exchange-board

Sahara-SEBI Case: SC Declines Sahara Plea to Issue Notice to Govt on OFCD Issue

by Paul Joseph July 11, 2011

The Supreme Court has declined the Sahara Group’s plea to issue a notice to the government in connection to a dispute with market regulator Sebi, which had directed the firm to return funds raised from investors under an OFCD scheme along with 15 per cent interest. “We do not want Union of India (government) to come at this stage. Let them (Sebi) come and clarify. We have our own query on it,” said the bench headed by the chief justice S H Kapadia. During the proceedings on Friday, senior advocate Fali S Nariman, appearing for the Sahara group, said that Sahara was not a listed company and only the government has jurisdiction over it and not market regulator Sebi. “We (Sahara) are not a listed company and the government (Ministry of Corporate Affairs) has jurisdiction over us. If there is any listed company, then Sebi has jurisdiction,” he said, asking the bench to issue a notice to the government seeking a clarification of its stance. Narimnan said that despite the matter was pending in the court, Sebi issued fresh cause notice to the group and passed the order. On it, the bench said,” We have asked the Sebi to explain it. We wanted to know that from where you got this (concept of) OFCD.” The Supreme Court further said that it had asked Sebi as “We wanted investors to be protected.” The bench later adjourned the matter for a week on the request made by Sebi’s counsel P Venugopal. Sebi submitted that Sahara group has filed some documents before it and the regulator wanted to go through it. In November, Sebi had indicated that two Sahara Group firms — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — were raising funds from the public through an optionally fully convertible debentures (OFCD) scheme without conforming to prudent disclosure and other investor protection norms. Subsequently, Sahara Group had contested Sebi’s authority to look into the issue in the Supreme Court, asserting that it was a privately held company and not listed and therefore, was under the jurisdiction of the Ministry of Corporate Affairs. Earlier, on June 27, a vacation bench of the apex court, comprising justices P Sathasivam and A K Patnaik had declined to hear the plea of Sahara India Real Estate Corp and asked to list it before the Chief Justice which has been hearing the case. Following the orders of the Supreme Court, the Security and Exchange Board of India had on June 23 passed an order and directed the two Sahara group firms — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — to refund the money raised by them in OFCD citing violation of regulatory norms.

Tagged as: exchange-board, government, india, investment, jurisdiction, kapadia-during, money, real estate india, sahara, sahara-group, supreme-court

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Supreme Court to Hear Sahara Plea against Sebi Order Tomorrow

by Paul Joseph July 8, 2011 Uncategorized

The Supreme Court will tomorrow hear the Sahara group firm’s plea against the SEBI order to return the money, along with 15 per cent interest, collected from investors through its Optionally Fully Convertible Debentures (OFCD) scheme. The plea would be heard by a three-member bench headed by Chief Justice S H Kapadia. Earlier on June 27, a vacation bench of the apex court, comprising Justices P Sathasivam and A K Patnaik, had declined to hear the plea of Sahara India Real Estate Corp and asked to list it before the Chief Justice, who has been hearing the case. Following the orders of the Supreme Court, the Security and Exchange Board of India (SEBI) had on June 23 directed the two Sahara group firms — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — to refund the money, along with 15 per cent interest, raised through OFCD scheme for violating regulatory norms. As per Sebi order, the two companies, promoter Subrata Roy Sahara and directors Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary jointly and severally, shall refund the money. Besides, the regulator has also restrained the entities from accessing the securities market for raising funds, till the time payments are made to the satisfaction of the SEBI. However, on May 12, the apex court had said that the Sebi directive would not take effect till its further order. During the last hearing on May 12, the apex court had asked Sebi to proceed with its probe into Sahara group’s OFCD scheme by observing that investors may not have any knowledge about these products and might feel cheated like in the Harshad Mehta scam. The court had also allowed the Allahabad High Court to proceed with its hearing, where the Sahara group has challenged SEBI’s direction to give details of its investors.

Tagged as: chief, delhi, exchange-board, india, investment, noida, real estate developers, real estate india, sahara-housing, sebi, supreme-court, time

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Supreme Court Questions Sahara about Fund Raising Schemes

by Paul Joseph May 10, 2011 Uncategorized

Counsel for the Sahara group of companies came in for some uncomfortable queries from the Supreme Court on Monday on its appeal against the bar on its recent fund-raising schemes. Subrata RoyThe Securities and Exchange Board of India (Sebi) had first barred two group entitites and their promoters from raising money. The Allahabad high court had, last month, declined to interfere with the order, also rapping the Sahara group in the process. The SC on Monday asked Sahara India Real Estate Corporation to produce before it on Thursday the proforma in which investors were asked to apply for debentures. A bench headed by Chief Justice S H Kapadia also asked the corporation to produce the list of its agents employed to raise money. The court said it was not clear about the concept of the Optionally Fully Convertible Debenture through which the firm said it was raising the money. It asked Soli Sorabjee, counsel for the Sahara group, to explain it, but he was unable to. “If you don’t understand it, how can rural people understand it?” asked the court. Sebi had demanded full details on applicants for the scheme and said it was issuing the stop-order due to non-compliance. Sorabjee argued the company shouldn’t be held responsible if investors gave false addresses and like particulars. Sahara is also protesting at Sebi’s public advertisement on the matter, telling investors to keep away, as having given it a bad name and helping its competitors. The Allahabad HC had dismissed the plea regarding OFCD schemes floated by Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd.

Tagged as: against-the-bar, corporation, court-on-monday, exchange-board, gurgaon, money, noida, real estate, real estate developers, real estate trends, sahara-housing, sahara-india, supreme, the-corporation

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SC Adjourns Hearing of Sahara Group Petition

by Paul Joseph May 3, 2011 Uncategorized

The Supreme Court on Monday adjourned the hearing of the petition filed by the Sahara Group against the orders of the Allahabad High Court which necessitated the company to share full details of investors participating in its fund raising exercise with the market regulator SEBI. A three judges bench headed by the Chief Justice S H Kapadia adjourned the matter for a week after the group’s investment arm Sahara India Real Estate Corporation sought some time to file recent documents. Counsels appearing for Sahara Group sought permission to file some additional documents, which was accepted by the bench. Meanwhile, the Allahabad High Court has dismissed the application filed by the Sahara Group firms to recall and restore its earlier order of April 7, 2011 vacating stay and allowed market regulator Sebi to collect information on the two Optionally Fully Convertible Debentures (OFCDs) scheme launched by it. In its order dated April 29, 2011 the high court has said that despite the directions to give information to Sebi on its investment schemes, the group had not complied. “A person, who comes to the court, is supposed to come with clean hands and has to abide by the orders passed by the court, more so in a case where the parties counsel agree for certain action to be undertaken. “If some assurances is given by any person to the court, as has been done in the present case and the said assurance/ undertaking is not honoured, the court would not come to his rescue,” the court had said while rejecting Sahara’s application. The high court is also not satisfied with the Sahara group’s plea that it has handed over two CDs to Securities and Exchange Board of India and said,”It would not pursue us to recall our order”. Sebi had submitted before the high court that the CDs had incomplete information. “The information given was obviously incomplete, but even then it was pressed on behalf of the petitioner (Sahara) that they have given the required information, which cannot be said to be bonafide act on their part for compliance of the court’s order,” the high court had said. Two entities of Sahara Group — Sahara India Real Estate Corporation Limited and Sahara Housing Investment Corporation Limited — were raising money from investors through OFCDs. Market regulator Sebi had asked the Sahara group to share investors” details, a direction which was initially opposed by Sahara.

Tagged as: court-on-monday, delhi, exchange-board, faridabad, group, gurgaon, india, investment, orders, property prices, real estate developers, sahara-housing, supreme-court

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SEBI Bars Emaar MGF from Raising Rs1600cr via IPO

by Paul Joseph April 29, 2011 Uncategorized

Real estate developer Emaar MGF Land’s third attempt to raise Rs 1,600 crore through an initial share sale offer has hit a regulatory hurdle. Even after seven months, the Securities and Exchange Board of India has not given nod to Emaar MGF for its initial public offering as the New Delhi-based firm’s role came under scanner for alleged irregularities in developing the Commonwealth Games village, according to persons with direct knowledge of the matter. The joint venture between Indian lender MGF and Dubai’s Emaar Properties had filed its draft red herring prospectus (DRHP) with the capital markets regulator on September 30, 2010. The V K Shunglu committee, appointed by the Prime Minister to look into issues relating to organising and conduct of CWG held in Delhi last year, has come down heavily on Emaar MGF Construction Pvt Ltd, a unit of Emaar MGF Land. In its second report released last month, the committee has indicted Emaar MGF for failing to meet its contractual obligations, receiving undue financial gains and making unauthorised payments, among other things. The committee headed by the former Comptroller and Auditor General of India (CAG) estimated the total financial favours/loss to the Delhi Development Authority (DDA) by a series of decision taken to support Emaar MGF to as much as Rs 1,244.50 crore. The committee recommended that the Government of India or DDA may take appropriate action against Emaar MGF for knowingly supplying incorrect information and for its various acts of omission and commission. Separate e-mail queries sent to the spokespersons of Emaar MGF and Sebi on the issue remained unanswered. Among the risk factors in its DRHP Emaar MGF had said concerns regarding the readiness and habitability of the CWG village could expose the company to reputation and financial risk. This is the third time in the last four years that Emaar MGF’s plans to raise money through IPO have hit the wall. Earlier, in February 2008, the real estate developer had to withdraw its IPO due to poor response from investors after the stock market collapse. The company again filed for IPO in September 2009 and received Sebi’s nod in March 2010. However, it did not proceed with the issue at that time and re-filed in September 2010. Besides deferring the issue, Emaar MGF has also significantly scaled down the issue size from Rs 6,400 crore in 2008, to Rs 3,850 crore 2009 and to Rs 1,600 crore in 2010. The IPO is crucial for the company as it plans to repay and prepay debt of Rs 614 crore and redeem preference shares worth Rs 626.9 crore and pay development charges of Rs 83.6 crore out of the issue proceeds. According to the DRHP filed by the company in September 2010, it had a total debt of Rs 4,689 crore as on August 31, 2010. Of which the company had to repay Rs 1,199.8 crore by March 31, 2011, around Rs 796.8 crore and Rs 142.6 crore by March 31, 2012 and March 31, 2013, respectively. In addition, it had Rs 2,383 crore as compulsorily debentures as on August 31, 2010. A spokesperson for Emaar MGF said this month that the company had refinanced some of its debt and had also repaid Rs 1,400 crore in the last year-and-a-half. The company had a net profit of Rs 125 crore on sales of Rs 2,078 crore in FY10.

Tagged as: auditor-general, commonwealth, comptroller, delhi, exchange-board, indian, property prices, real estate developers, real estate india, securities, spokespersons

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Scam Hit Developers Postpone IPO Plans

by Paul Joseph December 7, 2010 Uncategorized

Six real estate companies, all set to raise over $2.9 billion or Rs 13,000 crore through the capital market, have postponed their plans till the middle of next year. Industry experts have blamed the LIC scam for bringing down the interests of foreign and domestic institutional investors in public offers. For some, the government and market regulator the Securities and Exchange Board of India (SEBI) played spoilsport. Developers such as Embassy Group, Lodha Developers, Emaar MGF and Raheja are not risking their initial public offerings (IPOs) and would be hitting the market only mid next year, sources say. While controversies do not seem to be ending for Sahara Prime and Lavasa whose IPOs, if they see the day of light, will only be able to raise liquidity through the primary market by next year middle. The total amount to be raised by these developers amounts to R13,000 crore. No developer, however, acknowledged that the delay was due to controversies surrounding the sector. “Yes we had plans to raise funds by December but SEBI has still not given us the permission, and even if they do, we will only be able to raise money by December. We will be coming out with our IPO around March next year,” said Sandeep Subramanya, general manager, corporate finance, Embassy Group. The Bangalore-based realty group had plans to raise R2,400 crore of which a substantial part was to be raised through pre-IPO placement. However, domestic investors and some high net-worth individuals with whom the company was negotiating, has asked for some time till “the volatility reduces”, a person familiar with the development said. According to investment bankers, institutional investors are adopting a cautious approach when it comes to real estate. “Investors will stay away from realty IPOs for at least three months, unless one more scam is unearthed. We hope that the appetite for the sector will improve next year, but that too cannot be generalised for all real estate firms,” said an investment banker with a multinational bank. “The market condition was volatile and we have decided to wait till the situation stabilises. Although we have never announced when we will hit the capital market, so there is no question of postponing the IPO,” said Abhisheck Lodha, managing director, Lodha Group. Lodha Developers is looking to raise R2,800 crore. Emaar MGF, the joint venture between MGF of India and Emaar Properties of Dubai, too has postponed the issue, and reportedly reduced its issue size by around 40% to R1,600 crore. Hindustan Times had recently reported that the company was forced to postpone its hospitality expansion plans. The company did not respond to queries about its IPO. However, given the situation inside the company and outside in capital market, it would be tough for the company to raise the amount at least by mid next year, said a person close to the development. For many developers liquidity is going to be a problem. After the LIC scam, banks have tightened the loan outflows. And as capital market too is not a favourable place for some time, developers may opt to reduce prices of their properties to improve cash flows. “Its’ not just about FIIs and DIIs, even the retail investor will stay away from realty IPOs,” said the banker.

Tagged as: abhisheck-lodha, capital, dubai, exchange-board, india, mumbai, noida, plans, pune, real estate companies, real estate india, sector

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Sahara India Real Estate Corporation Challenges Supreme Court’s Decision

by Paul Joseph December 1, 2010 Uncategorized

Sahara India Real Estate Corporation has moved the Allahabad High Court challenging the Supreme Court’s order barring Sahara’s firms and its chief from raising money from the public, reports CNBC-TV18 quoting Press Trust of India. The Lucknow bench of the Allahabad High Court will hear the case on December 1. Early last week, market regulator Securities and Exchange Board of India or SEBI had cracked the whip on the Sahara group by banning the group from raising funds from the public, either directly or indirectly. The entities that were barred included Sahara India Real Estate and Sahara Housing Investment, both of whom are promoters of another group company Sahara Prime City, which had earlier filed a draft red herring prospectus with the SEBI for an initial public offering. Sahara India Real Estate and Sahara Housing Investment had also issued an RHP to raise Rs 40,000 crore via optionally fully convertible debenture (OFCD) to public. Sahara India Real Estate has already raised Rs 4,843.37 cr via an OFCD. SEBI had issued a showcause notice against the two companies asking them why it should not take action against them for issuing OFCDs without its permission and barred them from issuing such bonds. SEBI’s approval is needed for fund raising from over 50 people.

Tagged as: banking and finance, estate, exchange-board, faridabad, gurgaon, noida, press, real estate, real estate india, real estate trends

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Three Ahmedabad-based realty firms plan IPOs

by Paul Joseph June 17, 2010

The changing skyline of Gujarat cities is also changing the rules of the game for realtors. With the cities pushing their boundaries and big realty firms eyeing a pie in the development cake, local developers are turning to capital markets to raise resources to ride the next growth wave. While JP Infrastructure Ltd (JPIL), popularly known as Iscon group, will come up with an initial public offering in August this year, two other realty firms, Dharmdev Infrastructure Limited and Safal group too plan to enter the capital market next year, according to a report published in Times of India. The last time an Ahmedabad-based realty company got listed on the bourses was Radhe Developers in 1995, which has a market capitalisation of Rs 60 crore. The only other listed Ahmedabad realty firm is Ganesh Housing with a market cap of Rs 550 crore. Now, JPIL plans to raise Rs 120 crore to fund its projects. “The funds will be utilised for acquiring land for two residential projects in Ahmedabad and Vadodara. A part of the funds will be diverted for some ongoing projects,” said Pravin Kotak, chairman of JPIL. The company has already filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). JPIL will dilute 25 per cent equity by offering 76,00,000 equity shares of Rs 10 each. “We plan to come up with an IPO to meet our future expansion plans in next fiscal,” says Umang Thakkar, chairman and managing director of Dharamdev Infrastructure, which is coming up with township and hospital projects. Dhiren Vora of Safal group says his company too would hit capital markets in the near future. Developers say the region, which falls under the Delhi-Mumbai Industrial Corridor influence area, is poised for next level growth and is likely to attract huge investments. Sensing opportunities, national realty players like Godrej Properties, Sahara and Mumbai-based Ajmera group, have forayed into the city. “Costs have escalated and some of the national players have created competition for the local developers. It is necessary for the local builders to have more liquidity. In the future many more companies are likely to hit the capital market,” says Jaxay Shah, president CREDAI (Gujarat).

Tagged as: development, exchange-board, real estate, real estate developers, sahara

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Defaults by listed companies may be disclosed

by Paul Joseph June 13, 2010

A committee comprising senior government officials and financial regulators has proposed mandatory disclosure of loan defaults by listed companies, a move aimed at protecting shareholders’ interest and boosting investor’s confidence. The proposal was discussed at the May 24 meeting of the High-Level Coordination Committee on Financial Markets, said a senior finance ministry official. Market regulator Securities & Exchange Board of India (Sebi) will examine the practical aspects of the proposal. “Sebi may consider making changes in the listing norms so that whenever a company defaults on any payment obligation, it would trigger a public announcement,” the official said, requesting anonymity. The meeting of the coordination committee was chaired by Reserve Bank of India (RBI) governor D Subbarao. Finance secretary Ashok Chawla, department of financial services secretary R Gopalan, chief economic advisor Kaushik Basu, Sebi chairman CB Bhave, Insurance Regulatory & Development Authority (IRDA) chairman J Hari Narayan and senior officials of the Pension Fund Regulatory & Development Authority (PFRDA) attended the meeting. At present, information on loan defaults is available only to the lenders, RBI and credit information companies such as CIBIL. As per the current practice, banks disclose a list of defaulters to RBI on a quarterly basis. A copy of this report is forwarded to Sebi and CIBIL. Globally, there were a number of corporate loan defaults in 2009, after some of the world’s largest economies were hit by the worst financial crisis since 1930s. India also felt the tremors of the crisis, leading to a few high-profile default cases. Several companies in the worst-hit sectors such as retail and real estate had a tough time servicing their loans. Institutional lender IDBI recalled a loan to a private airline recently after it failed to meet its repayment obligations. Industry officials and policymakers are of the opinion that disclosure on loan defaults will promote transparency and strengthen corporate governance. “Sebi should not have any problem. There are already laws in place making it mandatory for promoters to disclose information about shares pledged,” a finance ministry official said. Under the current laws, a company will have to disclose on a quarterly basis if its promoters have pledged shares amounting to 1% or more of the company’s capital. When promoters fail to repay, lenders dump their shares to recover their dues. Retail investors suffer in this whole process as they do not have access to information. A section of industry officials and market analysts fear that such disclosures may lead to panic in the capital market. “There needs to be clarity on the definition of default. Missing a monthly payment is also default, but putting that information out in public will be disastrous both for the lender and the corporate as it may create unnecessary panic,” said an RBI official. If a company fails to repay the loan, the banks give a window of 90 days. Failure to make repayments in this period results in the loan being classified as a bad loan or non-performing asset (NPA). Sharing such information with public is unnecessary and in some cases this would lead to witch-hunting, said Abizer Diwanji, head (financial services) at consultancy firm KPMG. “In my view, flow of such sensitive information should be restricted amongst regulators,” he said. Such information will be open to interpretation and may adversely affect corporate houses, he said. “If there were any chances of recovery, even that may dry up,” he said.

Tagged as: current, definition, delhi, exchange-board, financial, gurgaon, opinion, real estate india

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Reheja Universal to Raise 8.5 Billion Rupees via IPO

by Paul Joseph March 31, 2010

Indian real estate firm Raheja Universal plans to raise about 8.5 billion rupees ($188.5 million) through an initial public offering of shares, two sources with direct knowledge of the deal said on Wednesday. The Mumbai-based firm has filed initial papers with the stock market regulator, Securities and Exchange Board of India, said one source, who declined to be named as he was not authorised to speak to the media. Raheja joins other property firms such as Godrej Properties (GODR.BO: Quote, Profile, Research) and DB Realty (DBRL.BO: Quote, Profile, Research), which have listed this year. Shares of Developer DB Realty, which fell on debut, did not attract much retail interest though the issue was almost thrice covered on strong demand from institutions. Godrej Properties, which rose by a fifth on debut, also saw poor retail demand for its offering in January. Other real estate IPOs in the offing include those of Lodha Developers, Oberoi Realty, Neptune Developers, BPTP and Nitesh Estates.

Tagged as: exchange-board, india, initial-public, media, real estate, research

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