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Sebi probe shows DLF disclosures inadequate

Source : BUSINESS_STANDARD
Last Updated: Fri, Dec 07, 2012 21:00 hrs

pInvestigations by the Securities and Exchange Board of India Sebi show that DLF Ltd which raised a little over Rs 9000 crore through a public issue in 2007 had made inadequate disclosures in its then offer documentsppSebi sources say their probe shows Sudipti Estates against which a criminal complaint was registered with the Delhi Police is part of DLF group Yet the company had failed to give details about it in their initial public offering IPO prospectusppDLF has been denying that Sudipti was a group company A criminal complaint was registered in April 2007 by a New Delhi-based businessman Kimsuk Krishna Sinha who accused the company of duping him of Rs 34 crore Sinha in his petition to the court had alleged DLF intentionally made a false statement that it had no association with Sudipti Estates so that details of the criminal complaint stayed hidden from prospective shareholdersppAccording to Sebi&rsquos investor protection and disclosure guidelines any company launching an IPO has to disclose all details about criminal or civil cases registered against it or its group companies in the red herring prospectus RHP Sinha had alleged that Sudipti DLF Home Developers Ltd and DLF Estate Developers Ltd were sister concerns and part of the DLF Group A DLF spokesperson did not respond to phone calls a text message and an email on the matterbr  table cellpadding2 width400 tbody tr styleheight 15pt height20 td styleheight 15pt width390 bgcoloreeeeda colspan2 height20font faceTahoma size3strongLACKS TRANSPARENCYstrongfontfont faceTahoma size2br Sudipti Estates is a subsidiary of Purandar Estates which is held by Felicite Builders and Developers As per Registrar of Companies filing the shareholding of Felicite Builders and Construction as on Aug 2 2011span stylemso-spacerun yes spanfonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcolor929373 height20font faceTahoma colorffffff size2strongShareholdersstrongfonttd td alignright width168 bgcolor929373font faceTahoma colorffffff size2strongNo of shares heldspan stylemso-spacerun yes spanbr Rs 10 fully paidstrongfonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Pudmaja Sanka wife of wo Rameshspan stylemso-spacerun yes spanSanka former group chief financialspan stylemso-spacerun yes spanofficer CFO of DLF Ltd Currently headspan stylemso-spacerun yes spanof Facility Management and Utilitiesspan stylemso-spacerun yes spanBusiness of DLFspan stylemso-spacerun yes spanfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2204000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Madhukila Basak wo Surojit Basak CFOspan stylemso-spacerun yes spanHomesspan stylemso-spacerun yes  spanin DLF Home Developers Ltdfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2203000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Meenakshi Gupta wo Adesh Gupta VP Taxation DLF Ltdspan stylemso-spacerun yes spanfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Saroj Khanna wo Manik Khanna Head Banking at DLF Ltdspan stylemso-spacerun yes spanfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Ritu Chawla wo Sourabh Chawla Executive VP Finance at DLF Ltdspan stylemso-spacerun yes spanfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Mukta Jindal wo Vipin Jindal Sr VP Finance DLF Ltdspan stylemso-spacerun yes spanfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Nishi Goyal wo Atul Goyal CFO DLF Universal Ltdfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Sangeeta Gupta wo Shiv Kumar Gupta Sr VP Finance DLF Ltdfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2Rima Hinduja wo Gaurav Monga Former VP Finance DLF Ltdfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2200000fonttd tr tr styleheight 15pt height20 td styleheight 15pt width364 bgcoloreeeeda height20font faceTahoma size2DLF Home Developers Ltdfonttd td alignright width168 bgcoloreeeedafont faceTahoma size2203000fonttd tr tbodytableppDocuments accessed by Sebi show that Sudipti is a subsidiary of Purandar Estates which in turn is held by Felicite Builders and Construction One of the shareholders of Felicite Builders is DLF Home Developers which is also the original promoter of the company Spouses of senior executives of DLF and its other arms hold majority stakes in Felicite Builders a Sebi source said DLF had named these officials which hold majority shares in Felicite Builders as key management personnel in the public issue documents DLF Home was the original promoter of Felicite Builders but its shares were transferred on November 30 to a group employees wife See Table for top 10 shareholders of Felicite BuildersppA source with Sebi said filings with the registrar of companies RoC also show Shalika Estate Developers the erstwhile holding company of Sudipti was merged with Purandar Estates with effect from April 1 2008 But since Purandar is controlled by Felicite Builders which is controlled by key management personnel and associates of DLF Group the beneficiary of the assets of Sudipti Estates should be DLF Group said the sourceppThe registered office of Purandar Estates is at Jandewalan Extension New Delhi and belongs to DLF Ltd Many other DLF group companies too are registered at this address Further DLF Utilities Ltd a shareholder of Purandar Estates shares its registered office address in Gurgaon with DLF Ltd the document with Sebi showsppDLF in its draft RHP filed for a public issue in May 2006 had mentioned that Sudipti was its associate company but withdrew it and in a fresh filing in January 2007 did not mention Sudipti as an associateppThe court then asked Sebi to investigate if Sudipti was an associate of DLF or not and to ascertain if the company had deliberately dropped this information from the IPO prospectus Sebi which sought DLFs filings with RoC as part of its investigation found out that Sudipti was closely associated with the DLF groupppDLF&rsquos submission in court has been that &ldquobetween the filing of aforesaid DRHPs the company DLF had disassociated itself from the said companies Sudipti and its holding companies due to internal restructuring&rdquo DLF maintained Sudipti was a separate legal entity owned and controlled by different individualsppEarlier DLF had moved the single judge-bench to quash Sebis summons saying it was passed &ldquoerroneously and in blatant violation of the principle of natural justice&rdquo The judge on January 3 this year had dismissed DLF&rsquos plea against the market regulators decision saying Sebis order was &ldquobased on reasons&rdquo Following this DLF approached a division bench of Delhi HC which too ruled in favour of Sebi on November 20ppA top Sebi official said the regulator would take into account the judgement by Delhi HC Judge Vipin Sanghai who had stated that &ldquothere is no dispute to the fact that spouses of key managerial persons of DLF group are shareholders in Felicite Builders&rdquo while passing the orderp


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