing of the company’s shares on Aug 20
— in effect the money was to be repaid by today.
The promoters have not paid even 10% of their dues to Sterling and Wilson. The reason for their inability: “unforeseen significant and rapid deterioration” in the credit markets creating a significant liquidity crisis.
This reason does not stand merit because the promoters had received the amount from investors in the IPO and could have repaid the company.
Second, the promoters have shown blatant disregard to the commitment, through a SEBI-approved fund-raising prospectus, made to investors that Sterling and Wilson would be repaid the amount.
The promoters’ reasoning that the IPO got them only 28 bln rupees instead of an expected 45 bln rupees does not stand merit either as the amount collected via the IPO was higher than the amount owed.
It does appear that the promoters diverted the amount to meet some group company requirements given that rating agencies have cut their outlook or rating on several companies owned by the promoters.
The ball now is in the court of the market regulator.
The Securities and Exchange Board of India now needs to assert its regulation and hold the promoters of Sterling and Wilson Solar accountable to their commitment.
It could be a good opportunity to show that regulator will no longer allow deviant promoters to further erode the trust of investors in the sanctity of the capital market process. End
LATEST ANNOUNCEMENTS
* SEBI to fill three executive directors posts in December (BL)
* SEBI to auction assets of Royal Twinkle, Citrus Check Inns in December (PTI)
* SEBI Tyagi says non-compliant PSUs must raise free float
* SEBI issues circular on Aadhaar e-KYC for investors (PTI)
ORDERS, ADJUDICATION PROCEEDINGS
* SEBI denies RIL a waiver to delist Alok Industries (ET)
* Individual settles case of alleged fraudulent trading with SEBI by paying over 23 mln rupees (PTI)
* SEBI told to probe charges against promoters of three firms (BL)
* NCLAT asks SEBI to file reply on revised share delisting norms for cos under insolvency (PTI)
REGULATIONS (Announced in the past three months)
* SEBI issues norms on commodity F&O modifications, to roll out Dec 1
* SEBI prescribed wider disclosures and compliances norms by the issuers of listed municipal bonds (ET)
* SEBI allows MFs to segregate unrated debt papers from schemes
* SEBI issues circular on Aadhaar e-KYC for investors (PTI)
DATA FROM SEBI
| Date | Unit | Latest | Previous | |
| FII/FPI net equity investment | Nov 14 | US$ mln | (-)59.83 | 211.83 |
| FII/FPI net debt investment | Nov 14 | US$ mln | (-)14.26 | (-)136.34 |
| DIIs net equity investment# | Nov 5 | bln rupees | (-)14.25 | (-)2.03 |
| DIIs net debt investment# | Nov 5 | bln rupees | 9.51 | 8.97 |
IPO/FPO/NFO
* Sundaram MF seek SEBI’s approval for Sundaram Bluechip Fund
* Axis MF seeks SEBI’s approval for Axis Quant Fund
* Burger King India files for 4-bln-rupee fresh issue
* HSBC MF seeks SEBI nod for HSBC Ultra Short Duration Fund
SEBI IN NEWS
* SAT pulls up SEBI for ‘shabby’ handling of complaints from investor (BS)
* SAT to hear RIL appeal against SEBI in 20 bln rupees Reliance Petroleum case
* SEBI mulls lowering cost of derivatives trading (ET)
* SAT asks SEBI to pass order in RIL-Network 18 deal matter by Nov 30 (PTI)
Sources – Television, Print, or Web Editions of: PTI–Press Trust of India, BS–Business Standard, ET–The Economic Times, Moneycontrol, CNBC TV-18, Mint, BL–The Hindu Business Line, TH–The Hindu, RTR—Reuters, Mint, BT–Business Today, IANS–Indo-Asian News Service, IE— The Indian Express, ToI–The Times of India
Source: cogencis
