The Hindu Business Line : Padmini Polymers: CBI digs out shady deals

SHARES of Padmini Polymers (later renamed as Padmini Technologies) bought by SBI Mutual Fund in February 2000 were never paid for at the time of original allotment, claim Central Bureau of Investigation officials. According to them, the deal resulted in a loss of Rs 60.9 crore to the fund.

In an intriguing network of transactions spread between Mumbai, Kolkata and Delhi none of which involved any real transfer of funds until the mutual fund paid for the shares in an off-market transaction, lakhs of PPL shares changed hands several times through bogus documents, say these officials.

Cheques received for allotment of shares during the preferential allotment were withheld for seven to eight months, according to these officials.

PPL had made preferential allotment of shares to 12 companies in Kolkata and eight companies in Delhi during May and June 1999 who had issued cheques to the company without the necessary balance in their accounts. Though these cheques were not encashed, allotments were nevertheless made.

These Kolkata-based companies in turn sold the shares to eight Delhi-based entities again through paper transactions. Meanwhile, the company got the shares listed on the BSE and NSE giving a declaration that funds had been received as share application money. The company had also declared that all legal requirements in respect of preferential allotment had been duly complied with and disclosures made, officials said.

It is at this point that Mr Ketan Parekh, who spearheaded the 2001 stock market scam, stepped in at the instance of the promoters, these officials allege.

Ketan Parekh group entities purchased some of the shares held by these Delhi-based companies and paid for it. This money was deposited in their respective bank accounts in December 1999. PPL was informed and the original cheques issued during May and June were presented for payment.

The preliminary investigation report, a copy of which is available with Business Line, states that, "SBI Mutual Fund (SBI MF), Mumbai, prepared a false and inconsistent research report without due diligence recommending purchase of PPL. Based on this false research report, the investment committee of SBI MF approved purchase of 23,20,000 shares of PPL on February 18, 2000."

Triumph International, a Ketan Parekh group entity acquired on the same day sizeable quantities of shares from various Delhi-based companies and sent a fax offer to SBI MF for sale of 22 lakh shares of PPL through an off-market deal."

The deal was struck and SBI MF purchased 22 lakh shares of PPL at a price of Rs 165.01 per share, which later proved to be one of the largest losing deals for the mutual fund, officials said.

CBI officials said, "So far we have found evidence leading to a loss to the tune of Rs 60.9 crore but further investigations are going on and we have already filed an FIR based on these information."

More Stories on : Economic Offences | Stock Markets | Economic Offences | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
LNG price being finalised for fertiliser units

Ranbaxy forays into herbal medicine

Wipro beats expectations; net up 19 pc at Rs 274 cr in Q3 — `Rupee appreciation putting pressure on profitability'

Sensex plunges 164 in bearish market

Corporates can now file TDS returns online — Infosys first to use tax info network facility

Padmini Polymers: CBI digs out shady deals