The Securities and Exchange Board of India (SEBI) banned K. Koteswara Rao, Chairman-cum-Managing Director and other promoters of Transgene Biotek from accessing the capital market till further orders as the regulator found that the company transferred its GDR proceeds through its subsidiary for undisclosed and ulterior purposes.
“I prima facie find that the GDR proceeds were transferred by Transgene, directly or indirectly, through subsidiary for undisclosed and ulterior purposes under the garb of consideration for technology transfer and for other reasons,” said Rajeev Kumar Agarwal, Whole-time Member, SEBI, in an ad interim ex-parte order.
This case is having lot of significance at a time when the government is chasing black money of Indians kept abroad.
On February 22, 2011, Transgene had first issued 25 lakh GDRs at $9.2 per GDR and again on October 3, 2011, it had issued 25 lakh GDRs at $7 per GDR.
Thus, total 50 lakh GDRs were issued in the GDR issues of Transgene.
It had raised $23 million through first issue and $17.5 million through the second issue of GDRs.
Thus, total $40.5 million were raised by Transgene through the GDR issues and were deposited in the bank account of Transgene held in Investec Bank, Switzerland.
“These GDR issues were purportedly to raise capital from overseas market, inter alia, for expansion of its present business activities.
SEBI said that Transgene and its directors had deliberately shown a rosy picture to the investors in the Indian securities market by making the GDR issue and then making false and misleading disclosures about the utilisation of the GDR proceeds.
