Thursday, 26 February 2015

DLF drops after SEBI imposes fines on company and its directors - Business Standard

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dropped 1.8% to Rs 147.60 at 10:20 on after passed adjudicating orders and imposed penalties on the company and its directors for violating related to prohibition of Fraudulent and Unfair Trade Practices.


Meanwhile, the S&P BSE Sensex was up 142.42 points or 0.5% at 28,889.07.


On BSE, so far 1.81 lakh shares were traded in the counter as against average daily volume of 13.24 lakh shares in the past quarter.


The stock hit a high of Rs 149.20 and low of Rs 147.15 so far during the day. The stock had hit a 52-week high of Rs 242.80 on 9 June 2014. The stock had hit a 52-week low of Rs 100 on 16 October 2014.


The stock had underperformed the market over the past one month till 26 February 2015, falling 3.81% compared with 1.82% fall in the Sensex. The scrip had also underperformed the market in past one quarter, declining 1.09% as against Sensex's 1.27% rise.


The large-cap of realty firm has equity capital of Rs 356.39 crore. Face value per share is Rs 2.


The Securities and Exchange Board of India (Sebi) has passed two adjudicating orders dated 26 February 2015, and imposed penalties on the company and its directors for violating law related to prohibition of Fraudulent and Unfair Trade Practices related to Securities Market in the matter of DLF and Sudipti Estates. The investigation conducted by Securities and Exchange Board of India (Sebi) revealed that DLF and its non-independent directors namely Shri K.P Singh, Executive Chairman; Shri Rajiv Singh, Vice Chairman Shri T.C.Goyal, Managing Director, Ms. Pia Singh, Whole Time Director Shri. Kameshwar Swarup, Executive Director-legal Adjudication Order dated 26 February 2015 in respect of Sudipti Estates & 33 others in the matter of DLF and Sudipti Estates. Shri G.S.Talwar, Director and Shri Ramesh Sanka, Chief Financial Officer (CFO) had employed a scheme by camouflaging the association of Sudipti with DLF as dissociation and failed to ensure that the Offer Documents (RHP/Prospectus) contained all material information which was true and adequate so as to enable the investors to make an informed investment decision in the issue. It was also revealed that DLF, its non-independent directors and CFO had actively and knowingly suppressed certain material information and facts in the RHP. The investigation further revealed that the entities/persons had aided and abetted DLF, its non-independent directors and CFO in the said scheme of camouflage.


Separate order is also passed and penalties are imposed on the company and its seven other non independent directors in the said matter.


Securities and Exchange Board of India (Sebi) had conducted investigation into the allegations leveled by one Shri Kimsuk Krishna Sinha (KKS) in his complaints dated 4 June 2007 and 19 July 2007 in respect of DLF and Sudipti Estates. KKS, in his complaints, inter alia, alleged that Sudipti had duped him of around Rs 34 crore in relation to a transaction between them for purchase of land, and he had registered an FIR against Sudipti. It was also stated by KKS in the said complaints that Sudipti, DLF Housing Development (DHDL) and DLF Estate Development (DEDL) were sister concerns and inextricably linked; DHDL and DEDL were controlling the entire shareholding of Sudipti and that all those three companies (DHDL, DEDL and Sudipti) were part of DLF Group.


DLF had come out with an Initial Public Offer (IPO) through Red Herring Prospectus (RHP) dated 25 May 2007 for issuance of 17.50 crore shares at a price of Rs 525 per share aggregating to Rs 9187.5 crore. The above material information was not included in the said RHP.


Meanwhile, DLF said before market hours that it has been made aware of adjudication orders passed by SEBI under Section 15 of the SEBI Act, 1992 against DLF, its directors and other notices. The company is presently reviewing the said orders and after taking appropriate legal advice, the company will challenge the said orders in appeal. On similar facts, SEBI had earlier passed an order dated 10 October 2014 inter alia under Section 11 of the SEBI Act, 1992 against DLF and its directors, which order was challenged by the company before the Securities Appellate Tribunal. DLF wished to reassure its investors and all other stakeholders that it has not acted in contravention of law either during its initial public offer or otherwise. DLF and its board were guided by and acted on the advise of eminent legal advisors, merchant bankers and audit firms while formulating its offer documents. DLF will defend itself to the fullest extent against any adverse findings and measures contained in the orders passed by SEBI. DLF has full faith in the judicial process and is confident of vindication of its stand in the near future.


DLF's consolidated net profit fell 9.3% to Rs 131.79 crore on 19.7% fall in total income to Rs 2079.82 crore in Q3 December 2014 over Q3 December 2013.


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