Revocation order in the matter of Kavit Industries Ltd

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”), in the interest of investors, vide its letter dated August 7, 2017 to Stock Exchanges, took the pre-emptive interim measures under section 11(1) of SEBI Act, 1992, in respect of listed companies notified as shell companies by Ministry of Corporate Affairs (hereinafter referred to as “MCA”) including M/s Kavit Industries Limited (hereinafter referred to as “KIL” / “Company”). SEBI placed trading restrictions, including on the promoters/directors so

Order in the matter of M/s Kavit Industries Limited that they do not exit the company at the cost of innocent shareholders. In view of the said objective, SEBI vide the said letter dated August 7, 2017 also placed the scrip in the trade to trade category with limitation on the frequency of trade and imposed a limitation on the buyer by way of 200% deposit on the trade value, so as to alert them trading in the scrip. The said measures were initiated by SEBI pending final determination after verification of credentials and fundamentals by the exchanges, including by way of audit and forensic audit if necessary. The measures also envisaged, on final determination, delisting of companies from the stock exchange, if warranted. By virtue of these measure, trading in the scrip was not suspended but allowed under strict monitoring so that investors could take informed investment decisions, till SEBI and Exchanges completed their detailed examination of such companies.

2. Aggrieved by the aforesaid letter dated August 7, 2017 issued by SEBI, KIL filed an appeal No. 176 of 2017 before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”). The Hon’ble SAT vide order dated August 11, 2017 had granted stay to KIL and directed stock exchanges to reverse their decision in respect of KIL as expeditiously as possible and also directed SEBI to dispose of KIL representation in accordance of law. Hon’ble SAT also held that the said order shall not come in the way of SEBI as well as the stock exchanges to investigate the case of KIL and initiate proceedings if deemed fit.

3. Thereafter, SEBI vide Interim Order dated September 04, 2017 (hereinafter referred to as “Interim Order”), had modified, subject to para 30(iv) of the interim order, the actions envisaged in SEBI’s letter dated August 07, 2017 and the consequential actions taken by Stock Exchanges, against M/s Kavit Industries Limited as under:

(i) The trading in securities of KIL shall be reverted to XT group of BSE with applicable price band in trade to trade category. (ii) Exchange shall appoint an independent auditor to conduct forensic audit of KIL for verification, including the credentials/financials of KIL.

Order in the matter of M/s Kavit Industries Limited (iii) The promoters and directors in KIL are permitted only to buy the securities of KIL. The shares held by the promoters and directors in KIL shall not be allowed to be transferred for sale, by depositories. (iv) The other actions envisaged in SEBI’s letter dated August 07, 2017 in para 1 (d) as may be applicable, and the consequential action taken by Stock Exchanges shall continue to have effect against M/s Kavit Industries Limited

4. SEBI vide order dated February 28, 2018 (hereinafter referred to as “Confirmatory Order”) had confirmed the directions mentioned in the interim order dated September 04, 2017 against KIL and its promoters and directors.

5. Pursuant to the interim order and confirmatory order, BSE conducted a forensic audit in the matter of KIL to ascertain the violation of securities laws by KIL and its promoters and directors. BSE vide letter dated May 25, 2018 had forwarded the forensic audit report in the matter of KIL to SEBI. Thereafter various communications were exchanged between SEBI and BSE. SEBI received final forensic audit report alongwith supporting documents on June 21, 2018.

6. Upon completion of forensic audit by BSE and subsequent receipt of forensic audit report and supporting papers by SEBI, no evidence / supporting documents were found to substantiate the role of promoters namely Shree Saibaba Exim Private Limited, Raghuvir International Private Limited, Jaysurya Gases Ltd, Jagdish R Thakkar, Thakkar Kokila H, Hashmukhbhai Dhanjibhai Thakkar, Hansaben Jaswantbhai Thakkar, Mitul Jagdishbhai Thakkar, Santosh Kahar, Patel Bharatbhai Limjibhai, Somabhai S Thakkar, Jaswant Raichand Thakkar and Artiben Jayeshbhai Thakkar (13 promoter entities) with respect to misuse / misrepresentation in financials of KIL. Hence, violation of provisions of securities laws were not observed in respect of the said 13 promoter entities. I note that none of the said 13 entities were directors of KIL.

7. Considering the fact that there are no adverse findings against the aforementioned 13

Order in the matter of M/s Kavit Industries Limited promoter entities with respect to their role in misuse / misrepresentation in financials of KIL, I am of the considered view that the directions issued against them vide interim order dated September 04, 2017 which were confirmed vide order dated February 28, 2018 qua the aforementioned 13 promoter entities need not be continued.

8. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11, 11(4) and 11B of the SEBI Act, hereby revoke the direction issued vide interim order dated September 04, 2017 and confirmatory order dated February 28, 2018 qua below mentioned 13 promoter entities with immediate effect:

Sl. No. NAME PAN 1 Shree Saibaba Exim Private Limited AATCS6800N 2 Raghuvir International Private Limited AAGCR6132F 3 Jaysurya Gases Ltd AAACJ9797N 4 Jagdish R Thakkar AAVPT9901A 5 Thakkar Kokila H AFEPT1146H 6 Hashmukhbhai Dhanjibhai Thakkar ABLPT4221E 7 Hansaben Jaswantbhai Thakkar ABKPT5167A 8 Mitul Jagdishbhai Thakkar ADJPT6974G 9 Santosh Kahar ASVPK7560J 10 Patel Bharatbhai Limjibhai ALDPP1518Q 11 Somabhai S Thakkar AAQPT8887L 12 Jaswant Raichand Thakkar AAQPT8875L 13 Artiben Jayeshbhai Thakkar AAUPT5643E

9. The revocation of the directions issued is only in respect of the 13 promoter entities mentioned at paragraph 8 of this order in the matter of KIL. As regards to remaining entities in the matter of KIL, violations under Securities Laws were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide interim order dated September 04, 2017 as confirmed vide order dated February 28, 2018 against remaining entities shall continue.

Order in the matter of M/s Kavit Industries Limited

10. Copy of this Order shall be forwarded to the recognized stock exchanges for information and necessary action.

11. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs and Serious Fraud Investigation Office for their information.

-Sd- DATE: JULY 18, 2018 MADHABI PURI BUCH PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Order in the matter of M/s Kavit Industries Limited