SEBI bans 3 former executives of firm linked to Chandamama comics publisher from securities mkt for 1 yr

In its order, SEBI found that these persons were involved in siphoning of $125 million raised by the company through redeemable Foreign Currency Convertible Bonds (FCCBs) from overseas investors in 2008

FPJ Web DeskUpdated: Wednesday, December 21, 2022, 04:43 PM IST
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For syphoning off cash, SEBI has banned three former top executives of Geodesic Ltd, the company that owned the children's magazine Chandamama, from the securities markets for a year.

According to a SEBI order, those prohibited include Kiran Kulkarni, who served as Geodesic's managing director, Pankaj Kumar, the company's chairman, and Prashant Mulekar, who served as director and compliance officer.

Chandamama India Limited, publishers of the much loved Chandamama range of children's magazines, was a subsidiary of Geodesic Ltd.

In its order, SEBI found that these persons were involved in siphoning of $125 million raised by the company through redeemable Foreign Currency Convertible Bonds (FCCBs) from overseas investors in 2008. The funds were mobilised for the purpose of investing in companies including wholly owned subsidiaries.

As per SEBI, audited balance sheet of the company for FY 2011-12 was full of misleading financial data and did not contain the true and correct numbers pertaining to its financial health.

The forensic auditor appointed by SEBI bi in its report indicated that complex layered transactions were executed on behalf of the company and the persons behind such acts were Kulkarni, Kumar and Mulekar, who were the promoter and directors of the firm.

The funds were initially invested in the company's foreign subsidiaries – GTSL, Hong Kong, and Geodesic Holding Limited Mauritius – before being diverted to other entities.

"The investments which were reflected to have been made in the foreign subsidiaries, were further siphoned off from the accounts of those foreign subsidiaries to other various entities of suspected status and dubious antecedents," SEBI said in its 56-page order passed on Monday.

Ultimately, the company went under liquidation following directions of the Bombay High Court as it could not meet its obligation to redeem the FCCBs on their maturity due to lack of funds as the capital raised through the instruments had already been siphoned off through investments made in foreign subsidiaries, and through onward diversions to other entities for unexplained reasons, it added.

Accordingly, the Securities and Exchange Board of India (SEBI) restrained these persons from "accessing the securities market and further prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, for a period of one year".

SEBI started the investigation after receiving a letter in 2016 from the Company Registrar of the Bombay High Court. The letter informed SEBI about the order passed by the High Court in the matter of HDFC Bank Ltd versus Geodesic and further directed SEBI as well as the Enforcement Directorate to take action against the firm's directors.

The markets regulator then started looking into Geodesic's financial records to see if any regulatory standards had possibly been broken. The study took place between April 2011 and March 2012.

With inputs from Agencies.

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