Order under sections 11(1), 11(4)(d) and 11B of the SEBI Act, 1992 in the matter of trading by certain entities in the scrip of Polar Pharma India Ltd.[SAT Appeal No.:08/2016]

WTM/PS/147/IVD/FEB/2016 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 In the matter of Polar Pharma India Limited In respect of - S. No. Name Permanent Account Number 1. DPK Stock and Securities AACHB9339M 2. Shivam Investments ABMPK8540Q 3. Caps Finstock Services Pvt. Limited AAACC4192J 4. Peeyush Agarwal AACPA6470C 5. AJC Securities & Fin. Pvt. Limited AABCA1253B 6. Supreme Lease Finvest Pvt. Limited AABCS8098J 7. Shailja Investments Limited AAACS3302E 8. Kanhai Commodity Intermediaries Pvt. AACCK3363K Limited (now known as Omkam Commodities Pvt. Ltd.)

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) conducted an investigation into the scrip of Polar Pharma India Limited (hereinafter referred to as ‘PPL’ or ‘the Company’) for the period of July 04, 2005 to September 13, 2005 (hereinafter referred to as ‘the investigation period’). PPL is a pharmaceutical company with registered office at Plot No. 3, Somnathpur Industrial Estate, P.O. Remuna, Dist. Balasore, Orissa – 756 019. The scrip of the Company was listed on the Bombay Stock Exchange Limited (hereinafter referred to as ‘BSE’), Calcutta Stock Exchange and Bhubaneswar Stock Exchange. However, the scrip was traded at BSE, during the period of investigation.

2. The investigation was conducted in order to inter alia ascertain the possible violation of the provisions of the SEBI Act, 1992 (hereinafter referred to as SEBI Act) and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. The price of the scrip, during the relevant period at BSE had increased from ₹17.50 as on July 04, 2005 to ₹65.55 as on September 13, 2005, registering thereby an increase of ₹48.05 (i.e. about 274.57%).

3. During the period of investigation, the entities/ persons namely DPK Stock & Securities (DPK), Shivam Investments (Shivam), Caps Finstock Services Pvt. Limited (Caps), Mr. Peeyush Agarwal, AJC Securities & Fin. Pvt. Limited (AJC), Supreme Lease Finvest Pvt. Limited (Supreme), Shailja Investments Limited (Shailija) and Kanhai Commodity Intermediaries Pvt. Limited (Kanhai) (hereinafter collectively referred to as ‘suspected entities’) had traded actively in the scrip of PPL. DPK Stock & Securities (prop. Mr. D.K. Kapur) was found to be the highest buyer in the scrip of PPL who had purchased 2,38,849 shares (i.e. 8.33% to the total market volume). The highest seller in the scrip was Mr. Peeyush Agarwal who had sold 3,95,000 shares (i.e. 13.77% of total market volume) during the relevant period.

4. The suspected entities were found connected to each other and also with PPL. The details of their connections are discussed below:- Table A S.No. Name of Linkages Entity 1. DPK Proprietorship firm of Mr. D.K. Kapur (HUF). 2. Caps The directors during investigation period were Mr. D.K. Kapur and his wife Ms. Sushma Kapur 3. AJC The directors during investigation period were Mr. D.K. Kapur and his wife Ms.Sushma Kapur 4. Shivam This is proprietorship firm of Ms. Sushma Kapur wife of Mr. D.K. Kapur 5. Supreme The directors during investigation period were Mr. D.K. Kapur and his wife Mrs.Sushma Kapur. 6. Peeyush a. Mr. Peeyush Agarwal is former director of PPL who resigned on October Agarwal 28, 2004. 7. Kanhai b. Mr. Peeyush Agarwal had financial dealings with a company of Mr. D.K. Kapur (namely APM Financial Consultants P. Ltd.) in 2005. c. Off-market transfer of PPL shares by Mr. Peeyush Agarwal and/or its group companies to promoters of PPL during 2005. 8. Shailja a. This is an entity of Mr. Ramesh Kumar Jain, who was the director in the group companies of PPL during 1990-2002. b. There was financial dealings between promoters of PPL and Shailja Investments Ltd. & its group entities during July 2005. 5. During the investigation period, the trading activity of the suspected entities in the scrip of Polar was as under :

Table B Name of entity Gross Buy Gross buy qty. Gross Sell Gross sell qty. Net buy Qty. as % of mkt. Qty. as % of mkt. (sell) qty. AJC 1,92,729 6.72 1,22,839 4.28 69,890 Caps 2,86,978 10.01 204,447 7.13 82,531 Shivam 2,33,330 8.13 104,295 3.63 1,29,035 Supreme 1,77,873 6.21 91,848 3.2 86,025 DPK 2,38,849 8.33 175,425 6.12 63,424 Peeyush Agarwal 0 0 395,000 13.78 -3,95,000 Kanhai 0 0 64,100 2.24 -64,100 Shailja 1,42,361 4.96 11,000 0.38 1,31,361 Total 12,72,120 44.37 11,68,954 40.77 1,03,166 From the table above, it is observed that during the period of investigation the suspected entities had bought 44.37% i.e. 12,72,120 shares and sold 40.77% i.e. 11,68,954 shares, of the total traded volume at BSE. It has been revealed that out of the total buy of 12,72,120 shares and sale of 11,68,954 shares by the suspected entities, the trades for 8,45,844 shares were among the suspected entities only. The total trading by the suspected entities among themselves has been found to be 29.49% of the market volume during the period of investigation.

Considering the above, it can be inferred that the major trading in the scrip of PPL during the relevant period was being done by the suspected entities and such trading had allegedly contributed to the trading volume in the scrip of PPL.

6. It has also been revealed that the suspected entities had traded in the scrip of PPL in a synchronized manner (wherein the buy/ sell order quantity and rates were identical and the orders for the same were placed within a time gap of 60 seconds) for a total quantity of 2,44,540 shares (i.e. 8.52% of the market volume) during the period of investigation. A sample of such trading is reproduced below: Table C Buyer Seller Trade Time Buy Order Sell Order Trade Buy Sell Trade Sell Buy Time Price Qty. Name Name Time Time Price Order Order Qty. Order Order Diff. Diff. Diff. Price Price Qty. Qty. DPK Peeyush 11:45:36 11:45:36 AM 11:45:29 AM 47 47 47 5000 5000 5000 0:00:07 0 0 Stocks Agarwal 11:45:47 11:45:46 AM 11:45:45 AM 47 47 47 5000 5000 5000 0:00:01 0 0 and 11:46:04 11:45:58 AM 11:46:03 AM 47 47 47 5000 5000 5000 0:00:05 0 0 Securitie 11:46:27 11:46:20 AM 11:46:27 AM 47.05 47.05 47.05 5000 5000 5000 0:00:07 0 0 s 13:15:33 1:15:31 PM 1:15:33 PM 47.05 47.05 47.05 5000 5000 5000 0:00:02 0 0

The synchronized trades by the suspected entities represented 8.52% of the total market volume and 28.90% of the total quantity traded amongst the suspected entities. A summary of such trades is as under: Table D Synchronized trades executed amongst the suspected entities Seller→ AJC Caps DPK Peeyush Supreme Total as buyer Buyer↓ Agarwal (No. of trades) (No. of days), (Synchronized Qty.), (% of Synchronized Volume to Market Volume) AJC (0), (0), 0, (0) (0), (0), 0, (0) (2), (1), (10000), (1), (1), (5000) (1), (1), (400) (4), (3), (15400) (0.35%) (0.17%) (0.01%) (0.54%) Caps (1), (1), (350), (1), (1), (890), (6), (4), (20500), (8), (3), (40000), (0), (0), 0, (0), (16), (8), (61740), (0.01%) (0.03%) (0.71%), (1.40%) (2.15%) DPK (0), (0), 0, (0) (4), (1), (17500), (0), (0), 0, (0) (16), (5), (94900), (0), (0), 0, (0) (20), (6), (112400), (0.61%) (3.31%) (3.92%) Shivam (0), (0), 0, (0) (6), (2), (15000), (0), (0), 0, (0) (8), (3), (40000), (0), (0), 0, (0) (19), (5), (55000), (0.52%) (1.40%) (2.12%) Total as (1), (1), (350), (11), (4), (33390), (8), (5), (30500), (33), (8), (179900), (1), (1), (400), (59), (22), Seller (0.01%) (1.16%) (1.06%) (6.27%) (0.01%) (244540), (8.52%) From the table above, it can be observed that the suspected entities were involved in the creation of artificial volume by indulging in synchronized trading for more than one day.

7. The investigation also observed that the suspected entities had contributed to the price rise in the scrip of PPL during the investigation period. The following table shows the contribution of suspected entities (on buy side) in positive LTP: Table E Contribution to Positive LTP by suspected entities Name All Trades LTP > 0 LTP < 0 LTP = 0 % of positive LTP to total Net Qty. No. of LTP Qty. No. of LTP Qty. No. of Qty No. of mkt. positive LTP traded trades impact traded trades impact traded trades traded trades LTP Shailja 28.2 1,42,361 277 36.65 42,054 93 -8.45 8,934 18 91,373 165 7.71 Caps 3.95 2,86,978 368 35.15 64,275 84 -31.2 61,804 121 1,60,899 163 7.40 AJC 11.7 1,92,729 232 25.15 64,187 73 -13.45 29,156 66 99,386 94 5.29 Supreme 10.25 1,77,873 255 24.2 65,715 70 -13.95 11,937 58 1,00,221 127 5.09 DPK 11.15 2,38,849 122 13.05 55,502 32 -1.9 55,200 8 1,28,147 82 2.75 Shivam -2.95 2,33,330 128 7.05 56,041 24 -10 43,556 25 1,33,733 79 1.48 Total of 62.3 12,72,120 1,382 141.25 3,47,774 376 -78.95 2,10,587 296 7,13,759 710 29.73 group Total 44.05 28,67,344 5,156 475.05 6,91,833 1,301 -431 4,74,092 1,112 1,701,419 2,743 Market

It can be observed that the suspected entities had contributed ₹141.25 in positive LTP (i.e. 29.73% of the total positive LTP) in the market and their net LTP contribution was ₹62.30.

8. Gains: Based on the analysis as given above, it is noted that the suspected entities had traded substantially amongst themselves, created artificial volume in the market and also contributed to the positive LTP and manipulated the price and volume in the scrip of PIL. In the process, the persons/ entities also made unlawful gains which has been calculated and given hereunder: Table F Statement showing the profits made by the suspected persons/entities while trading in the shares of PPL: Name of Entity Buy Qty. Weighted Sell Qty. Weighted Remaining Calculations Gain Average Average or excess (Amount in buy price sell price shares ₹)

DPK Stocks and Securities 2,38,849 53.12 1,75,425 57.19 63,424 [(D*E)+(F*61.55)]-B*C 12,48,644 Caps Finstock Services P.Ltd. 2,86,978 57.51 2,04,447 58.79 82,531 [(D*E)+(F*61.55)]-B*C 5,95,117 AJC Securities & Fin. P.Ltd. 1,92,729 57.85 1,22,839 59.23 69,890 [(D*E)+(F*61.55)]-B*C 4,28,111 Shivam Investments 2,33,330 51.54 1,04,295 55.82 1,29,035 [(D*E)+(F*61.55)]-B*C 17,38,023 Supreme Lease Finvest P. Ltd. 1,77,873 59.22 91,848 58.7 86,025 [(D*E)+(F*61.55)]-B*C 1,52,677 Peeyush Agarwal 0 0 3,95,000 50.9 3,95,000 (D*E)-[(B*C)+F*17.5)] 1,31,93,000 Kanhai Commodity 0 0 64,100 44.81 64,100 (D*E)-[(B*C)+F*17.5)] 17,50,571 Intermediaries P.Ltd. Shailja Investments Ltd. 1,42,361 38.03 11,175 46.12 1,31,186 (D*E)+(F*61.55)-B*C 31,75,900 Total 2,22,82,044 The opening price of the scrip of PPL on the first day of the investigation period was ₹17.50 and the closing price on the last day of the investigation period was ₹61.55. For the calculation of the alleged unlawful gains, these figures have been reckoned. From the above calculation, it is observed that the combined unlawful gains made by the suspected entities from such trading was about ₹2,22,82,044.

9. As the alleged gains were made during the year 2005, it becomes reasonable and necessary to levy an interest at the rate of 12% simple interest per annum. A summary of the gains along with the interest is as under: Table G Name of Entity PAN Gain (in ₹) Interest 12% p.a.** Total (₹) DPK Stocks and Securities AACHB9339M 12,48,644 15,73,292 28,21,936 Caps Finstock Services Pvt. AAACC4192J 5,95,117 7,49,848 13.44,965 Limited

AJC Securities & Fin. Pvt. Ltd. AABCA1253B 4,28,111 5,39,420 9,67,530 Shivam Investments ABMPK8540Q 17,38,023 21,89,909 39,27,932 Supreme Lease Finvest Pvt. AABCS8098J 1,52,677 1,92,373 3,45,051 Limited Peeyush Agarwal AACPA6470C 1,31,93,000 1,66,23,180 2,98,16,180 Kanhai Commodity AACCK3363K 17,50,571 22,05,719 39,56,290 Intermediaries Pvt. Limited (now Omkam Commodities P. Ltd.) Shailja Investments Ltd. AAACS3302E 31,75,900 40,01,635 71,77,535 Total 2,22,82,044 2,80,75,375 5,03,57,419 ** Interest calculated on illegal gains from 01/08/2005 till 31/01/2016 From the above table, it can be observed that the alleged illegal profits made by the above entities/ persons stands at ₹5.03 crore (i.e. gains + interest) through trading in the scrip of PPL.

10. Considering the facts and circumstances of the case, the balance of convenience lies in favour of SEBI. With the initiation of investigation and quasi-judicial proceedings, it is possible that entities/ persons herein may divert the unlawful gains (subject to the adjudication of the allegation on the merits in the final order), which may result in defeating the effective implementation of the direction of disgorgement, if any to be passed after adjudication on merits. Non-interference by the Regulator at this stage would therefore result in irreparable injury to interests of the securities market and the investors.

11. Accordingly, as an interim measure, an ad-interim ex-parte Order for impounding such alleged gains under Section 11(4)(d) of the Securities and Exchange Board of India Act, 1992 needs to be issued against the following: Table H

S. No. Entity name PAN 1 DPK Stock and Securities AACHB9339M 2 Shivam Investments ABMPK8540Q 3 Caps Finstock Services Pvt. Limited AAACC4192J 4 Peeyush Agarwal AACPA6470C 5 AJC Securities & Fin. Pvt. Limited AABCA1253B 6 Supreme Lease Finvest Pvt. Limited AABCS8098J 7 Shailja Investments Limited AAACS3302E 8 Kanhai Commodity Intermediaries Pvt. Limited AACCK3363K (now Omkam Commodities Pvt. Limited)

12. In view of the foregoing, I, in exercise of the powers conferred upon me by virtue of Section 19 read with Sections 11(1), 11(4)(d) and 11(B) of the SEBI Act, 1992, hereby order to impound the alleged unlawful gains of a sum of ₹5,03,57,419 (alleged gain of ₹2,22,82,044 + interest of ₹2,80,75,375 from August 01, 2005 to January 31, 2015), jointly and severally from the persons tabulated in the paragraph above. If the funds are found to be insufficient to meet the figure of unlawful gains, as directed above, then the securities lying in the demat account of these persons shall be frozen to the extent of the remaining value.

13. The Banks and Depositories are directed that no debits shall be made, without permission of SEBI, in respect of the bank accounts and demat accounts, held jointly or severally, by all the entities/ persons tabulated in paragraph 12 above. The Banks and the Depositories are directed to ensure that all the above directions are strictly enforced. However, credits, if any, into the accounts maybe allowed.

14. The entities/ persons tabulated in paragraph 12 above are also directed not to dispose off or alienate any of their assets/properties/securities, till such time the amounts mentioned in paragraph 12 are credited to an escrow account [‘Escrow Account in Compliance with SEBI Order dated February 02, 2016 - A/c (in the name of the respective persons/ entities)’] created specifically for the purpose in a Nationalized Bank. The escrow account/s shall create a lien in favour of SEBI and the monies kept therein shall not be released without permission from SEBI. On production of proof by any of the persons, mentioned in paragraph 11, that the said money is deposited in the escrow account, SEBI shall communicate to the Banks and Depositories to defreeze the accounts.

15. Further, the entities/ persons tabulated in paragraph 11 above are directed to provide, within 7 days of this order, a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/ securities, if held in physical form and details of companies in which they hold substantial or controlling interest.

16. The above directions shall come into force with immediate effect.

17. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against the 15 persons covered under this Order, in accordance with law. The persons against whom this Order has been passed may file their replies to SEBI within 21 days from the date of receipt of this order, if they so desire. They may also indicate in their replies whether they wish to avail an opportunity of personal hearing in the matter.

Date: February 02, 2016 PRASHANT SARAN Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA