labels: investment - general
Big Bull-II run a costly show news
Praveen Chandran
14 January 2002

Mumbai: The investigations by the Securities and Exchange Board of India (Sebi) into 23 entities associated or controlled by Big Bull-II Ketan Parekh have pegged the total default by them to various sectors at Rs 3,078 crore. The Sebi probe has also revealed that large funds, given to a clutch of Parekh outfits, appeared to have gone into stock market operations.

In its interim report submitted to the joint parliamentary committee (JPC) in December 2001, Sebi said: "...large funds were given to these entities of Ketan Parekh and associates with a view to hide the nexus between the source of fund flow, [that is] by corporates/companies and [the] ultimate user of these firms in the stock markets. It was observed that funds were received by certain entities from banks as loans, overdrafts which were diverted to other entities for acquiring shares [and] meeting other obligations."

The total default by Parekh to various entities:

Corporates:       Rs 1,200crore
Banks:             Rs 1,428 crore
OCBs:              Rs 450 crore

Total:                Rs 3,078 crore

Funds transferred to Calcutta brokers: 
Rs 2,800 crore

Dissecting the nature of funds flow, the capital market watchdog pegged the default to the corporate sector to the tune of Rs 1,200 crore, while the default to the banking sector was pegged at Rs 1,425 crore and overseas corporate bodies (OCBs) Rs 450 crore. Senior Sebi officials say around Rs 1,200 crore was received by various Parekh entities from four corporate houses Zee Telefilms, Himachal Futuristic Communication, the Adani group and the DSQ group.

On the funds flow of the banking sector to Parekh entities and associates, Sebi has said the outstanding amount to Madhavpura Mercentile Corporate Bank from the Parekh group is Rs 888.25 crore. Besides, the amount outstanding to Mukesh Babu, a sub-broker with Ketan entities, is Rs 225.63 crore.

The funds received by the Parekh group from ICICI Bank, Centurion Bank and Bank of Punjab as on 31 March 2001 was Rs 65.47 crore. Besides, the amount outstanding to Global Trust Bank was around Rs 250 crore. Finally, the Sebi probe pointed out that the Triumph group did not provide for the non-payment of sales proceeds of around Rs 450 crore to a set of OCBs.

Sebi has also found a nexus between Parekh and three Kolkata-based broking entities the AK Poddar group, DK Singhania and Company and Sanjay Khemani. Sebis detailed investigations into two of the Parekh groups associate companies  Panther Fincap Management and Services, and Classic Credit have revealed that from January 2000 to March 2001 these firms have transferred about Rs 1,480 crore and Rs 1,330 crore respectively to the Kolkata entities.

The probe also says the final picture will only emerge after all bank accounts are analysed an exercise that will take time. During its course of investigations, Sebi also looked into the books of the three Kolkata-based groups. These brokers had excessive purchase positions marked for delivery. And on account of their failure to meet the pay-in obligation, the settlement process was disturbed.

The probe also indicated that Singhania had received around Rs 828 crore from Parekh and his associate entities. The Khemani group received around Rs 1.248 crore and the Podar group around Rs 887 crore.


 


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Big Bull-II run a costly show