Order in respect of Bharatiya Global Infomedia Ltd., its directors and Manager(Finance) in the matter of IPO of Bharatiya Global Infomedia Ltd

WTM/PS/11/IVD/ID-06/OCT/2012 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER IN THE MATTER OF BHARATIYA GLOBAL INFOMEDIA LIMITED In respect of Bharatiya Global Infomedia Limited, Mr. Rakesh Bhatia, Ms. Arti Bhatia, Mr. Sanjeev Kumar Mittal, Mr. Anil Kapoor, Mr. Sanjay Kapoor, Mr. Harjeet Anand, Ms. Jaya Mishra and Mr. Rajeev Kumar Agarwal Date of hearing: 22 March, 2012 Appearances: For Noticee: Mr. R.S. Loona, Advocate Mr. Ankur Loona, Advocate Ms. Roochi Hitengdi, Advocate Mr. Sanjeev Mittal, Director, Bharatiya Global Infomedia Limited For SEBI: Mr. Biswajit Chaudhary, Deputy General Manager Ms. Geetha G, Deputy Legal Adviser Mr. Sugadev Chinnakannu, Assistant General Manager Mr. Priyam Ray, Assistant Legal Adviser ORDER UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') upon noticing wide fluctuations in the price of the scrip of Bharatiya Global Infomedia Limited (hereinafter referred to as 'BGIL') initiated a preliminary investigation. BGIL came out with an Initial Public Offering (hereinafter referred to as 'IPO') during the period of July 11, 2011 to July 14, 2011. The preliminary investigation inter alia revealed that the proceeds of the IPO of BGIL were transferred to various entities with a likely purpose of siphoning off and/ or diversion of funds. It was prima facie revealed that BGIL had suppressed material facts in the offer document like utilization of IPO proceeds, payment for Inter Corporate Deposits (hereinafter referred to as 'ICD'), payment to vendors etc.

2. Based on the preliminary findings, SEBI, vide an ad interim ex-parte order dated December 28, 2011 (hereinafter referred to as the 'interim order') inter alia prohibited

BGIL, its directors namely Mr. Rakesh Bhatia, Ms. Arti Bhatia, Mr. Sanjeev Kumar Mittal, Mr. Anil Kapoor, Mr. Sanjay Kapoor, Mr. Harjeet Anand, Ms. Jaya Mishra and its Manager (Finance) Rajeev Kumar Agarwal (hereinafter collectively referred to as ‘the persons/ entities’ and individually by their respective names) from buying, selling or dealing in the securities market in any manner whatsoever, till further directions. The interim order also prohibited BGIL from raising any further capital from the securities market, in any manner whatsoever, till further directions and directed it to call back the ICDs of `. 12.5 crore invested by it with Nihita Financials Limited, Sanjukta Vanijya Pvt. Limited and Darshan Tradelink Pvt. Limited and all amounts transferred/ paid out of IPO proceeds to its directors or relatives of its directors or HUFs belonging to any of its directors or associate or subsidiaries or group companies. It was also directed that these amounts together with all of the IPO proceeds that are still lying unutilized with the company across all its bank/ deposit accounts or any investments including that in mutual funds, shall be deposited in an interest bearing escrow account with a scheduled commercial bank, till further orders. The persons/ entities against whom the interim order was issued, were advised that they may file their objections, if any, within twenty one (21) days from the date of the said order and also avail of opportunities of personal hearing, if they so desire.

3. Pursuant to the passing of the interim order, BGIL vide its letter dated January 03, 2012 sought certain guidance from SEBI relating to the said order. Thereafter, vide letter dated January 18, 2012, BGIL sought extension of time for submitting reply/ objections., BGIL submitted its reply/ objections vide letter dated January 23, 2012, which was taken on record. The Manager (Finance) of BGIL also submitted objections on behalf of himself and all the directors of BGIL vide another letter dated January 23, 2012 and said that they inter alia agreed with the submissions of BGIL. The submissions in brief are as under:

a. BGIL had utilized a total of `.17.62 crores in accordance with the declared objects of the IPO. b. The Inter Corporate Deposits (hereinafter referred to as 'ICD') raised by BGIL to the tune of `.7 crores before the date of Red Herring Prospectus (hereinafter referred to as 'RHP') were as per the objects of the IPO and were duly approved by the company's

Audit Committee. Further, all the payments made to the suppliers/ vendors out of the ICD proceeds were in accordance with the objects of the IPO declared in the offer document. c. The ICD proceeds were utilized towards the objects of the IPO and for making timely payments to the supplier/ vendors which resulted in substantial savings. The new vendors/ suppliers enjoy high credentials and had provided better delivery terms along with the warranty support and assured quality of the product. d. As regards, the utilization of idle IPO funds to the tune of `.12.5 crores for investment in ICDs, BGIL has stated that it was authorized to temporarily invest this in high quality interest bearing liquid instruments in accordance with the investment policies approved by the board of the company. The liabilities of BGIL had never increased substantially as a result of monies being raised in the form of ICDs and compared to the current liabilities as on March 31, 2011. e. The interest payable on the said ICDs has not been paid till date as BGIL had sought reduction of rate of interest. f. BGIL has submitted that any inconsistency in the information provided by it to SEBI was inadvertent in nature without the intention to mislead or conceal any information. g. All the properties acquired by BGIL were through transparent deals after the approvals from the Audit Committee of the Board of BGIL.

Even if, any property has been acquired at a location not mentioned in the RHP, the same has been done keeping in mind the best interests of the business of the company. h. The details pertaining to Gadeo Electronics in which Ms. Richa Mittal is a major partner were duly disclosed in the prospectus. BGIL has denied that Jupiter Infraenergy Limited is its related entity. BGIL has also denied that it did not disclose the group/ associated companies in relation to Mr. Rakesh Bhatia, one of the directors. The Company has stated that Mr. Bhatia’s association with any such company was long time ago when such disclosures under the SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2009 were not required. i. The inferences drawn against BGIL based on the background of its CMD, Mr. Rakesh Bhatia are baseless. j. The persons/ entities had availed the services of expert professionals including the Book Running Lead Manager and auditors to whom all relevant information and documents were provided for the purpose of making adequate disclosures in the offer documents. k. Out of the 7 directors of BGIL impleaded in the interim order, 4 are independent dirctors who are accomplished professionals/ personalities in their respective fields and were not concerned with the day to day management of the company.

Further, the directors and Manager (Finance) of BGIL has been performing the duties towards the company, in their respective professional capacities with utmost diligence and care.

4. Opportunities of personal hearing were granted to the persons/ entities on March 22, 2012. On the date scheduled for the hearing, Mr. R.S. Loona, Advocate, Mr. Ankur Loona, Advocate, Ms. Roochi Hitengdi, Advocate and Mr. Sanjeev Mittal, Director, BGIL appeared for the persons/ entities and made submissions. Thereafter, BGIL vide its letter dated June 20, 2012 submitted certain additional documents in support of its submissions made during the course of hearing.

5. I have carefully considered the replies/ objections filed by the persons/ entities, the submissions made on their behalf during the personal hearing and the relevant material available on record. The limited issue to be considered and decided in this order is whether, based on the material available on record and after considering the submissions made by the persons/ entities, the directions issued by SEBI vide the interim order needs to be continued, revoked or modified in any manner, in so far as it relates to the persons/ entities herein.

6. I note that BGIL had utilized a part of the IPO proceeds under the heads not specified in the RHP and for paying the vendors other than those disclosed in the RHP. BGIL also raised ICDs between the date of RHP and the date of allotment of IPO shares. I note that such ICDs were prima facie in the nature of financial arrangement to be repaid out of the IPO proceeds and incurred liabilities for the company. BGIL has not disputed these facts and has only submitted that the said investments/ utilization have been done keeping in mind the betterment of the business of BGIL and were done with the approval from its Board of Directors. As regards the interest component on the ICDs raised by BGIL, I note the submission of the company that it had sought reduction of the interest from the respective entities. However, pursuant to this, no update can be seen from the records available. The interim order has also pointed out omissions on the part of BGIL in respect of disclosures made regarding the relatives of the directors of the company. BGIL had also submitted a list of 25 other names, which is subsequent to the RHP and the prospectus. It is seen that BGIL had submitted varying explanations while providing the details of the amount debited from IPO proceeds. I note that all these facts and the submissions made by the persons/ entities require independent verification.

7. The prima facie conduct of BGIL as described in detail in the interim order is not in tune with the standards to be followed by a corporate entity who raises funds from the investors through the process of an IPO.

8. I note that the investigation in the matter is still in progress and the findings thereof would reveal the specific role of the persons/ entities in the dealings in the IPO of BGIL. I note that the directions issued vide the interim order are interim in nature and were issued on the basis of prima facie observations. Thus, at the present stage, I am of the considered view that it would not be appropriate to give any conclusive findings as to any fact or submissions made by the persons/ entities. It is to be noted that the activities of the persons/ entities were found to be prima facie in violation of the provisions of the SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2009, SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 read with the SEBI Act, 1992 as mentioned in the interim order.

9. I also note that BGIL has failed to call back the ICDs of `.12.5 crore together with all of the IPO proceeds lying unutilized with the company and deposit these in an interest bearing escrow account with a scheduled commercial bank. It is seen that as on March 20, 2012, the BGIL has only deposited a sum of `. 47.37 lacs.

10. Therefore, I do not find it fit to modify/ revoke the ad interim directions issued vide Order dated December 28, 2011, till the completion of investigation in the matter. I am convinced that the directions in the interim order in respect of the persons/ entities need to be continued. Needless to say, the same would be reviewed after the conclusion of investigation.

11. In view of the foregoing, I, in exercise of the powers conferred upon me in terms of Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11(1), 11(4) and 11B thereof, hereby confirm the directions issued against Bharatiya Global Infomedia Limited, Mr. Rakesh Bhatia, Ms. Arti Bhatia, Mr. Sanjeev Kumar Mittal, Mr. Anil Kapoor, Mr. Sanjay Kapoor, Mr. Harjeet Anand, Ms. Jaya Mishra and Rajeev Kumar Agarwal vide the ex-parte ad interim Order dated December 28, 2011.

PLACE: MUMBAI PRASHANT SARAN DATE: 5/OCTOBER/2012 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA