Interim Order in the matter of Castor Seed Contracts

WTM/RKA/ISD/CDD2/55/2016 SECURITIES AND EXCHANGE BOARD OF INDIA EX-PARTE AD-INTERIM ORDER UNDER SECTION 11 AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF TRADING IN CASTOR SEED CONTRACTS AT NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED. 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) noticed that prices in Castor Seed February 2016 Contract at NCDEX fell by around 20% in month of January 2016. It was observed that futures prices of Castor Seed Contracts touched lower circuit of 4% on January 25, 2016 and hit lower circuit of 6% on January 27, 2016. It was also noticed that there was a very high concentration of open interest in February 2016 Castor Seed Contract. On January 27, 2016 National Commodity & Derivatives Exchange Ltd. (hereinafter referred to as “NCDEX/the exchange”) under the provisions of its Rules, Bye-laws and Regulations suspended the trading in Castor Seed Contracts at the close of business hours, vide its circular (NCDEX/TRADING-007/2016/012) dated 27 January, 2016. Pursuant to this, SEBI after examination, passed an ex-parte ad interim order on March 2, 2016 in the matter of trading in Castor Seed Contracts at NCDEX, and restrained 16 entities from buying, selling or dealing in the securities market, either directly or indirectly, in any manner whatsoever, till further directions.

2. As a part of preliminary examination, the bank statements of the concerned suspected entities were analysed. During preliminary examination several acts and omissions, in connection with dealing in Castor Seed Contracts trading at NCDEX having a bearing on the commodities market, including circulation/transfer of funds for creating position in Castor Seed Contracts were also observed. 3. The preliminary examination, inter alia, revealed that one client namely, Ruchi Soya Industries Limited hereinafter referred to as 'Ruchi Soya' (who was holding significant position in Castor Seed Contracts) has transferred funds of around ₹ 76.77 crore during the period of Jan 01, 2015 to Jan 27, 2016 to 5 clients who were also holding significant position in Castor Seed Contracts. It has been also noticed that the funds transferred by Ruchi Soya to these clients were then transferred to the respective Commodity Trading Members by the clients and using which these clients created position in Castor Seed Contracts. A flowchart showing transfer of funds by Ruchi Soya to 5 clients is as follows:

Interim Order in the matter of Castor Seed Contracts

4. From the bank statement analysis of above stated entities and their pattern of trading / manner of creating position in Castor Seed Contracts, it has been prima facie observed that Ruchi Soya has financed/ provided funds to aforesaid 5 clients for taking open position in Castor Seed Contracts and further to maintain positions held by them in Castor Seed Contracts. Date wise details of fund transfer to aforesaid 5 clients and subsequent details of fund transfer to Commodity Trading Members and manner in which position in Castor Seed Contracts was created by the clients is explained below : I. National Steel and Agro Industries Ltd. :- It has been prima facie observed that the client National Steel and Agro Industries Ltd. has mainly initiated long positions in Castor Seed Contracts from December 14, 2015. Before that the client was holding minimal positions. Therefore, SEBI analysed bank statements from December 01, 2015 till January 31, 2016. Observations from bank statement analysis (HDFC Bank Ltd.- Account No. 00360330002361) and trading activity of client are give below : Table 1 : Bank Statement analysis HDFC Bank Ltd.- Account No. 00360330002361 Received from Transferred to Date Particulars Amt Date Particulars Amt 11-Dec- Ruchi Soya 14-Dec Angel Commodities 15 Industries Ltd. 50000000 -15 Pvt. Ltd. 20000000

15-Dec- Angel Commodities 15 Pvt. Ltd. 30000000 Ruchi Soya 12-Jan- Angel Commodities 11-Jan-16 Industries Ltd. 25000000 16 Pvt. Ltd. 19000000 13-Jan- Angel Commodities 16 Pvt. Ltd. 6000000 Ruchi Soya 14-Jan- Angel Commodities 14-Jan-16 Industries Ltd. 15500000 16 Pvt. Ltd. 15500000 Ruchi Soya 16-Jan- Angel Commodities 15-Jan-16 Industries Ltd. 16000000 16 Pvt. Ltd. 12500000 Ruchi Soya 22-Jan- Angel Commodities 21-Jan-16 Industries Ltd. 17500000 16 Pvt. Ltd. 17500000 Ruchi Soya 25-Jan- Angel Commodities 22-Jan-16 Industries Ltd. 5000000 16 Pvt. Ltd. 5000000 i. National Steel and Agro Industries Ltd. received funds aggregating to around ₹ 12.90 crore from Ruchi Soya. Out of the said funds received from Ruchi Soya, funds to the tune of ₹ 12.55 crore was transferred to the member, Angel Commodities Broking Pvt. Ltd. ii. From Table 1 it has been observed that on the same day or next day the funds received from Ruchi Soya has been transferred to the member Angel Commodities Broking Ltd. by National Steel and Agro Industries Ltd. iii. The client National Steel and Agro Industries Ltd. started taking long positions in Castor Seed Contracts in a significant way from December 14, 2015. Before this date the client was holding minimal positions i.e., since 1 Jan 2015 till 13 Dec 2015. iv.

The client initiated a long position of 4750 MT as on December 14, 2015. The long position has then been steadily increased by the client to 7770 MT on December 16, 2015. Prima facie, it has been observed that the funds of ₹ 5 crore received from Ruchi Soya on December 11, 2015 has then been transferred to the member Angel Commodities Pvt. Ltd. on December 15, 2015 for payment towards margin obligations in respect of the positions taken in Castor Seed Contracts by National Steel and Agro Industries Ltd. v. On January 08, 2016 National Steel and Agro Industries Ltd. was holding long position of 19500 MT which was increased to 25470 MT on January 11, 2016 and further increased to 27470 MT on January 12, 2016 and to 27970 MT on January 13, 2016. Prima facie, it has been observed that the funds received from Ruchi Soya during January 11, 2016 to January 22, 2016 have been used to pay the margin requirements for the increased long positions held by National Steel and Agro Industries Ltd. vi. Thus it has been prima facie observed that the Castor Seed Contract positions of the client, National Steel and Agro Industries Ltd. were funded by Ruchi Soya

II. Mr. Anuj Jain :- It has been prima facie observed that the client Mr Anuj Jain has taken positions in Castor Seed Contracts since December 9, 2015. Therefore SEBI analysed bank statements from December 01, 2015 to January 31, 2016. Observations from bank statement analysis (Axis Bank Ltd. - Account No. 912030007771472 and 911020029479389) and trading activity of client are given below : Table 2 : Bank Statement analysis Axis Bank Ltd. - Account No. 912030007771472 and 911020029479389 Analysis of Bank Transaction of Mr. Anuj Jain ( A/c no.912030007771472) Received from Transferred to Date Particulars Amt Date Particulars Amt 3-Dec- Ruchi Soya 7100000 9-Dec- Neer Ocean 27500000 15 Industries 15 Multitrade Private 5-Dec- Ruchi Soya 7900000 Limited 15 Industries 9-Dec- Ruchi Soya 30000000 15 Industries 10- Ruchi Soya 50000000 10- Neer Ocean 47500000 Dec-15 Industries Dec-15 Multitrade Private Limited 14- Neer Ocean 5000000 Dec-15 Multitrade Private Limited 16- Ruchi Soya 180099 Dec-15 Industries 30- Anuj Jain A/c no. 5000000 30- Ruchi Soya 5000000 Dec-15 911020029479389 Dec-15 Industries 12-Jan- Ruchi Soya 211739 12-Jan- Anuj Jain A/c no. 4000000 16 Industries 16 911020029479389 12-Jan- Ruchi Soya 5000000 16 Industries 13-Jan- Ruchi Soya 5400000 13-Jan- Anuj Jain A/c no. 1000000 16 Industries 16 911020029479389 14-Jan- Ruchi Soya 8500000 14-Jan- Anuj Jain A/c no. 8500000 16 Industries 16 911020029479389 15-Jan- Ruchi Soya 9000000 15-Jan- Anuj Jain A/c no. 9500000 16 Industries 16 911020029479389 20-Jan- Ruchi Soya 2900000 22-Jan- Anuj Jain A/c no. 7000000 16 Industries 16 911020029479389 21-Jan- Ruchi Soya 7500000 16 Industries 22-Jan- Ruchi Soya 5000000 22-Jan- Anuj Jain A/c no. 5100000 16 Industries 16 911020029479389 Analysis of Bank Transaction of Mr. Anuj Jain ( A/c no.911020029479839) Received from Transferred to Date Particulars Amt Date Particulars Amt 30- Anuj Jain A/c No. 5000000 30- Neer Ocean 5000000

Dec- 912030007771472 Dec-15 Multitrade Private 15 Limited 12-Jan- Anuj Jain A/c No. 4000000 12-Jan- Neer Ocean 4000000 16 912030007771472 16 Multitrade Private Limited 13-Jan- Anuj Jain A/c No. 1000000 13-Jan- Neer Ocean 1000000 16 912030007771472 16 Multitrade Private Limited 14-Jan- Anuj Jain A/c No. 8500000 14-Jan- Neer Ocean 8500000 16 912030007771472 16 Multitrade Private Limited 15-Jan- Anuj Jain A/c No. 9500000 15-Jan- Neer Ocean 9000000 16 912030007771472 16 Multitrade Private Limited 22-Jan- Anuj Jain A/c No. 7000000 22-Jan- Neer Ocean 7000000 16 912030007771472 16 Multitrade Private Limited 22-Jan- Anuj Jain A/c No. 5100000 22-Jan- Neer Ocean 5100000 16 912030007771472 16 Multitrade Private Limited i. During the period from December 01, 2015 to January 30, 2016, the client Mr Anuj Jain has received around ₹ 14.37 crore from Ruchi Soya in his account number 912030007771472 held with Axis Bank. ii. Out of these ₹ 14.37 crore received from Ruchi Soya, ₹ 8 crore has been transferred by Mr. Anuj Jain to the member Neer Ocean Multitrade Pvt. Ltd from the said bank account on 9th ,10th and 14th December 2015. iii. From the remaining funds received by Mr. Anuj Jain, ₹ 4.01 crore has been transferred by Mr. Anuj Jain to his another Axis Bank account 911020029479389 from which ₹ 3.96 crore has been then transferred to the trading member Neer Ocean Multitrade Pvt. Ltd between December 30, 2015 to January 22, 2016. iv. From Table 2 it has been observed that the client Mr Anuj Jain has received funds from Ruchi Soya and same has been immediately transferred to the member Neer Ocean Multitrade Pvt. Ltd. v. The client Mr Anuj Jain had no position in Castor Seed Contracts prior to December 9, 2015 and has taken a long position of 5450 MT in Castor Seed Contracts as on December 9, 2015 which was increased to 14950 MT on December 10, 2015 and further increased to 16950 MT as on December 11, 2015. Prima facie, it has been observed that Mr Anuj Jain received funds to the tune of ₹ 9.5 crore from Ruchi Soya between December 3, 2015 - December 10, 2015 and of which ₹ 8 crore were paid to Neer Ocean Multitrade Pvt between December 9, 2015 - December 14, 2015 for trading and taking fresh positions in Castor Seed Contracts.

vi. Thus it has been prima facie observed that the Castor Seed Contract positions of the client, Mr. Anuj Jain were funded by Ruchi Soya. III. Sisne Polymers Pvt. Ltd. :- It has been prima facie observed that the client Sisne Polymers Pvt. Ltd. has taken substantial position in Castor Seed Contracts from December 01, 2015 onwards. Therefore SEBI analysed bank statements from December 01, 2015 to January 31, 2016. Observations from bank statement analysis (Dena Bank Account No. 112211023965 and Kotak Bank Account No. 2611260408) and trading activity of client are given below : Table 3 : Bank Statement analysis Kotak Bank Account No. 2611260408 Received from Transferred to Date Particulars Amt Date Particulars Amt Mid India Commodities Pvt. 02-Dec-15 Ltd. 5000000 02-Dec- Ruchi Soya Dena Bank Account 15 Industries Ltd 35000000 03-Dec-15 of Sisne Polymers 25000000 Dena Bank Account 05-Dec-15 of Sisne Polymers 7500000 07-Dec- Ruchi Soya Dena Bank Account 15 Industries Ltd 20000000 07-Dec-15 of Sisne Polymers 20000000 10-Dec- Ruchi Soya Dena Bank Account 15 Industries Ltd 25000000 10-Dec-15 of Sisne Polymers 24000000 Ruchi Soya Dena Bank Account 12-Jan-16 Industries Ltd 10000000 13-Jan-16 of Sisne Polymers 10000000 Ruchi Soya Dena Bank Account 14-Jan-16 Industries Ltd 10000000 14-Jan--16 of Sisne Polymers 11000000 Ruchi Soya Dena Bank Account 15-Jan-16 Industries Ltd 10000000 15-Jan-16 of Sisne Polymers 10000000 Dena Bank Account 16-Jan-16 of Sisne Polymers 8000000 Ruchi Soya Dena Bank Account 21-Jan-16 Industries Ltd 20000000 22-Jan-16 of Sisne Polymers 10000000 Table 4 : Bank Statement analysis Dena Bank Account No. 112211023965 Received from Transferred to Date Particulars Amt Date Particulars Amt Kotak Bank of Mid India 03-Dec- Sisne Commodities Pvt. 15 Polymers 25000000 03-Dec-15 Ltd. 23000000 Kotak Bank of Mid India 05-Dec- Sisne Commodities Pvt. 15 Polymers 7500000 05-Dec-15 Ltd. 7500000 Kotak Bank of Mid India 07-Dec- Sisne Commodities Pvt. 15 Polymers 20000000 07-Dec-15 Ltd. 19000000 10-Dec- Kotak Bank of Mid India 15 Sisne 24000000 10-Dec-15 Commodities Pvt. 23000000

Polymers Ltd. Kotak Bank of Mid India Sisne Commodities Pvt. 13-Jan-16 Polymers 10000000 13-Jan-16 Ltd. 9000000 Kotak Bank of Mid India Sisne Commodities Pvt. 14-Jan-16 Polymers 11000000 14-Jan-16 Ltd. 10000000 Kotak Bank of Mid India Sisne Commodities Pvt. 15-Jan-16 Polymers 10000000 15-Jan-16 Ltd. 11000000 Kotak Bank of Sisne 22-Jan-16 Mid India 17500000 16-Jan-16 Polymers 8000000 Commodities Pvt. Kotak Bank of Ltd. Sisne 22-Jan-16 Polymers 10000000 i. Sisne Polymers Pvt. Ltd. has received funds aggregating to ₹ 13 crore approximately from Ruchi Soya in its bank account no. 2611260408 with Kotak Bank, from which Sisne Polymers Pvt. Ltd. transferred ₹12.55 crore to his other bank account no. 112211023965 held with Dena Bank. Sisne Polymers Pvt. Ltd. finally transferred ₹ 50 lakhs from Kotak Bank account and ₹ 12 crore from Dena Bank account to the trading member, Mid India Commodities Pvt. Ltd. through which he has traded in Castor Seed Contracts. ii. From Table 3 and Table 4 it has been observed that the amounts received from Ruchi Soya has been transferred on the same or next day to the member, Mid India Commodities Pvt. Ltd. by the client through his two bank accounts. iii. The client initiated long positions of 670 MT as on November 30, 2015 which was increased to 5990 MT on December 1, 2015 and further increased to 11140 MT on December 2, 2015. Prima facie, it has been observed that the funds required to meet the margins in respect of the said positions has been met through the funds received from Ruchi Soya since December 02, 2015. iv. Thus it has been prima facie observed that the Castor Seed positions of the client, Sisne Polymers Pvt. Ltd. were funded by Ruchi Soya. IV. Stride Multitrade Pvt. Ltd. :- It has been prima facie observed that the client Stride Multitrade Pvt. Ltd. has been consistently holding long positions in Castor Seed Contracts from January 2015. Therefore SEBI analysed bank statements from January 01, 2015 to January 31, 2016. Observations from bank statement analysis (HDFC Bank Ltd. - Account No. 00600310002679) and trading activity of client are given below : Table 5 : Bank Statement analysis HDFC Bank Ltd. - Account No. 00600310002679 Received from Transferred to Date Particulars Amt Date Particulars Amt

Mid India Ruchi Soya Commodities Pvt 2-Jan-15 Industries Ltd 30000000 2-Jan-15 Ltd. 30000000 Mid India Ruchi Soya Commodities Pvt 19-Jan-15 Industries Ltd 45000000 19-Jan-15 Ltd. 45000000 Mid India Ruchi Soya Commodities Pvt 5-Feb-15 Industries Ltd 15000000 5-Feb-15 Ltd. 15000000 Mid India 10-Feb- Ruchi Soya 10-Feb- Commodities Pvt 15 Industries Ltd 20000000 15 Ltd. 20000000 Mid India 18-Feb- Ruchi Soya 18-Feb- Commodities Pvt 15 Industries Ltd 20000000 15 Ltd. 20000000 Mid India 24-Feb- Ruchi Soya 25-Feb- Commodities Pvt 15 Industries Ltd 20000000 15 Ltd. 20000000 Mid India Ruchi Soya Commodities Pvt 8-Apr-15 Industries Ltd 30000000 8-Apr-15 Ltd. 30000000 Mid India 25-May- Ruchi Soya 25-May- Commodities Pvt 15 Industries Ltd 35000000 15 Ltd. 35000000 Mid India 30-Dec- Ruchi Soya 30-Dec- Commodities Pvt 15 Industries Ltd 20000000 15 Ltd. 20000000 i. During the period on various instances Stride Multitrade Pvt. Ltd. received funds aggregating to around ₹23.50 crore from Ruchi Soya which has been fully transferred on the same day or next day to the member Mid India Commodities Pvt. Ltd. through which the client has traded and was holding positions in Castor Seed Contracts. ii. Stride Multitrade Pvt. Ltd. received ₹4.5 crore from Ruchi Soya on January 19, 2015 and transferred it to its member Mid India Commodities Pvt. Ltd. on the same day. The Long positions of Stride Multitrade increased from 5050 MT as on January 19, 2015 to 11590 MT on January 21, 2015 and further increased to 12000 MT on January 22, 2015. iii. Stride Multitrade Pvt. Ltd. has received an amount of ₹ 7.5 crores from Ruchi Soya in the month of February 2015 which were transferred to the member Mid India Commodities Pvt. Ltd immediately or on the next day. The long position of the client increased from 8830 MT as on February 12, 2015 to 12000 MT as on February 24, 2015. iv. Stride Multitrade Pvt. Ltd. has received an amount of ₹ 3.5 crores from Ruchi Soya on May 25, 2015 which were transferred to the member Mid India Commodities Pvt. Ltd on the same day. The long position of the client increased from 11950 MT as on May 20, 2015 to 15400 MT on May 28, 2015.

v. Thus it has been prima facie observed that the margin requirements in respect of the said Castor Seed positions of the client through the member Mid India Commodities Pvt. Ltd. has been funded by Ruchi Soya V. Bharat Food Co-operative Ltd:- It has been prima facie observed that the client Bharat Foods Co-operative Ltd. has been consistently holding long positions in Castor Seed Contracts. Observations from bank statement analysis (HDFC Bank- Account No. 02162320002297) and trading activity of client are given below : i. The client Bharat Foods Co-operative Ltd. has been consistently holding long positions in Castor Seed Contracts. ii. On October 14, 2015, Bharat Food Co-operative Ltd received ₹ 13 crore from Ruchi Soya and on the same day ₹ 5.50 crore was transferred to member, Investsmart Commodities Ltd. through which client was holding position in Castor Seed Contracts. iii. The client was allocated delivery in Castor Seed for 5780 MT on October 12, 2015. Thus it has been prima facie observed that the amount of ₹5.50 crore paid to the member, Investsmart Commodities Ltd. was towards pay-in obligation for the said deliveries in Castor Seed Contracts.

5. In view of the above, prima facie it has been observed that Ruchi Soya has provided funds to 5 clients for creating / maintaining open position on Long Side in Castor Seed Contract. Therefore, all 6 entities i.e. Ruchi Soya and 5 clients funded by Ruchi Soya (namely National Steel and Agro Industries Ltd., Mr. Anuj Jain, Sisne Polymers Pvt. Ltd., Bharat Food Co-operative Ltd. and Stride Multitrade Pvt. Ltd. ) are connected with each other and hereinafter referred to as 'Ruchi Group Entities'. Further, National Steel and Agro Industries is a Ruchi Group Company (as per website of Ruchi group). Independent Director Mr Navin Khandelwal is common to both National Steel and Agro Industries Ltd. and Ruchi Soya Industries Ltd. 6. Further, it has been prima facie observed that Ruchi Soya and 5 clients funded by Ruchi Soya were also among the top 15 clients on Long Side in Castor Seed February – 2016 Contract during the month of January 2016. Collectively, 'Ruchi Group Entities' were holding 111600 MT of Castor Seed position in February – 2016 out of total 283260 MT which was 39.39% of open position in February – 2016 Contract of Castor Seed (as on 27th January 2016) which in value terms was approximately to the tune of ₹ 340 crore.

Details of open interest position held by aforesaid 6 clients in Castor Seed February - 2016 Contract is as given below :

Table 6 : Open Position held by 'Ruchi Group Entities' in Castor Seed February – 2016 Contract as on 27 Jan, 2016 Long OI in Sr No Client Name Pan No MT 1 National Steel and Agro Industries Limited AAACN3548H 24130 2 Stride Multitrade Private Limited AAGCS5768N 23910 3 Ruchi Soya Industries Limited AAACR2892L 18930 4 Bharat Foods Co-Operative Limited AAAAB3160D 18660 5 Mr. Anuj Jain ABEPJ8083F 13080 6 Sisne Polymers Private Limited AAPCS4092L 12890 7. In view of the above, it has been prima facie observed that the manner in which Open Interest positions are held jointly by the 'Ruchi Group Entities' in Castor Seed Contracts suggests a "acting in concert" pattern and this combined with the fact that they collectively were holding a substantial open position, indicates a scenario which has a potential to disturb the market equilibrium and harm market integrity. Hence, open positions held by 'Ruchi Group Entities' are being treated as clubbed position in view of the fact that, it has been prima facie observed that though the position in Castor Seeds were taken by different clients through different Commodity Trading Members, there was a meeting of minds and intention to corner the market on Long Side in Castor Seed Contracts by 'Ruchi Group Entities'.

Further, Ruchi Soya Industries Limited has continuously provided the financial means / assistance to other clients for creating / maintaining position in Castor Seed Contracts whenever required by them. 8. Therefore above prima facie findings indicate that, 'Ruchi Group Entities' has traded in Castor Seed Contracts with a dubious plan and premeditated arrangement and artifice to corner /control the market on Long Side in Castor Seed Contracts. 9. Further, on account of clubbed position held by 'Ruchi Group Entities' in Castor Seed Contracts across different expiries it has been noticed that there were several continuous instances where position limit violations were observed. During the period of Jan 01, 2016 to Jan 27, 2016 (examination period indicated in aforesaid ex-parte ad interim order dated March 2, 2016), Client level position limit violations as prescribed by Forward Market Commission (hereinafter referred to as “FMC”) vide its circular FMC/3/2014/C/128 dated October 22, 2014 and FMC/3/2014/C/137 dated December 11, 2014 were observed on most of the trading days. Counts of position limit violations are given below and details placed as Annexure A : I. On 18 occasions 'Ruchi Group Entities' have violated commodity level client position limits as prescribed by FMC.

II. On 6 occasions 'Ruchi Group Entities' have violated near month client position limit as prescribed by FMC.

10. Further, out of the aforesaid 6 clients, 4 entities namely Stride Multitrade Pvt. Ltd., Bharat Foods Co-operative Limited, Mr Anuj Jain and Sisne Polymers Pvt. Ltd., were restrained from buying, selling or dealing in the securities market, either directly or indirectly, in any manner whatsoever, till further directions vide SEBI Ex Parte Ad Interim Order dated March 02, 2016 in matter of trading in Castor seed Contracts at NCDEX. The said order clearly demonstrates that the aforesaid 4 clients have failed to discharge their MTM obligation and have disturbed the market equilibrium. 11. Based on the above stated facts and analysis, I prima facie find that:  'Ruchi Group Entities' have taken huge long positions in Castor Seed Contracts and have violated the position limits prescribed by FMC.  There was a prior meeting of mind among 'Ruchi Group Entities' to form a cartel and execute their trades in Castor Seed Contracts.  'Ruchi Group Entities' have traded in Castor Seed Contracts with a dubious plan and premeditated arrangement and artifice to corner /control the market on Long Side in Castor Seed Contract.  'Ruchi Group Entities' have traded in such a manner and in high magnitude which has potential to disturb the market equilibrium and harm market integrity.

12. It is noted that the role of commodity derivative market is to provide price discovery and risk management to stakeholders in the market such as farmers, traders, exporters and consumers etc. and in this context the dominant position created by 'Ruchi Group Entities' in Castor Seed in a concealed manner, which was also in violation of prescribed limits for client level position, oblivious to other market participants has disturbed the market equilibrium and has thus harmed the market integrity. Also the dictum 'disturbing the market equilibrium' has a wide meaning and any such disturbance in commodity derivative markets may lead to disturbance in underlying physical market, as well. Therefore, in present case conduct of the aforesaid 6 entities holding 39.39% of total open interest in February-2016 Castor Seed Contract has to be seen in that context. 13. Considering the above facts and circumstances, I, prima facie, find that the acts and omissions of Ruchi Soya Industries Limited and National Steel and Agro Industries Limited has, not only disturbed market equilibrium, but also indicate manipulative and fraudulent design to form a cartel and corner the Castor Seed market.

I further, prima facie find that Ruchi Soya Industries Limited and National Steel and Agro Industries Limited being part of 'Ruchi Group Entities' have violated the position limits prescribed by FMC vide its circular FMC/3/2014/C/128 dated October 22, 2014 and FMC/3/2014/C/137 dated December 11, 2014. 14. I, therefore, prima facie find that Ruchi Soya Industries Limited and National Steel and Agro Industries Limited have contravened the provisions of the Securities and Exchange Board of India Act, 1992 (the SEBI Act) and have acted in fraudulent and deceitful manner which attracts prohibitions enshrined in section 12A(a), (b) and (c) of the SEBI Act and provisions of regulation 3(a) and (d) and regulation 4(1), 4(2)(a) and (g) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ('PFUTP Regulations') which read as following:- Section 12A of the SEBI Act- "Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control. 12A. No person shall directly or indirectly— (a) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made there under; (b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognized stock exchange; (c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognized stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;" PFUTP Regulations – "3.

Prohibition of certain dealings in securities No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner (b) ………………………………………………………………………………… (c) ………………………………………………………………………………… (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under." "4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:— (a) indulging in an act which creates false or misleading appearance of trading in the securities market;

…………………………………………………………………………………… (g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security; …………………………………………………………………………….…..…." 15. I am of the opinion that detailed investigation of entire scheme, plan, device and artifice employed by concerned entities is necessary. I further note that role of other 4 entities funded by Ruchi Soya Industries Limited i.e. Stride Multitrade Pvt. Ltd., Bharat Foods Co-operative Limited, Mr Anuj Jain and Sisne Polymers Pvt. Ltd. against whom SEBI already has passed an Ex Parte Ad Interim Order dated March 02, 2016 in matter of trading in Castor seed Contracts at NCDEX, may also be looked upon during investigation in this matter. The connected entities, acting in concert under a premeditated plan, have acquired dominant market share in Castor Seed Contracts traded at NCDEX. Their acts, conduct, behaviour and dealings connote a deceptive conduct designed to deceive or defraud market participants and by camouflaging /masking their actual position in Castor Seed, they have interfered with free market forces of supply and demand.

16. SEBI strives to safeguard and protect the interests of a genuine investor in the Indian securities market. It has been a point of concern when behaviour of few entities put entire market at systemic risk and disturbs the market equilibrium and integrity. Allowing the entities that are prima facie found to be involved in such fraudulent, unfair and manipulative transactions to continue to operate in the market would shake the confidence of the investors in the commodities market. Further, the fraudulent, manipulative and deceptive device, plan, device and artifice as prima facie found in this case, I am convinced that this is a fit case where, pending investigation, effective preventive and remedial action is required to be taken by way of ad interim ex-parte order to protect the interests of investors and preserve the safety and integrity of the securities market. 17. Therefore, in order to protect the interest of investors and the integrity of the securities market, I, in exercise of the powers conferred upon me by virtue of section 19 read with sections 11 and 11B of the SEBI Act, 1992, pending investigation, by way of this ad-interim ex-parte order restrain following clients from buying, selling or dealing in the securities market, either directly or indirectly, in any manner whatsoever, till further directions:

Sr. No. NAME PAN 1 Ruchi Soya Industries Limited AAACR2892L 2 National Steel and Agro Industries Limited AAACN3548H

18. The commodity exchanges, stock exchanges and the depositories are directed to ensure that the above directions are strictly enforced.

19. The above order is without prejudice the right of SEBI to take any other action that may be initiated against the abovementioned entities in accordance with law. 20. The entities against whom this order is being passed may file their objections, if any, within twenty one days from the date of this Order and, if they so desire, may avail themselves of an opportunity of personal hearing before the Securities and Exchange Board of India at its Head Office at SEBI Bhavan, C4-A, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai-400 051 on a specific request in this regard. 21. This order shall come into force with immediate effect.

Sd/- DATE: May 24th, 2016 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Annexure A On account of clubbed position held by 'Ruchi Group Entities' in Castor Seed Contracts across different expiries during the period of Jan 01, 2016 to Jan 27, 2016 (examination period indicated in aforesaid ex-parte ad interim order dated March 2, 2016), Client level position limit violations as prescribed by Forward Market Commission (hereinafter referred to as “FMC”) vide its circular FMC/3/2014/C/128 dated October 22, 2014 and FMC/3/2014/C/137 dated December 11, 2014 were observed on most of the trading days. Day wise details of position limit violations are as given below : On 18 occasions 'Ruchi Group Entities' have violated commodity level client position limits as prescribed by FMC. Details given below : Sr. Date Netted OI of Market OI 5% of Absolute OI Excess OI No. 'Ruchi Group (across Market OI Limit Qty Entities' (across contracts) (commodity contracts) level) 1 01/01/2016 94440 502220 25111 12000 69329 2 04/01/2016 96220 499010 24950 12000 71270 3 05/01/2016 99350 505910 25295 12000 74055 4 06/01/2016 105790 487310 24365 12000 81425 5 07/01/2016 105920 478200 23910 12000 82010 6 08/01/2016 106320 473610 23680 12000 82640 7 11/01/2016 107520 475410 23770 12000 83750 8 12/01/2016 106320 470130 23506 12000 178264 9 13/01/2016 105780 465980 23299 12000 82481 10 14/01/2016 105800 470980 23549 12000 82251 11 15/01/2016 105780 475840 23792 12000 81988 12 18/01/2016 105650 460890 23044 12000 82606 13 19/01/2016 105760 465850 23292 12000 82468 14 20/01/2016 104080 450390 22519 12000 81561 15 21/01/2016 103580 447890 22394 12000 81186 16 22/01/2016 103290 450060 22503 12000 80787 17 25/01/2016 102770 444040 22202 12000 80568 18 27/01/2016 82690 434602 21730 12000 60960

On 6 occasions 'Ruchi Group Entities' have violated near month client position limit as prescribed by FMC. Details given below : Sr. Date Netted OI of Market OI 5% of Absolute OI Excess OI No. 'Ruchi Group (near month Market OI Limit (near Qty Entities' (near contract) month) month contract) 1 01/01/2016 12690 203620 10181 6000 2509 2 04/01/2016 12690 198800 9940 6000 2750 3 05/01/2016 13040 200020 10001 6000 3039 4 06/01/2016 14270 174970 8748 6000 5522 5 07/01/2016 14080 163410 8170 6000 5910 6 08/01/2016 10930 129110 6455 6000 4475