SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
Under Section 15-I (1) of SEBI Act, 1992 read with Rule 5(1) of SEBI (Procedure for holding inquiry and imposing penalties by adjudicating officer) Rules, 1995 in the matter of M/s Anant Raj Industries Ltd.
1.0. Securities and Exchange Board of India (hereinafter referred to as “Board / SEBI”) vide circular no. SMD/Policy/Cir-13/02 dated June 20, 2002, had directed the stock exchanges to include Clause 51 in the Listing Agreement requiring the companies specified from time to time to upload various financial statements / documents on the EDIFAR web site, www.sebiedifar.nic.in setup by SEBI in association with National Informatics Centre (NIC).
2.0. In this regard, M/s Anant Raj Industries Ltd. (hereinafter referred to as “company ”) was required to upload the above documents with effect from quarter ending March 30, 2003 as stipulated vide SEBI circular no. SMD/Policy/Cir-10/2003 dated March 17, 2003.
3.0. It was observed that the company had failed to register with the website for uploading the financial statements / documents as also failed to upload the following documents :
(i) annual report inclusive of the balance sheet, profit and loss statement, director’s report and auditor’s report for the financial year 2002-03,
(ii) cash flow statement for the financial year 2002-2003,
(iii) shareholding pattern statement as on March 31, 2003,
(iv) Corporate Governance report,
(v) quarterly financial statements for the quarter ending March 31, 2003 and;
(vi) statement of actions taken against the company by any regulatory agency during the period upto March 31, 2003.
4.0. The undersigned was appointed as the Adjudicating Officer by the Board vide an order dated April 2, 2004 to inquire into and adjudge under Section 15A (b) of SEBI Act, 1992 against the company.
5.0. In view of the above, a show cause notice ref. no. NRMO/EIF/2004/3/20017 dated May 21, 2004 was issued to the company for non-compliance to Clause 51 of the Listing Agreement and violation of Regulation 17(3) of SEBI (Central Listing Authority) Regulations, 2003.(hereinafter referred to as “CLA Regulations”) The company was required to make its submissions in reply to the show cause notice within 15 days.
6.0. The company, vide its letter dated nil received on June 10, 2004 submitted its reply to the show cause notice.
6.1 In its reply the company stated that it had not received any earlier communication regarding implementation of the EDIFAR, from any of the stock exchanges where it was listed. As per the statement of the company, it was informed about the matter vide letter no. DCS/EDIFAR/133/1809 dated April 2, 2004 from The Stock Exchange, Mumbai (BSE).
6.2 The company stated that it subsequently made an application dated April 27, 2004 to BSE to register itself with EDIFAR. Further, the company also submitted additional documents vide its letter dated June 4, 2004 as was required by BSE.
7.0 From the information received from Delhi Stock Exchange (DSE), it was observed that DSE vide its letter ref. no. DSE/EDIFAR/2003/63/5675 dated March 25, 2003 had informed the company regarding the insertion of Clause 51 in the Listing Agreement relating to EDIFAR and the subsequent obligations of the company.
8.0 BSE vide its letter dated July 7, 2004 informed that the company was notified of its requirements under EDIFAR vide its circular no. CRD/GEN/1 dated April 4, 2003.
9.0 The company was called for a personal hearing before me on September 22, 2004. The hearing was attended by Shri Manoj Pahwa, Company Secretary of M/s Anant Raj Industries Ltd. along with Ms Arundhati Dhar, an advocate from M/s Dubey & Partners, and Shri Ambarish Chatterjee, a practicing company secretary. Statement of Shri Manoj Pahwa was also recorded under oath.
9.1 Shri Pahwa submitted that the company was not aware of the circulars passed by SEBI about the compliance of Clause 51 of the Listing Agreement until April 22, 2004 when they received a show cause notice from BSE for non-compliance of the same.
9.2 He also submitted that though they had been receiving notices / circulars from BSE fairly regularly, they did not receive any correspondence from the Stock Exchange, Mumbai with regard to EDIFAR uploading of financial and other information.
9.3 Further, it was stated that the delay in uploading financial and other information on the EDIFAR site has not benefited the company in any way nor has it prejudicially affected the interest of any shareholder / investor or the public at large.
10.0 Written submissions were made by the company at the time of hearing and also vide their letter dated October 5, 2004.
10.1 In the submissions made by the company, it was stated that the company has filed the relevant documents such as Annual report, cash flow statement, shareholding pattern, corporate governance report etc. with various authorities including the stock exchanges of Mumbai and Delhi and the Registrar of Companies. The information required to be uploaded on the EDIFAR site was an additional filing to facilitate the availability of financial and other information in electronic mode. The said information was available to the public for inspection / review by alternate means.
10.2 It was also stated that the entire networth of the company was eroded as per Balance Sheet as on March 31, 1999. Pursuant to a reference filed by the company before the Hon’ble Board for Industrial and Financial Reconstruction (BIFR), the company was declared as a sick company by BIFR on November 15, 1999. The rehabilitation scheme of the company has been sanctioned by BIFR and the scheme is required to be implemented by March 31, 2006.
11.0 FINDINGS
11.1 From the trading data of the company M/s Anant Raj Industries Ltd., it was observed that the shares of the company are not actively traded on BSE. The average daily volume of shares during January 2003 to September 2004 is around 1500 shares (with a low of 150 shares to a high of 83,000 shares). The price of the scrip has also varied between Rs. 1.95 to Rs. 6.95 since January 2003. Thus there is limited investor interest in the scrip.
11.2 From the statement made by the company and the submissions made it has been observed that the company has filed the requisite documents with various authorities like ROC and stock exchanges. The company has also published its quarterly and half-yearly results in various newspapers as required.
11.3 It has also been observed that M/s Anant Raj Industries has been declared a sick company by Hon’ble BIFR since November 15, 1999 and is under the rehabilitation scheme.
11.4 The company has not complied with Clause 51 of the Listing Agreement and thus violated Regulation 17(3) of SEBI (Central Listing Authority) Regulations, 2003. However, I find that the company has submitted the relevant documents to the stock exchanges of Mumbai and Delhi and to the ROC from time to time, and filing the documents electronically with EDIFAR is one of the requirements which the company has failed to comply with. I also find that the scrip of the company does not have a significant investor interest as is evident from the trading volumes on BSE, and the company has been declared as a sick company by Hon’ble BIFR.
12.0 ORDER
Having regard to the facts and circumstances of the case and submissions, factors contained in section 15J of the SEBI Act, 1992 and also considering the fact that the company has been registered as a sick company by the Hon’ble BIFR and in view of the substantial compliance by the company of the other disclosure requirements, I am of the considered view that it is not just, fair and proper to impose any penalty on the company in the said matter. However, it is hoped that the company would be more careful in future in compliance with the regulatory requirements.
Piyoosh Gupta
Adjudicating Officer
Place : New Delhi.
Date : November 30, 2004