MUMBAI: Regulator Sebi has banned Yashovardhan (Yash) Birla from the market for two years. The action is due to misutilisation of funds collected through the initial public offering (IPO) of Birla Pacific Medspa in mid-2011, including using the proceeds from the offer to manipulate the stock price. Sebi also banned several others associated with Yash for their roles in the same matter. Earlier this month as well, in another case, Sebi had banned Yash from the market for two years.
According to the 61-page order by Sebi whole-time member Ananta Barua, Birla Medspa opened its Rs 65-crore IPO in June 2011 and the shares were listed on July 7 in the same year. Within days of listing, Birla Medspa had transferred large amounts of funds to other entities, which transferred these on to some others that, in turn, transferred to a broker, GRD Securities. The broker had bought the stock of the company on its first day on the bourses.
So, there were efforts for layering, relating to fund transfers. On the listing day, the stock had closed 154% up over its IPO price despite the company having a rating that indicated “below average fundamentals”. Birla Medspa had thus “deviated from issue objects and diverted money from IPO proceeds worth Rs 33.4 crore”, Sebi noted.
The investigation by Sebi also found that despite the company’s promise to set up spa centres across the country, none have come up so far. “On the contrary, around 50% of the IPO proceeds were deployed as ICDs (inter-corporate deposits) to group companies, out of which 60% of ICDs were never returned to the company,” the order pointed out.
Along with Yash, 10 other entities have been banned from the market for two years, while another one has been banned for six months.