Investigation IN THE Matter OF Market Manipulation Using GDR Issues

Annexure 2
INVESTIGATION REPORT IN THE MATTER OF MARKET

MANIPULATION USING GDR ISSUES.
Contents
Contents ..................................................................................................................................... 1
Background ................................................................................................................................. 4
PART 1 - SCHEME OF MANIPULATION OF INDIAN MARKETS USING GDRS BY ARUN
PANCHARIYA ............................................................................................................................... 6
Definitions .................................................................................................................................. 6
Associations of Entities ............................................................................................................. 10
AP GDR Scheme ........................................................................................................................ 14
Step 1:- Issuance of GDRs ..................................................................................................... 15
Step 2:- Cancellation of GDRs ............................................................................................... 19
Step 3:-Sale of Shares to group of Indian clients and utilisation of GDR issue proceeds by
Examined Companies. .......................................................................................................... 20
Detailed Investigation of Issuer Companies ............................................................................. 23
(I) ASAHI INFRASTRUCTURE AND POJECTS LTD. ................................................................... 23
Summary of GDR issue:- ................................................................................................... 23
Subscribers of GDR Issue:- ................................................................................................ 23
Loan & Pledge Agreement signed among Asahi, Vintage & Euram. ................................ 24
Acquisition Cancellation and Sale of GDRs:-..................................................................... 27
Utilisation of GDR proceeds by Asahi:-............................................................................. 31
Misleading Submissions by Asahi:- ................................................................................... 35
(II) AVON CORPORATION LTD. .............................................................................................. 37
Loan & Pledge Agreement signed among Avon, Vintage & Euram. ................................. 38
Utilisation of GDR proceeds by Avon:- ............................................................................. 45
Misleading Submissions by Avon:- ................................................................................... 48
(III) CAT TECHNOLOGIES LTD ................................................................................................ 50
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Loan & Pledge Agreement signed among CAT, Vintage & Euram:- ................................. 52
Utilisation of GDR proceeds by CAT:- ............................................................................... 60
Misleading Submissions by CAT ....................................................................................... 62
(IV) IKF TECHNOLOGIES LTD ................................................................................................. 64
Loan & Pledge Agreement signed among IKF, Vintage & Euram:- ................................... 65
Utilisation of GDR proceeds by IKF:-................................................................................. 73
Misleading Submissions by IKF ......................................................................................... 76
(V) K SERA SERA LTD ............................................................................................................. 78
Loan & Pledge Agreement signed among K Sera, Vintage & Euram:- .............................. 80
Utilisation of GDR proceeds by K Sera:- ........................................................................... 87
Misleading Submissions by K Sera .................................................................................... 89
(VI) MAARS SOFTWARE INTERNATIONAL LTD ...................................................................... 91
Loan & Pledge Agreement signed among Maars, Vintage & Euram:-.............................. 92
Utilisation of GDR proceeds by Maars:- ........................................................................... 97
Summary of role of entities involved in the market manipulation using GDRs ..................... 100
PART 2 - SCHEME OF MANIPULATION OF INDIAN MARKETS IN CALS REFINERIES ............ Error!
Bookmark not defined.
A. Summary of Cals GDR Issue:-........................................... Error! Bookmark not defined.
B. Cals Shareholding & Ownership Structure:- .................... Error! Bookmark not defined.
C. Loan Agreement:- ............................................................ Error! Bookmark not defined.
D. Honor Finance Ltd:- ......................................................... Error! Bookmark not defined.
E. Account Charge Agreement:- .......................................... Error! Bookmark not defined.
F. Subscriber to the Cals GDR Issue:-................................... Error! Bookmark not defined.
G. Utilisation of GDR proceeds by Cals:- .............................. Error! Bookmark not defined.
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H. Analysis of transaction regarding Asiatexx Enterprises Limited..... Error! Bookmark not

defined.
I. Misleading submissions made by Cals & Mr. Devanathan Sundararajan, MD of Cals.
Error! Bookmark not defined.
J. Summary of role of entities involved in the market manipulation using GDR issue of
Cals Error! Bookmark not defined.
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Annexure 2
Background
Based on alerts received by SEBI in its IMSS system regarding a few scrips like IKF
Technologies Ltd, Avon Corporation Ltd, Cat Technologies Ltd, Asahi Infrastructure
Ltd and K Sera Sera Ltd, preliminary examination of trading in these scrips was
conducted. It was revealed in the preliminary examination that certain FIIs/Sub-
Accounts were converting the GDRs held by them into shares (known as ‘cancelling’
GDRs) and selling the resultant shares in the Indian markets. Further investigation
revealed that the complete process of GDR issuance by these companies was devised
and structured by Arun Panchariya (hereinafter referred to as "AP") in connivance
with the issuer companies to the detriment of the Indian Investors.
Investigations were initiated in the matter and an Interim Order was passed on
September 21, 2011 against AP, 7 listed companies that issued GDRs, 4 Sub-
Accounts, 1 FII, 5 Indian companies trading in these scrips, and 1 foreign based Lead
Manager. Following are the entities against whom directions were issued in the said
Order:-
Lead Manager:-
1. Arun Panchariya (AP)
2. Pan Asia Advisors Ltd (Panasia), Lead Manager
Sub-Accounts/FIIs:-
3. India Focus Cardinal Fund(IFCF), Sub-Account
4. MAVI Investment(Mavi), Sub-Account
5. KII Ltd (KII), Sub-Account
6. Sophia Growth - A share Class of Somerset India Fund (Sophia), Sub-Account
7. European American Investment Bank Ag (Euram), FII
Indian Clients
8. Basmati Securities Pvt. Ltd( Basmati)
9. Oudh Finance & Investment Private Ltd (Oudh)
10. Alka India Ltd (Alka)
11. SV Enterprises (SV)
12. JMP Securities Pvt. Ltd (JMP)
GDR Issuers
13. Asahi Infrastructure & Projects Ltd(Asahi)
14. IKF Technologies Ltd. (IKF)
15. Avon Corporation Ltd (Avon)
16. K Sera Sera Ltd (K Sera)
17. CAT Technologies Ltd (Cat)
18. Maars Software International Ltd (Maars)
19. Cals Refineries Ltd. (Cals)
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The investigations conducted into the case have clearly revealed that in the case of
Asahi, Avon, IKF, K Sera, CAT and Maars, AP and other entities/companies/FIIs/Sub-
Accounts connected to him or to his brother Satish Panchariya (collectively referred
to as AP Entities), including Panasia have played key role in structuring of GDR issues
of Indian Companies. These GDRs were issued by companies (Issuer Companies) with
the help of AP, wherein AP arranged for loans for the subscription of GDRs and
thereafter converted the GDRs into underlying shares. The underlying shares were
sold to Indian investors with the help of FIIs/Sub-Accounts as well as certain Indian
entities connected to AP. The activities of AP along with AP Entities involved in the
whole scheme have resulted in Indian retail investors ultimately bearing the cost of
these GDRs. The Part 1 of this investigation report deals with this fraudulent scheme
perpetrated by AP to defraud Indian retail investors.
Part 2 of the report deals with the fraud perpetrated by promoters and directors of
Cals Refineries Ltd. in Indian Stock Market. Cals announced a huge project of shifting
and relocating a refinery from Germany in West Bengal. However, as investigations
revealed, the GDR issuance was organized to defraud Indian investors and dump the
shares generated out of conversion of GDRs on Indian retail investors.
The detailed investigation of creation of false market by clients connected to AP and

sale of shares by FIIs to such clients and Indian retail investors is dealt in a
supplementary report which will be soon completed. The period of investigation is
from January 01, 2009 to September 21, 2011. In the case of Maars, the examination
period for trading by the FIIs and Counterparty Group is from January 01, 2007 till
September 21, 2011.
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Annexure 2
PART 1 - SCHEME OF MANIPULATION OF INDIAN

MARKETS USING GDRS BY ARUN PANCHARIYA
Definitions
Alka Alka India Ltd., a company listed on BSE has the following family
members of AP acting as promoters,
1. Ramswaroop Panchariya
2. Ashok Panchariya
3. Gopikishan Panchariya
4. Geetabai M Purohit
5. Satish R Panchariya
6. Arun R Panchariya
7. Ramswaroop B Panchariya
8. Shantidevi Panchariya
9. Saritadevi Panchariya
10. Madhudevi Panchariya
11. Radhadevi Panchariya
12. Shantidevi R Panchariya
13. Radhadevi S Panchariya
14. Arun Ramswaroopji Panchariya
15. Ramswaroopji B Panchariya
16. Satish R Panchariya
Alkarni Alkarni Holdings Ltd, a company registered in British Virgin Island

(BVI) with following shareholders:-
1. Arun Panchariya
2. Ashok Panchariya
3. Radhadevi Satish Panchariya
4. Sarita Arun Panchariya
5. Madhudevi Ashok Panchariya
AP Mr. Arun Panchariya
AP GDR Scheme The scheme devised by AP wherein Structured GDRs are issued by
Indian companies with the help of AP and ultimately offloaded in
Indian markets to unsuspecting retails investors.
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Annexure 2
Ashok Mr. Ashok Panchariya, brother of AP & Satish Panchariya
Atique Atique Al Aqadi Trading Company was one of the investor in Class
A shares of India Focus Cardinal Fund. It was also one of the
shareholders of Panasia.
Banco Banco Efisa SFE, A bank based in Portugal, which financed the first
GDR issue of IKF in 2007.
Cancelling GDRs As GDRs are issued, equivalent numbers of shares are issued in
India and kept frozen with the Indian custodian. When GDRs are
cancelled by any entity, it tenders GDRs to the Overseas
Depository Bank (ODB) and equivalent number of shares are
issued by the Indian Custodian to that entity.
CCPL Cardinal Capital Partners Ltd, a company owned 100% by AP and it

is Investment manager of IFCF. CCPL is also 100% owner of IFCF.
CP Group Counterparty Clients Group, Group of Indian

companies/individuals which has acted as major counterparty to
selling of shares by FIIs in Indian markets only to gradually sell
these shares to genuine retail investors by creating false volumes
in Indian markets.
Euram European American Investment Bank AG, Austria , It is a bank

based in Vienna Austria which was also registered as an FII with
SEBI in INDIA till November 20, 2011.
Euram Accounts The bank accounts of Issuers and other entities maintained with
Euram.
Euram Asia European American Asia Ltd, A joint venture in Dubai between
Euram and Panasia. The Joint Venture after its incorporation acts
as a Loan agent for Euram and Listing agent for GDR issuing
Examination Period of January 01, 2009 to September 21, 2011 (unless

Period otherwise mentioned)
Examined Following 6 companies which were examined for their GDR issues
Companies1 and trading in Indian markets :-
1. Asahi Infrastructure & Projects Ltd

2. Avon Corporation Ltd
3. CAT Technologies Ltd
1
GDR issues of 7 companies were investigated by SEBI which included CALS Refineries Ltd. A separate report has been prepared
for CALS. Therefore, in this report Examined Companies refers to only six companies in which Mr. Arun Panchariya was found to
be involved.
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Annexure 2
4. IKF Technologies Ltd.

5. K Sera Sera Ltd
6. Maars Software International Ltd
GDR Accounts The Bank Account of an Issuer maintained with a foreign bank to
deposit the proceeds of GDR issue. In all the GDR issues
investigated and discussed in this report (except the first GDR
issue of IKF in 2007 which had Banco as the bank maintaining GDR
Accounts) the GDR accounts have been maintained with Euram.
GDR Guidelines Scheme for issue of Foreign Currency Convertible Bonds (FCCB)
and Ordinary Shares (Through Depository Receipt Mechanism)
Scheme, 1993 and guidelines issued by the Central Government
there under from time-to-time.
IFCF India Focus Cardinal Fund, a fund based in Mauritius and is

registered with SEBI as a Sub-Account. AP is 100% owner of IFCF
through its company Cardinal Capital Partners Ltd. AP and its
family members are major investors in the fund through their
associated companies. AP was director of the IFCF until October
28, 2010.
Interim order SEBI Interim Order dated September 21, 2011 passed against 19
entities due to their role in Structuring of GDRs
Issuers / Indian companies which issue GDRs.

Issuer
Companies
KII Ltd KII, A Sub-Account which has similar pattern of trading like IFCF
LM Lead Manager to GDR Issues
Loan Agreement A Loan Agreement signed between the subscriber of GDR issuance
and a foreign bank (Euram or Banco) for the purpose of financing
of the GDR issues.
Mavi Mavi Investment Fund Ltd., Sub-Account
ODB Overseas Depository Bank; In a GDR issuance the GDRs are issued
by the issuer in the name of the overseas depository bank and the
overseas depository Bank or ODB subsequently issues the GDRs to
non-resident investors, known as GDR holders.
Panasia Pan Asia Advisors Ltd, a lead manager based in UK which was
founded by AP. AP is 100% shareholder of Panasia. AP was also
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Annexure 2
director of the fund until September 29, 2011.
Pledge An Agreement signed between foreign bank (Euram or Banco )

Agreement with issuer companies wherein the issuer pledges its accounts
with bank against the loan provided by bank for subscription of
GDR issuance.
Sophia Sophia Growth – A share Class of Somerset Fund, Sub-Account
SP Mr. Satish Panchariya, brother of AP
Structured GDRs GDRs issued by companies with the help of AP wherein AP

arranged for loans for the subscription of GDRs (due to insufficient
investor appetite, domestic or overseas) and sold to Indian
investors with the help of FIIs and Indian clients connected to AP.
Vintage Vintage FZE, a company established in Jebel Ali Free Zone, Dubai
on January 02, 2001. AP is founder and director of Vintage and
management and control are vested with AP. Alkarni is 100%
shareholder of Vintage. Subsequent to Interim order, name of
Vintage has now changed to Alta Vista International FZE.
9
Associations of Entities
Following chart depicts the associations and connections of different entities which
are part of AP GDR Scheme, amongst themselves. The connections pertain to period
of investigation, until otherwise mentioned:-
10
1. Alkarni Holdings Ltd. (Alkarni) is a company registered in British Virgin Island
with following family members of Arun Panchariya as shareholders :-
Name of Share % of
Holder shareholding
Arun Panchariya 52.50%
Radhadevi Satish 15.00%

Panchariya
Sarita Arun 15.00%

Panchariya
Madhudevi Ashok 15.00%

Panchariya
Ashok Panchariya 2.50%
2. Vintage FZE, a company established in Jebel Ali Free Zone, Dubai on January
02, 2001. Alkarni is 100% shareholder of Vintage. The founder and director
of Vintage is AP, who also controlled its management. Subsequent to Interim
order, name of Vintage has now changed to Alta Vista International FZE.
3. Vintage is the initial investor of the GDR issues of all the Examined
Companies. By way of its holding of GDRs, Vintage was also the single largest
shareholder of the Examined Companies, after issuance of GDRs. The
association between Vintage and Examined Companies is also evident from
the fact that Examined Companies pledged their funds (GDR proceeds) to
Euram as collateral against the loan taken by Vintage.
4. Credo Investments Holding Ltd (Credo) and KII are group companies of Credo
group. Vintage signed a loan agreement with Credo, wherein it provided loan
to Credo to further lend it to KII so that KII can deal in GDRs and shares of
Examined Companies.
5. AP was the chief investment officer of CCPL. AP is also 100% shareholder of

CCPL.
6. CCPL is 100% shareholder of IFCF. CCPL also acts as Investment manager of

IFCF. CCPL is registered as an FII with SEBI since June 20, 2011 and IFCF is
registered as its Sub-Account in India. Prior to registration of CCPL with SEBI,
Euram was the FII for IFCF.
11
7. Vintage, through Euram, is the largest investor (63.11%) in Class A shares of
IFCF 2.
8. AP is the founder and director of Panasia. He is also 100% shareholder of

Panasia.
9. Atique was also one of the major shareholders of Panasia along with AP prior
to AP acquiring Atique's stake in Panasia.
10. IFCF deals in GDRs, exclusively under Class A of its investment. As per
information filed by IFCF, following are the investors in Class A shares of IFCF
as on September 30, 2011:-
Name of Investors % of investment

Euram Bank 63.11%
Atique Aqadi Trading LLC 29.06%
(Atique)
Citco Bank 7.82%
11. Euram Asia is joint venture in Dubai, between Euram and Panasia. AP is
holding 49% in Euram Asia by way of his investment in Panasia.
12. AP and SP were also directors of Euram Asia.
13. Euram holds 51% shareholding in Euram Asia.
14. Vintage signed Loan Agreements with Euram wherein, Euram provided loan
to Vintage for the sole purpose of subscription of GDR issue of Examined
Companies.
15. Examined Companies signed Pledge Agreements with Euram. According to

the Pledge Agreements, the proceeds of GDR issuance were deposited and
pledged by the companies with Euram.
16. As per the KYC documents of Rexflec, AP is the director and beneficial owner
of Rexflec.
17. Rexflec is supposedly one of the initial investors in GDR issues of CAT, K Sera
and Maars. Rexflec has the same address as that of one Seychelles based
company called Premier Management Consultancy Ltd. IKF made a payment
to Premier Management Consultancy Ltd as placement fees of GDRs. The
name of Rexflec is now changed to Pan Asia Management Ltd.
2
Class A of IFCF is exclusively investing in the GDRs of Indian companies and subsequently selling in Indian Markets.
12
18. Ababil Star General Trading (Ababil) is shown as one of the initial investors in
GDR issue of K Sera by Panasia. However, from the documents available, it is
found that GDRs were actually issued to Vintage and payments were made to
the issuer from the bank account of Vintage. From this, it is inferred that
Ababil is also connected to AP/AP related entities. Investigations revealed
that Ababil received funds from companies like Avon and Asahi. Asahi and
Avon have transferred funds to Ababil out of GDR issue proceeds.
19. Ababil transferred funds to one of the subsidiary of K Sera in Dubai.
20. Alka India Ltd., a company listed on BSE has the following family members of
AP acting as promoters:-
a) Ramswaroop Panchariya
b) Ashok Panchariya
c) Gopikishan Panchariya
d) Geetabai M Purohit
e) Satish R Panchariya
f) Arun R Panchariya
g) Ramswaroop B Panchariya
h) Shantidevi Panchariya
i) Saritadevi Panchariya
j) Madhudevi Panchariya
k) Radhadevi Panchariya
l) Shantidevi R Panchariya
m) Radhadevi S Panchariya
n) Arun Ramswaroopji Panchariya
o) Ramswaroopji B Panchariya
p) Satish R Panchariya
Mr. Satish Panchariya was appointed as the Chairman of company K Sera Sera
Ltd in October 2012.
21. Alka India and Oudh were among the shareholders of Basmati. Together, they
held 37.68% of the shares of Basmati. Basmati in turn held 27.8% of the
shares of Oudh. (source: MCA website).
22. SV is the proprietary firm of Sarfaraz Khan Pathan. As per the KYC details
provided by the Depository Participants of SV, one of the brothers of AP
(Ashok Panchariya) is mentioned as nominee for the demat account of SV.
Ashok Panchariya is also mentioned as introducer on the KYC documents for
the bank accounts of Sarfaraz Khan.
13
AP GDR Scheme
The following chart depicts the scheme of GDRs wherein AP arranges loans for the
subscription to GDRs, subscribes to GDRs, sells the GDRs to FIIs/ Sub accounts (FIIs)
who, in turn, sell shares received from conversion of GDRs in Indian securities
market. A large portion of shares sold by FIIs are purchased by a set of
counterparties (CP Group), who in turn, sell these shares to Indian retail investors. In
addition to purchasing shares from FIIs and selling to retail investors, CP Group also
creates/maintains liquidity in the scrip by trading among themselves. The GDRs thus
issued and sold to Indian investors through steps explained below are hereinafter
referred to as Structured GDRs and the complete scheme is referred to as GDR
Scheme.
14
Step 1:- Issuance of GDRs
1.1 Step 1 of the GDR scheme is shown in following chart:-
15
1.2 As the Issuer Company is ready to issue GDRs in the Luxembourg market, Vintage
signs a loan agreement with Euram for issue of loan (Subscription Loan) for the
purpose of subscription of GDRs. This loan agreement is signed by AP on behalf of
Vintage.
1.3 The nature and purpose of the agreement states clearly that the loan is being
provided to enable Vintage to take down the specified GDR issue of the Issuer
Company. Further, according to the Loan Agreement, the amount may only be
transferred to the account of that Issuer Company maintained with Euram. The
aforesaid account of the Issuer Company mentioned in the loan agreement of
Vintage is the same account where Issuer Company shows its GDR subscription
proceeds as deposited (GDR Account).
1.4 Simultaneously, Issuer company also signs a Pledge Agreement with Euram
wherein interalia, following is pledged by the issuer company to Euram.
"...all of its right title and interest in and to, and the balance of funds existing
from time to time at present or hereafter on the account no ... (GDR Account) kept
by Bank (Euram) and all amounts credited at any particular time therein."
16
Further, the pledge agreement is also part of the loan agreement and vice versa.
The pledge agreement in its preamble states that,
"...The Pledgor (Issuer Company) has received a copy of the Loan Agreement and
acknowledges and agrees to its terms and conditions."
1.5 The following is also secured as per the Loan agreement:-
a. "...In order to secure all and any of the Bank's claims and entitlements against
the Borrower (Vintage).......... it is hereby irrevocably agreed that the following
securities and any other securities which may be required by the Bank from time
to time shall be given to the Bank as provided herein or in any other form or
manner as may be demanded by the Bank.....
 Pledge of certain securities held from time to time in the Borrower's

account no ... at the Bank as set out in a separate pledge agreement which
is attached hereto as Annex which forms an integral part of this Loan
Agreement.
 Pledge of the GDR Account of the Borrower held with the Bank as set out
in a separate pledge agreement which is attached hereto as Annex and
which forms an integral part of this Loan Agreement.
The GDR account referenced above is the same account wherein the issuer
company has deposited the subscription proceeds of the GDR issue. From the
above, it is observed that the GDR Account is held in the name of the issuer
company while, for all intents and purposes, the actual control of said account
ultimately vests with Vintage (effectively AP), as the account is kept as collateral
for the loan availed by Vintage.
1.6 As a result of the Loan Agreement and the Pledge Agreement, the Subscription
Loan provided to Vintage by Euram is used to acquire the GDRs of Issuer
Company by Vintage. This Subscription Loan is thus deposited as Subscription
fund in the GDR Account of Issuer Company which is pledged by the Issuer
Company with Euram as security against the Loan provided to Vintage.
1.7 The Issuer company then issues GDRs to Initial investors through ODB. In the
cases investigated by SEBI, it is observed that the GDRs were transferred not to
the account of initial investors but to the security account of Vintage maintained
with Euram. The issuer companies and Panasia have provided a list of initial
investors to whom GDRs were issued. However, as per documents available with
SEBI, it is observed that GDRs have been credited to the securities account of
Vintage held with Euram on the day of GDR issuance and a payment for GDRs is
made from the Euram Account of Vintage to the GDR Account of Issuer Company.
From the foregoing it is clear that the GDRs were directly issued to Vintage. The
list of initial investors of GDRs provided to SEBI by the issuer companies,
therefore is a list designed to camouflage the name of the actual investor i.e.
Vintage and mislead the shareholders of the company and the market.
17
1.8 Effectively, there is no real movement of funds involved from Step 1.1 to 1.7. By
way of entries in the books of Euram, funds are released from loan account of
Vintage to GDR account of issuer company and are kept as collateral with
Euram. Thus, without any actual inflow of funds into the company, the issuer
Company is successful in issuing large amount of GDRs which gives a respectable
appearance to the financial statement of the company, which is misleading. In
reality, few book entries result in large surge in the capital of the company. Thus,
these GDRs are created without any purchase transactions or for any cost (apart
from interest and commission earned by Euram).
1.9 The initial investors to the GDRs appear to be just fictitious/front entities created
by AP and Panasia. Efforts to contact these original investors were futile. Emails
sent have bounced back. Letters sent to these investors have also returned
undelivered. SEBI also sought help of regulators of respective jurisdiction where
these investors have been stated to be based. Foreign regulators have been
unable to locate these investors.
1.10 Following are the details of the GDRs issued by the companies examined by SEBI.
Shares Market Capital % Capital

issued % GDR Cap prior raised by raised to
Date of Pre GDR under to Pre to GDR GDR pre GDR
Sr. GDR equity GDR GDR issue( Rs Issue(Rs. Market
No Issuer Issue (‘000) (‘000) equity Crore) Crore) Cap
1 IKF 31-03-07 1,06,690 1,32,000 123 79.60 47.96 60.25
2 CAT 27-07-07 5,750 25,286 440 3.00 26.13 871.20
3 Maars 10-08-07 66,160 73,800 112 29.71 72.93 265.02
4 K Sera 26-10-07 19,513 47,619 244 71.02 98.42 138.58
6 Asahi 29-04-09 37,196 2,99,100 804 2.64 32.99 1137.94
7 IKF 15-05-09 2,68,190 1,62,391 61 79.66 54.44 68.35
8 Avon 19-06-09 16,580 48,000 289 14.71 48.13 327.19
9 K Sera 16-10-09 67,131 1,34,257 200 137.95 138.73 100.57
10 CAT 06-11-09 31,576 47,860 152 50.81 46.83 92.17
1.11 From the above table, it is clear that the amount of capital raised via issuing GDRs
is significantly large when compared to existing capital of the companies.
1.12 For the purpose of subscription of the GDRs of the aforementioned Examined
Companies, loan agreements were signed by various entities with the banks. This
loan was then utilised for subscribing to the GDRs of the Examined Companies, as
detailed in Para 1.1 to 1.7 and summarised in Para 1.8.
1.13 Following are the details of loan agreements signed for the purpose of
subscription of GDRs of Examined Companies.
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Sr. Issuer Date of GDR Issue Borrower Loan Date of Lender Date of
No. GDR Size Amount Loan Pledge
Issue ($ '000) ($ '000) Agreement Agreement
1 IKF 31-03-07 11,000 Seazun 14,000 27-03-07 Banco 27-03-07

2 CAT 27-07-07 6,457 Vintage 6,457 23-07-07 Euram 20-07-07
3 Maars 10-08-07 17,933 Vintage 17,933 27-07-07 Euram 27-07-07
4 K Sera 26-10-07 25,000 Vintage 25,000 30-10-07 Euram 30-10-07
6 Asahi 29-04-09 5,982 Vintage 5,982 21-04-09 Euram 21-04-09
7 IKF 15-05-09 10,988 Vintage 10,988 28-04-09 Euram 28-04-09
8 Avon 19-06-09 10,000 Vintage 10,000 10-06-09 Euram 10-06-09
9 K Sera 16-10-09 29,984 Vintage 29,984 06-10-09 Euram 06-10-09
10 CAT 06-11-09 10,003 Vintage 10,003 27-10-09 Euram 27-10-09
Step 2:- Cancellation of GDRs
2.1 The GDRs created at the end of Step 1 were transferred to the account of Vintage
held with Euram. Subsequently, Vintage through over the counter transactions,
sold the GDRs to FIIs such as IFCF, KII etc or other FIIs which had an agreement
with AP for the purpose of purchasing GDRs. The GDRs were then converted into
underlying shares and these shares were sold in the Indian market.
2.2 Euram Bank informed SEBI vide letter dated March 27, 2012 that their
investment in IFCF is on behalf of Vintage. Similarly, Atique is also connected with
AP. Thus 92.17% of Class A shares of IFCF was held by entities with established
connection with AP and all the dealings of IFCF in the GDRs of Examined
Companies were under control of AP.
2.3 Arrangements between Credo, KII and Vintage for dealing in GDRs of Examined
Companies have been observed. Vintage signed a loan agreement with Credo,
wherein it provided loan to Credo to further lend it to KII so that KII can purchase
GDRs of Examined Companies and convert into shares to sell in Indian Markets.
The market risk of these transactions was borne by Vintage. Thus, the dealings of
KII in the GDRs of Examined Companies were also under control of AP.
2.4 It is observed that IFCF and KII started dealing in the GDRs of Examined
Companies from June 2009 and after that no other FII/Sub-Account has cancelled
GDRs of Examined Companies except KII and IFCF. Following table provides
details of cancellation of GDRs of Examined Companies done by KII and IFCF as on
June 30, 2012.
19
% of % of GDRs
GDRs GDRs cancelled by
cancelled cancelled IFCF & KII to
between by IFCF & total GDRs
Total GDRs June 01, KII to cancelled
Cancelled 2009 to GDRs GDRs total between June
GDR Total GDRs till June 30, June 30, cancelled cancelled GDRs 01, 2009 to
Issue Date Issued 2012 2012 by IFCF by KII cancelled June 30, 2012
Asahi 29-04-09 29,91,000 15,14,450 15,14,450 13,81,000 1,00,000 97.8 97.8
Avon 19-06-09 16,00,000 16,00,000 16,00,000 14,44,000 1,56,000 100.0 100.0
CAT 27-07-07 43,04,348 25,80,000 1,95,000 1,20,000 75,000 7.6 100.0
CAT 06-11-09 15,95,333 13,685 13,685 13,685 0 100.0 100.0
IKF 31-03-07 1,10,00,000 1,10,00,000 0 0 0 0.0 0.0
IKF 15-05-09 54,13,048 10,34,000 10,34,000 9,89,000 45,000 100.0 100.0
K Sera 26-10-07 47,61,900 47,61,900 33,41,900 13,96,757 19,45,143 70.2 100.0
K Sera 16-10-09 44,75,238 12,35,500 12,35,500 7,58,500 4,77,000 100.0 100.0
Maars 10-08-07 73,80,000 57,92,800 15,77,800 11,27,800 4,50,000 27.2 100.0
From the above table, it is clear that from June 01, 2009, the activity of cancelling
GDRs and converting to shares was done entirely under direct control of AP.
2.5 To summarise, the funds for the purchase of GDRs are provided by AP to FIIs,
either by direct investment in the fund like IFCF or by entering into contractual
agreement and providing loan to FIIs/Sub-Accounts (e.g. KII , etc). In reality, funds
have only moved from one AP controlled company (IFCF) to another AP
controlled company (Vintage) and vice versa.
Step 3:-Sale of Shares to group of Indian clients and utilisation of GDR issue
proceeds by Examined Companies.
3.1 The step 3 of the GDR scheme involves selling of shares (received post conversion
of GDRs of Examined Companies) on Indian stock exchanges by FIIs. It has been
observed that the shares sold by FIIs are purchased in large quantities by certain
set of Indian clients (CP Group) . These Indian clients then sell these shares
purchased from FIIs to other retail investors. It has also been observed that the
members of the CP Group traded in large quantities among themselves which
increased the liquidity of the scrip of Examined Companies. SEBI in its interim
Order dated September 21, 2011 identified one such group of clients which had
connections with AP and made following observations in Para 5 on Page 3 of the
aforesaid order:-
 The average daily volume has increased significantly on the days when the entities, Sub-Accounts
and Group, have been observed to be trading in the scrip. In the case of Asahi it is nearly 26 times
the days when these entities have not trade , indicating the major role these entities have played
in creating liquidity in the scrip.
20
 On days when Sub-Accounts have sold the shares their concentration is ranging from 18% to 53%
of day’s net volume. On such days, the volume has increased from 7 times (Cat) to 74 times
(Maars) than compared to when Sub-Accounts are not trading. Thus the selling of the Sub-Account
is expected to have a huge downward pressure on the price of the scrip.
rd
 During the days the Group has traded its total trading is nearly 1/3 of the total trading in the
scrip on a gross basis.
3.2 Following chart explains the manner in which the shares received from
cancellation of GDRs are ultimately sold to Indian retail investors:-
3.3 The next step in the GDR scheme involves the CP Group selling shares to the
Indian retail investors with a view to generate profit. Uptil now, each transaction
has been controlled by AP or SP. In this last step, since the shares are being sold
to the retail investors, the price paid by such investors goes to the sellers (CP
Group or FIIs) and thereby to AP, as the CP Group, FIIs and AP are
related/connected with each other. Thus, it is the Indian Investors, and not the
foreign investors, who have ultimately paid for the GDRs.
3.4 As the investigations conducted by SEBI revealed that the GDR issue of Examined
Companies were not a capital raising exercise as it was portrayed by these
companies and Lead Manager, SEBI investigated the utilisation of GDR issue
proceeds by the Examined Companies.
3.5 Investigations have revealed that all the Examined Companies have utilised
majority of the GDR issue proceeds through their foreign subsidiaries in other
countries. Majority of these foreign subsidiaries have following common aspects:-
3.5.1. Most of these are based in free zones of U.A.E.

3.5.2. In almost all the case, the major portion of the GDR issue (100% in one of
the case viz, CAT) is directly transferred to foreign subsidiary and is not
repatriated to India.
3.5.3. Mostly, these have been incorporated during or after the period of GDR
issue.
3.5.4. These are mostly trading companies generally dealing in commodities/
products unrelated to the business of parent company.
21
3.5.5. They have financial transactions with Vintage, Initial investors of GDR
issues of other companies and foreign subsidiaries of other companies
which have issued GDRs managed by AP and Panasia.
3.6 None of the Examined Companies have provided SEBI with adequate explanation
of the transfer of funds to their foreign subsidiaries. Due to the non cooperation
by companies, many aspects like bank accounts, financial transactions, nature of
business and dealings with AP connected entities of foreign subsidiaries of Issuer
companies could not be investigated in detail by SEBI. However, from the limited
documents and material available with SEBI, it is revealed that foreign
subsidiaries are being used to make payments to AP/AP related entities. The
rationale for such transaction has not been explained to SEBI. However, in light
of the findings of the investigation indicating that AP/AP related entities have
colluded with the companies to issue GDRs fraudulently, it is probable that the
financial transaction between the foreign subsidiary and AP/AP related entities
could possibly be a route for the issuer company to compensate AP for services
rendered by him.
22
Detailed Investigation of Issuer Companies
(I) ASAHI INFRASTRUCTURE AND POJECTS LTD.
Summary of GDR issue:-
1. The GDR Issue of Asahi for US $ 5.98 Million closed on April 29, 2009 and was
fully subscribed. The allotment of 29,91,000 GDRs representing 299,100,000
equity shares of Rs 1/- each at USD 2.00 by the company was done on April
29, 2009.
2. Panasia was appointed as the LM to the GDR issue by the company.
3. Asahi consolidated equity shares on November 04, 2010 from 10 equity

shares of Rs. 1 each to 1 equity shares of Rs. 10 each. For ease of
understanding, each share of Asahi transacted post consolidation of shares
has been treated as 10 shares of face value Rs. 1.00 in our calculation in this
report.
4. Prior to GDR issue, Asahi had 37,196,000 fully paid equity shares. Therefore,
the equity shares represented by the GDRs were approximately 804.03% of
Asahi's outstanding share capital at the time of GDR issue.
5. The total capital raised by Asahi vide GDRs was USD 5,982,000 which is equal
to Rs. 30,04,16,040 considering conversion price of USD 1 = Rs. 50.22 as on
April 29, 2009. The market cap of Asahi prior to GDR issue was Rs.
2,64,00,000. Therefore, the capital raised by GDR issue was 1137.94% of the
market capital of the company prior to GDR issue.
6. The last traded price of Asahi on BSE on April 29, 2009 was Rs. 0.74. The
highest and lowest price of Asahi for period of three months from January
29, 2009 to April 29, 2009 was Rs. 0.89 and Rs. 0.53 respectively. The price
which subscribers paid for each share underlying GDRs was Rs. 1.04 (USD 1 =
Rs. 50.22 as on April 29, 2009) which was 140.54% of the price of the scrip on
same day.
Subscribers of GDR Issue:-
7. Following are the details of investors in the GDR issue of Asahi, as per the
submissions of the company:-
23
Name of Subscriber GDRs Amount % of total GDR
Subscribed Paid (USD) issue
Greenwich Management
Inc (Greenwich)
14,91,000 29,82,000 49.85
Tradetec Corporation
(Tradetec) 15,00,000 30,00,000 50.15
8. Greenwich and Tradetec were observed to be investors in several other GDR

issues of Indian companies. The address of these subscribers, which was
made available to SEBI, is given below.
Name Address
Greenwich Floor - 18, One International Finance Centre, 1 Harbour view

Street, Central, Hong Kong
Tradetec Level 47, Prudential Tower, 30 Cecil Street, Singapore -
049712
Email : bw@tradeteccorporation.com
9. In order to contact these initial investors emails were sent to available email
addresses of these entities and summons were issued to the contact address
made available to SEBI. All the emails and summons issued to these investors
returned back undelivered. The respective securities market regulator of the
countries where these investors are located were requested contact these
investors. However, the regulators have informed SEBI that the addresses of
the investors are either non-existent or do not belong to these entities.
Loan & Pledge Agreement signed among Asahi, Vintage & Euram.
10. From the documents available with SEBI, it is observed that the issuance and
subscription of GDRs of Asahi was done using loan taken from Euram. The
GDR issue of Asahi was managed and structured by AP with the Loan and
Pledge Agreement signed among Asahi, Vintage and Euram, which is the key
to the fraudulent issuance and subscription of GDRs in this case.
11. A loan agreement (Loan Agreement : K210409-003) dated April 21, 2009, was
signed between Euram and Vintage on April 22, 2009. The agreement was
signed by AP as Managing Director on behalf of Vintage on April 22, 2009.
12. The Loan agreement states that Euram has agreed to make available a loan
of USD 59,82,000.00 to Vintage (referred to as ''the Borrower''). The nature
and purpose of the loan facility is to provide funding enabling Vintage to take
down GDR issue of Asahi's Luxemburg public offering and may only be
transferred to Euram account no: 540030.
24
13. The Euram account no: 540030 is the bank account of Asahi maintained with
Euram for the purpose of depositing proceeds of GDR issue.
14. As security against the Loan provided to Vintage following is stated in the
Loan Agreement.
"6.1 In order to secure all and any of the Bank's claims and entitlements against
the Borrower, arising now or in the future out of or in connection with the Loan or
any other obligation or liability of the Borrower to the Bank, including without
limitation other loans granted in the future , it is hereby irrevocably agreed that the
following securities and any other securities which may be required by the Bank
from time to time shall be given to the Bank as provided herein or in any other form
or manner as may be demanded by the Bank

account no. 540 030 at the Bank as set out in a separate pledge agreement
which is attached hereto as Annex 2 and which forms an integral part of
this Loan Agreement.
 Pledge of the account no. 540 030 of the Borrower held with the Bank as set
out in a separate pledge agreement which is attached hereto as Annex 2
and which forms an integral part of this Loan Agreement."
15. A Pledge Agreement dated April 21, 2009 was signed between Asahi and
Euram. The agreement was signed by Mr. Laxminarayan Rathi on April 28,
2009, on behalf of Asahi as Managing Director of Asahi. He and his other
family members are also promoters of Asahi.
16. Mr. Laxminarayan Rathi did not inform Bombay Stock Exchange or
shareholders or of the company about signing the Pledge Agreement.
17. According to the Pledge Agreement, Asahi has been referred to as "Pledgor''
while Euram has been referred to as ''Bank''.
18. The preamble of the Pledge Agreement states
"By loan agreement K210409-003 (hereinafter referred to as ''Loan Agreement'')

dated April 21, 2009, the Bank granted a loan (hereinafter referred to as the
''Loan'') to Vintage FZE, AAH-213, Al Ahmadi House, Jebel Ali Free Trade Zone, Jebel
Ali, Dubai, United Arab Emirates (''the Borrower") in the amount of $ USD
5,982,000.00 million3. The Pledgor has received a copy of the Loan Agreement and
19. From the above preamble of Pledge Agreement, it is clear that Mr.
Laxminarayan Rathi and Asahi were also the party to the Loan Agreement.
20. The pledge created in the Pledge Agreement is stated below:-
3
It appears that 'million' has been wrongly inserted in the Loan agreement. The loan amount was only
USD 5,982,000.00.
25
" 2. Pledge
2.1 In order to secure any and all obligations, Present and future, whether conditional
or unconditional of the Borrower towards the bank under the Loan Agreement and
any and all respective amendments thereto and for any and all other current or
future claims which the Bank may have against the Borrower in connection with the
Loan Agreement – including those limited as to condition or time or not yet due –
irrespective of whether such claims have originated from the account relationship,
from bills of exchange, guarantees and liabilities assumed by the Borrower or by the
Bank, or have otherwise resulted from business relations, or have been assigned in
connection therewith to the Bank (“the Obligations”) the Pledgor hereby pledges to
the Bank the following assets as collateral to the Bank:
2.1.1 all of its rights, title and interest in and to the securities deposited from time to
time at present or hereafter (hereinafter referred to as the “Pledged Securities”) and
the balance of funds up to the amount of $ USD 5,982,000.00 existing from time to
time at present or hereafter on the securities account(s) no. 540 030 held with the
Bank (hereinafter referred to as the “Pledged Securities Account”) and all amounts
credited at any particular time therein.
2.1.2 all of its right, title and interest in and to, and the balance of funds existing from
time to time at present or hereafter on the account(s) no. 540 030 kept by the Bank
(hereinafter referred to as the “Pledged Time Deposit Account “) and all amounts
(the Pledged securities account and the Pledged Time Deposit account hereinafter
referred to as the “Pledged Accounts”, the Pledged Securities and the Pledged
Accounts hereinafter collectively referred to as “Collateral”)
2.2 The Pledgor agrees to deposit with the Bank all dividends, interest and
other payments, distributions of cash or other property resulting from the
Pledged Securities and funds."
21. Further, following condition have been put in the Pledge agreement for the
realization of the pledge.
6. Realization of the Pledge
6.1 In the case that the Borrower fails to make payment on any due amount, or
default in accordance with the Loan Agreement, The Pledgor herewith grants its
express consent and the Bank is entitled to apply the funds in the Pledged Accounts to
settle the Obligations. In such case the Bank shall transfer the funds on the Pledged
Accounts, even repeatedly, to an account specified by the Bank
6.2 Notwithstanding the foregoing, in the case that the Borrower fails to make
payment on any due amount, or defaults in providing or increasing security, the
Pledgor herewith grants its express consent and the Bank is entitled to realize the
26
Pledged Securities (i) at a public auction for those items of Pledged Securities for
which no market price is quoted or which are not listed on a recognized stock
exchange or (ii) in a private sale pursuant to the provisions of Section 376 Austrian
Commercial Code unless the Bank decides to exercise its rights through court
proceedings. The Pledgor and the Bank agree to Realize those items of the Pledged
Securities for which a market price is quoted or which are listed on a stock exchange
through sale by a Broker Publicly authorized for such transactions, selected by the
Bank.
6.3 The Bank may realize the Pledge rather than accepting payments from the
Borrower after maturity of the claim if the Bank has reason to believe that the
Borrower’s payments may be contestable.
22. As the account no. 540030 is the account which Asahi has maintained with
Euram to keep the proceeds of GDRs, it is clear that Asahi has pledged
money received through issuance of GDRs to secure rights of Euram against
the loan given by Euram to Vintage for subscription of GDR issue (as
mentioned in Loan agreement of Vintage). This account (540030) is also
referred to as borrowers (Vintage) account in the Loan Agreement. This
common ownership of a bank account that belongs to both the
borrower/subscriber and the Issuer Company in which the GDR proceeds are
received added to a guarantee by Issuer Company for the loan taken by
subscriber to its GDRs, are the central and determining features of this
scheme to fraudulently raise capital by the Issuer Company
23. The fraudulent transformation of loan into GDR subscription in the name of
different subscribers occur through the scheme between AP/Vintage and
Asahi wherein the latter supports the former through pledging of GDR
proceeds.
24. On June 01, 2009, Asahi informed BSE that the Company had allotted
29,91,00,000 equity shares of Rs 1/- each underlying 29,91,000 GDRs
available for conversion, to the foreign entities namely, Greenwich and
Tradetec. Subsequently, this information was made public to retail investors
on BSE website. It is now clear from the investigation conducted that the
said public announcement by Asahi was done to mislead retail investors in
believing that the GDRs were subscribed by genuine foreign investors,
whereas in reality, GDRs were subscribed by Vintage in connivance with
Asahi and the proceeds simultaneously pledged with the Euram.
Acquisition, Cancellation and Sale of GDRs:-
25. After the issuance of GDRs, Vintage became the sole holder of the GDRs
issued, thereby becoming the majority share holder of Asahi. As on April 29,
2009, Vintage held 29,91,000 GDRs of Asahi, which made Vintage 88.94%
shareholder of the company.
27
26. These GDRs were then transferred to IFCF and KII through over the counter
transactions. Following table gives the details of transfer of GDRs from
account of Vintage (maintained with Euram) to that of IFCF and KII.
Date of Name of Name Quantity of Value of Trading Value per

Transaction Acquirer of Seller GDRs GDR Platform GDR ($)
acquired Acquired ($)
4
17-08-09 IFCF Euram 44,000 1,10,000 OTC 2.50
24-08-09 IFCF Euram 1,11,000 2,38,650 OTC 2.15
16-11-09 KII Euram 35,000 63,504 OTC 1.81
03-12-09 IFCF Euram 50,000 94,500 OTC 1.89
17-12-09 IFCF Euram 76,000 1,49,720 OTC 1.97
21-01-10 KII Euram 65,000 1,20,557 OTC 1.85
02-02-10 IFCF Euram 1,50,000 2,77,500 OTC 1.85
09-05-10 IFCF Euram 1,00,000 3,02,000 OTC 3.02
13-08-10 IFCF Euram 2,00,000 4,10,000 OTC 2.05
05-10-10 IFCF Euram 50,000 91,000 OTC 1.82
12-10-10 IFCF Euram 50,000 96,500 OTC 1.93
21-10-10 IFCF Euram 50,000 93,000 OTC 1.86
27-10-10 IFCF Euram 1,00,000 1,85,000 OTC 1.85
06-11-10 IFCF Euram 1,00,000 1,86,000 OTC 1.86
09-03-11 IFCF Euram 50,000 1,12,153 OTC 2.24
10-03-11 IFCF Euram 1,00,000 2,23,152 OTC 2.23
26-04-11 IFCF Euram 1,50,000 3,03,000 OTC 2.02
15-06-11 IFCF Euram 1,70,000 2,32,900 OTC 1.37
Total 16,51,000 32,89,136 1.99
27. Both IFCF and KII are connected to AP as Credo was found to be having an
agreement with Vintage for dealing in the GDRs of Asahi.
28. Credo, an associate company of KII was found to have an agreement with
Vintage. According to this agreement, Vintage provided a Loan of USD
20,00,000.00 to Credo to further lend it to KII, to enable KII to purchase
securities of several Indian companies including those of Asahi, either in
India or overseas market. As per the agreement, KII got GDRs converted
into underlying shares and sold the resultant shares in the Indian Markets.
The sale proceeds were then to be used to purchase further securities to
repeat the said process until KII decided to terminate the agreement.
29. Credo was paid a definite amount as commission by Vintage for providing
service of dealing in the securities of Indian companies. The agreement also
ensured that Vintage take full liability of the dealings of KII in the GDRs of
4
Euram has informed SEBI that all the transactions executed by Euram in GDRs of Indian companies
are on behalf of Vintage.
28
Indian companies and any loss incurred by KII to be borne by Vintage only.
The agreement was signed by AP on behalf of Vintage.
30. The cancellation of the GDRs of Asahi started from August 19, 2009 till June
14, 2011. Following are the details of cancellation requests completed till
June 30, 2012.
Transaction Date Entities cancelling GDRs on GDRs Shares Released

behalf of FIIs/Sub-Accounts Cancelled
19-08-2009 Euram 44,000 44,00,000
25-08-2009 Euram 1,11,000 1,11,00,000
23-11-2009 J.P. Morgan Clearing Corp. 35,000 35,00,000
04-12-2009 Euram 50,000 50,00,000
18-12-2009 Euram 76,000 76,00,000
27-01-2010 Jefferies & Co, Inc 65,000 65,00,000
02-02-2010 Euram 1,50,000 1,50,00,000
09-08-2010 Euram 30,000 30,00,000
11-08-2010 Euram 20,000 20,00,000
12-08-2010 Euram 50,000 50,00,000
24-08-2010 Euram 20,000 20,00,000
09-09-2010 Euram 50,000 50,00,000
20-09-2010 Euram 25,000 25,00,000
22-09-2010 Euram 35,000 35,00,000
05-10-2010 Euram 50,000 50,00,000
01-03-2011 Euram 1,00,000 1,00,00,000
20-04-2011 SIX SIS AG 33,450 33,45,000
26-04-2011 Euram 65,000 65,00,000
31-05-2011 Euram 1,45,000 1,45,00,000
03-06-2011 Euram 1,45,000 1,45,00,000
07-06-2011 Euram 74,500 74,50,000
14-06-2011 Euram 1,40,500 1,40,50,000
Total 15,14,450 15,14,45,000
31. The shares were released and credited to the demat accounts of IFCF and KII
as detailed below.
Date of receiving Name of entity receiving shares from GDR No. of shares
shares cancellation received
20-08-2009 INDIA FOCUS CARDINAL FUND 44,00,000

26-08-2009 INDIA FOCUS CARDINAL FUND 1,11,00,000
25-11-2009 KII LTD 35,00,000
28-01-2010 KII LTD 65,00,000
29
Date of receiving Name of entity receiving shares from GDR No. of shares
27-04-2011 BANK SARASIN AND CO. LTD 33,45,000
Total 15,14,45,000
32. 14,81,000 GDRs (49.51% of total 29,91,000 GDRs issued) were cancelled by
IFCF and KII during the period August 20, 2009 to June 15, 2011, of which
13,81,000 GDRs were cancelled by IFCF.
33. The following chart depicts the complete process of acquisition of GDRs by
IFCF and KII from Vintage and cancellation and conversion of these GDRs into
underlying shares.
30
34. The underlying shares received by IFCF and KII were sold in the Indian
Markets.
35. The details of the counterparties to these sales during the period January 01,
2009 to September 21, 2011 are given below:-
% of Total
FII CP PAN CP NAME Sell Volume Sell Value (Rs.) sale by IFCF
INDRAVARUN TRADE IMPEX 28.53
IFCF AACCI3088H PVT LTD (INDRAVARUN) 65,99,900 3,39,36,012
IFCF AAACB4324K BASMATI 1,90,52,069 2,80,81,895 23.60
IFCF ACRPP5552H SV 34,11,300 35,02,024 2.94
Others 3,54,18,377 5,34,47,388 44.93
Total sale by IFCF 6,44,81,646 11,89,67,319 100.00
% of Total
FII CP PAN CP NAME Sell Volume Sell Value (Rs.) sale by KII
KII
ACRPP5552H SV 20,00,000 20,00,000 57.14
KII AAACB4324K BASMATI 7,50,755 7,50,755 21.45
Others 7,49,245 7,49,245 7.09
Total Sale by KII 35,00,000 35,00,000 100.00
36. Considering the consolidation of shares by Asahi on November 04, 2010, IFCF
sold 12,39,71,646 shares of Asahi for Rs. 11,89,67,319, out of 13,81,00,000
shares received by it post cancellation of GDRs.
Utilisation of GDR proceeds by Asahi:-
37. The proceeds of GDR issue received by Asahi were also analyzed to
determine the manner in which the company has utilized the funds.
Documents were sought from Asahi in support of the utilisation of the GDR
proceeds. Most of the information and documents submitted by Asahi are
inconsistent with the statements made by Asahi to SEBI or with statements
available in public domain. Details of the same are provided in following
paragraphs
38. Summons were issued to Asahi seeking details regarding utilisation of GDR
proceeds by the company. The information and documents sought in the
summons are detailed below:-
38.1. Details of usage of proceeds of the GDR Issues by Asahi, along

with the documentary proof in support of the utilization of the
funds.
38.2. Copies of bank account statements of Asahi maintained with
Euram Bank.
38.3. Copies of bank account statements of Asahi in India highlighting
transactions related to repatriation of GDR proceeds.
31
38.4. Chronology of events leading to the issue of GDRs along with a
certified true copy of the resolution passed by Board of
Directors.
38.5. Rationale for the appointment of Panasia as LM for GDR issue of
Asahi.
38.6. Copies of all the agreements between Asahi and Panasia
38.7. Copies of agreements with Euram.
38.8. Details of the conditions that were laid upon Asahi for the
withdrawal of GDR proceeds from bank accounts maintained
with Euram.
38.9. Copy of any other agreement that Asahi had with Euram apart
from those related to GDR issues.
38.10. Details of any agreement of Asahi regarding financing for the
purpose of subscription by initial investors of GDRs.
38.11. Copies of agreements that Asahi had with Vintage and AP.
38.12. Details of nature of business of the subsidiary of Asahi in U.A.E
viz, Asahi Infrastructure & Projects Ltd FZE (Asahi FZE).
38.13. Copies of Bank Account Statements of Asahi FZE.
38.14. Details of payments made to Panasia or companies associated
with Panasia.
38.15. Name of the directors and promoters of Asahi at the time of
issue of GDRs.
38.16. Details of money paid by Asahi FZE, be it on account of
purchases or expenses or loan, to other entities for more than
USD 25,000 from incorporation. Asahi was specifically asked to
provide details like name of entities to which payments were
done, purpose of payments and amount paid by Asahi FZE.
38.17. Audit Report of Asahi FZE along with financial statements for the
year ending March 2010 and March 2011.
38.18. Detail of remittance of USD 60,798 done to Pan Asia
Management by Asahi on July 15, 2010.
38.19. Contact details, Nature of business and Bank Account
statements of Asahi FZE
39. Summons dated March 28, 2012 was issued to Managing Director of Asahi
to appear in person on April 16, 2012 before Investigating Authority at SEBI
head office. On April 16, 2012, Mr. Ravi Ramaiya, Practicing Chartered
Accountant appeared on behalf of Asahi with authorisation letter signed by
Mr. Laxminarayan Rathi, MD of Asahi and the representative's statement
was recorded before Investigating Authority.
40. From the perusal of the documents submitted in response to the summons
and statement given by the representative of Asahi, following are observed:-
40.1. Asahi submitted the details of utilisation of GDR proceeds.

Summary of the same is given below:-
32
Amount (in Rs.
Utilisation
crore)
Transferred to
Asahi FZE 20.96
GDR Expense. 1.369
Utilised in India 5.886
Dividend Payment 1.7
Total Capital Raised 29.91
40.2. Rs. 20.96 crore out of total issue size of Rs. 29.91 crore i.e.
around 70% was transferred by Asahi to its subsidiary in Dubai
Asahi FZE.
40.3. It was submitted by Asahi that Rs. 20.96 crore was transferred to
Asahi FZE for trading purpose. Asahi FZE received and paid
money for trading in cement, aluminium, iron, construction and
so on.
40.4. The account statement of Asahi FZE reflected transactions with
K Sera Sera Production FC LLC (Asahi FZE received USD 19,97,955
), Ababil Star General Trading (Ababil)5 , CAT Technologies,
Vintage etc.
40.5. Asahi FZE had transactions with companies like Beckons
Industries Ltd, Cybermate Infotek and CAT that have issued GDRs
with Panasia as LM. Asahi has not been able to explain the
rationale behind such financial transactions with these
companies.
40.6. According to submissions by Asahi, Asahi FZE paid USD
20,73,000 to Vintage and USD 600,000 to Ababil from its Dubai
Bank accounts. However, Asahi was unable to provide an
explanation for these transactions.
41. On adding USD 26,73,000 transferred to Vintage and Ababil by Asahi FZE to
the funds which Vintage received by selling the GDRs (USD 32,89,136) to FIIs,
the total amount comes to be USD 59,62,136, which is around 99.66% of
total loan taken by Vintage from Euram for subscribing to GDR issue of Asahi .
42. Out of Rs. 20.96 crore (approx USD 4.7 million) transferred to Asahi FZE, USD
2.67 million was transferred back to AP Entities like Vintage and Ababil. Thus
Asahi transferred 44.68% of the GDR issue proceeds back to AP entities
which is suspected to be utilised to repay the loan taken by Vintage under
Loan Agreement.
43. Following documents/information sought vide summons/emails/letters were

not provided by Asahi.
5
Ababil was a company based outside India with which Avon had an agreement worth USD 4 million to purchase second hand
machinery. Ababil was also one of the initial investors of GDR issue of K Sera.
33
43.1. Important details with respect to Asahi FZE viz. address, contact
person and contact no. was not provided by Asahi to SEBI.
43.2. Asahi was specifically asked to explain the rationale behind all the
payments done by Asahi FZE which were above USD 25,000.
However, Asahi did not provide rationale for payments done by
Asahi FZE.
43.3. Details of purchases and expenses incurred by Asahi FZE were not
provided.
44. Due to the fact that Asahi did not provide the specific details like purpose of
payments done by Asahi FZE with proper documentary proof, it was not
possible for SEBI to investigate the end use of the GDR proceeds by Asahi FZE
and establish complete cycle of flow of funds. It is suspected, due to reasons
explained above, that Asahi FZE was used by AP to route funds back to
Vintage and other AP entities. The same is explained in chart below:-
34
Misleading Submissions by Asahi:-
45. Apart from not providing aforementioned critical information to SEBI, wrong
information was also provided by Asahi. The wrong submissions of Asahi
were particularly related to Pledge and Loan Agreements to which Asahi was
one of the party.
46. It was confirmed by Asahi in its submissions that there were no conditions
prescribed under any Agreement with Euram with regard to withdrawal of
funds from GDR Account.
47. Asahi denied having any other agreement with Euram other than Escrow
Account agreement.
48. Asahi also denied having any agreement with Vintage or AP.
49. Asahi denied having any agreement with any entity regarding financing of
subscription of GDR Issues.
50. The submission by Asahi that it did not have any other agreement with
Euram, Panasia, Vintage or AP is false as Pledge was signed by the Managing
Director of the company with Euram. Further, this Pledge Agreement is part
of the Loan Agreement between Vintage and Euram. Similarly it is mentioned
in the Pledge Agreement that the Pledgor has received the Loan Agreement
and agrees to its conditions.
51. Asahi also made a false submission of no restriction/condition on its GDR

Account for withdrawal of funds. From the perusal of Pledge Agreement
it is observed that the GDR Account is a collateral against the Loan taken by
Vintage and therefore funds can only be withdrawn when the loan is
repaid by Vintage
52. Asahi did not disclose details of outstanding GDRs in its quarterly disclosure
of share holding pattern to exchanges. As per BSE website, the equity held
with custodians is shown as nil for Asahi even after issuance of GDR issue.
53. The above explained falsification of information regarding Pledge and Loan
Agreements and concealment of information regarding utilisation of funds by
foreign subsidiary supports the suspicion of SEBI that part of the proceeds of
GDR issue were routed back to AP entities.
54. In conclusion, it may be said that Asahi having executed the fraudulent
transaction of claiming subscription of GDRs by two foreign investors while it
was only purchased by the LM/AP related entity and finding the proceeds
being encumbered due to the underlying loan taken by AP, finally received,
in India, not more than 30% of the money raised. The remaining funds were
paid out to various parties without any clear purpose of such transfers
35
mentioned in the books of the company. These highly material events are
not explained clearly in the financial statements of the company nor were
ever disclosed to the market. The shareholders of Asahi were adversely and
without warning impacted due to the slide in prices on account of the large
sale of shares upon cancellation of GDRs.
36
(II) AVON CORPORATION LTD.
1. The GDR Issue of Avon for US $ 10 Million closed on June 19, 2009 and was
fully subscribed. The allotment of 16,00,000 Global Depository Receipts
representing 4,80,00,000 equity shares of Rs 10/- each at $6.25 by the
company was done on June 19, 2009.
3. Prior to GDR issue, Avon had 1,65,80,317 fully paid equity shares. Therefore,
the equity shares represented by the GDRs were approximately 289.50% of
Avon's outstanding share capital at the time of GDR issue.
4. The total capital raised by Avon vide GDRs was USD 1,00,00,000 which is
equal to Rs. 48,13,00,000 considering conversion price of USD 1 = Rs. 48.13
as on June 19, 2009. The market cap of Avon prior to GDR issue was Rs.
14,71,00,000. Therefore, the capital raised by GDR issue was 327.19% of the
market capital of the company prior to GDR issue.
5. The last traded price of Avon on BSE on June 19, 2009 was Rs. 8.87. The
highest and lowest price of Avon for a period of three months from March
19, 2009 to June 19, 2009 was Rs. 10.30 and Rs. 3.95 respectively. The price
which subscribers paid for each share underlying GDRs was Rs. 10.02 (USD 1
= Rs. 48.13 as on June 19, 2009) which was 112.05% of the price of the scrip
on same day.
6. Following are the details of investors in the GDR issue of Avon, as submitted
by the company.
Name of Subscriber GDRs Amount Paid % of total

Subscribed (USD) GDR issue
Flamboyant International
Ltd (Flamboyant) 2,40,000 15,00,000 15.00
Trendsetter Enterprises
Cops.(Trendsetter) 3,20,000 20,00,000 20.00
Green Management Inc
(Greenwich) 2,88,000 18,00,000 18.00
Flagstaff Investments LTD
(Flagstaff) 2,24,000 14,00,000 14.00
Imagination Network
Inc.(Imagination) 2,40,000 15,00,000 15.00
Figura Group LTD (Figura) 2,88,000 18,00,000 18.00
37
7. All the above subscribers were observed to be investors in several other GDR
issues of Indian companies which were managed by Panasia. The addresses
of these subscribers which were made available to SEBI are as following.
Name of Subscriber Address

st
Flamboyant 21 Floor, ICBC Tower, Citibank Plaza No: 3,
Garden Road, Hong Kong
Trendsetter Level 42, Suntec 4, 8 Temasek BLVD, Singapore -
038988
Greenwich Floor - 18, One International Finance Centre, 1
Harbour view Street, Central, Hong Kong
Email : bw@tradeteccorporation.com
Flagstaff 10th Floor, Al Odaid Office Tower, Airport Road,
P.O. Box 128161, Abu Dhabi, UAE
Imagination Level 39, One Exchange Square, Central HongKong
Figura 15 A, West Road, West Cliff Onsea, Essex SS09AU
8. All the attempts to contact these subscribers were unsuccessful, just like in
all the other cases where LM to the GDR issue is Panasia. None of the letters,
emails or summons got delivered to these subscribers due to wrong email
addresses and other contact addresses. Even the financial market regulators
regulating the region where these subscribers were located could not trace
these subscribers. In most of the cases SEBI got a reply from the respective
regulators that no such address exist that have been provided by SEBI.
Loan & Pledge Agreement signed among Avon, Vintage & Euram.
subscription of GDRs of Avon was done using loan taken from Euram. The
GDR issue of Avon is issued using AP GDR Scheme and Loan and Pledge
Agreement signed among Avon, Vintage and Euram is the key to issuance
and subscription of GDRs in this case.
10. The Pledge and Loan agreements among Avon, Vintage and Euram are
similar to that of Asahi and other companies examined by SEBI. These
agreements are part of AP GDR scheme.
11. A loan agreement (Loan Agreement : 100609-002) dated June 10, 2009, was
signed between Euram and Vintage on June 12, 2009. The agreement was
signed by AP as Managing Director on behalf of Vintage on June 12, 2009.
of USD 1,00,00,000.00 to Vintage (referred to as ''the Borrower''). The
nature and purpose of the loan facility is to provide funding enabling Vintage
to take down GDR issue of Avon's Luxemburg public offering and may only be
transferred to Euram account no: 540084.
38
13. The Euram account no: 540084 is the bank account of Avon maintained with
Loan Agreement.

15. A Pledge Agreement dated June 10, 2009 was signed between Avon and
Euram. The agreement was signed by Mr. Pankaj Saraiya on June 12, 2009 on
behalf of Avon, as CEO of Avon. He and his other family members are
promoters of Avon.
16. According to the Pledge Agreement, Avon has been referred as "Pledgor''
and Euram has been referred to as ''Bank''.
"By loan agreement K210409-003 (hereinafter referred to as ''Loan

Agreement'') dated June 10, 2009, the Bank granted a loan (hereinafter
referred to as the ''Loan'') to Vintage FZE, AAH-213, Al Ahmadi House, Jebel Ali Free
Trade Zone, Jebel Ali, Dubai, United Arab Emirates (''the Borrower") in the amount of
$ USD 10,000,000.00. The Pledgor has received a copy of the Loan Agreement and
18. From the above preamble of Pledge Agreement, it is clear that Mr. Pankaj
Saraiya and Avon were also the party to the Loan Agreement between
Vintage and Euram.
39
" 2. Pledge
"6. Realization of the Pledge
40
Bank.
Borrower’s payments may be contestable. "
21. As the account no. 540084 is the account which Avon has maintained with
Euram to keep the proceeds of GDRs, it is clear that Avon has pledged money
received through issuance of GDRs to secure rights of Euram against the loan
given by Euram to Vintage as borrower of funds for subscription of GDR issue
(as mentioned in Loan agreement of Vintage).
22. The account no. 540084 is also mentioned as the account of the borrower in
the Loan Agreement. This common ownership of a bank account that
belongs to both the borrower/subscriber and the Issuer Company in which
the GDR proceeds are received added to a guarantee by Issuer Company for
the loan taken by subscriber to its GDRs, are the central and determining
features of this scheme to fraudulently raise capital by the Issuer Company.
Avon wherein the latter supports the former through pledging of GDR
proceeds.
24. On June 19, 2009, Avon made a public announcement on BSE that the GDR
issue of the Company for US $ 10 Million was fully subscribed and closed on
June 18, 2009 and the Board of Directors at its Meeting held on June 19,
2009 allotted 16,00,000 GDRs underlying equity shares 4,80,00,000 at Rs
10/- per share at par. It is now clear from the investigation conducted that
the said public announcement by Avon was done to mislead retail investors
in believing that the GDRs were subscribed by genuine foreign investors,
whereas in reality, GDRs were subscribed by Vintage in connivance with
Avon.
issued, thereby becoming the majority share holder of Avon. On June 19
2009, Vintage was holding 16,00,000 GDRs of Avon, which means it was
74.34% shareholder of the company.
26. These GDRs were then transferred to IFCF and KII through over the counter
transactions. Following table gives the detail of transfer of GDRs from
account of Vintage (maintained with Euram) to that of IFCF and KII.
41
Date Name of Name of Quantity of Value of Trading Value
Acquirer Seller GDRs GDRs Platform per
Acquired Acquired ($) GDR($)
27-Jul-09 IFCF Euram 34,700 1,99,525 OTC 5.75
04-Aug-09 KII Euram 78,000 4,52,088 OTC 5.80
07-Aug-09 IFCF Euram 90,500 5,79,200 OTC 6.40
12-Aug-09 KII Euram 78,000 4,52,088 OTC 5.80
20-Nov-09 IFCF Euram 30,000 1,47,000 OTC 4.90
18-Jan-10 IFCF Euram 22,000 99,000 OTC 4.50
19-Jan-10 IFCF Euram 1,00,000 4,45,000 OTC 4.45
02-Feb-10 IFCF Euram 33,000 1,49,160 OTC 4.52
10-Mar-10 IFCF Euram 80,000 2,88,000 OTC 3.60
04-May-10 IFCF Euram 1,05,000 4,29,450 OTC 4.09
27-May-10 IFCF Euram 2,00,000 6,60,000 OTC 3.30
01-Sep-10 IFCF Euram 1,70,000 5,27,000 OTC 3.10
01-Sep-10 IFCF Euram 35,000 1,08,500 OTC 3.10
01-Oct-10 IFCF Euram 23,800 72,828 OTC 3.06
Total 16,00,000 61,20,639
27. The cancellation of the GDRs of Avon started from July 31, 2009 till
November 02, 2010. Following are the details of cancellation requests that
were completed by ODB till June 30, 2012.
Transaction Entities cancelling GDRs on GDRs Cancelled Shares Released

Date behalf of FIIs/Sub-Accounts
31-07-2009 Euram 25,000 7,50,000
05-08-2009 Euram 9,700 2,91,000
10-08-2009 Euram 90,500 27,15,000
20-11-2009 Euram 30,000 9,00,000
20-01-2010 Euram 22,000 6,60,000
21-01-2010 Euram 50,000 15,00,000
03-02-2010 Euram 33,000 9,90,000
04-03-2010 Euram 50,000 15,00,000
10-03-2010 Euram 50,000 15,00,000
17-03-2010 Euram 30,000 9,00,000
07-05-2010 Euram 73,000 21,90,000
27-05-2010 Euram 40,000 12,00,000
19-07-2010 Euram 33,000 9,90,000
26-07-2010 Euram 45,000 13,50,000
03-08-2010 Euram 50,000 15,00,000
10-08-2010 Euram 50,000 15,00,000
42
Transaction Entities cancelling GDRs on GDRs Cancelled Shares Released
Date behalf of FIIs/Sub-Accounts
30-08-2010 Euram 14,000 4,20,000
01-09-2010 Euram 60,000 18,00,000
07-09-2010 Euram 30,000 9,00,000
08-09-2010 Euram 76,000 22,80,000
15-09-2010 Euram 76,000 22,80,000
20-09-2010 Euram 35,000 10,50,000
22-09-2010 Euram 30,000 9,00,000
28-09-2010 Euram 50,000 15,00,000
29-09-2010 Euram 1,00,000 30,00,000
01-10-2010 Euram 70,000 21,00,000
05-10-2010 Euram 30,000 9,00,000
06-10-2010 Euram 30,000 9,00,000
07-10-2010 Euram 30,000 9,00,000
12-10-2010 Euram 40,000 12,00,000
12-10-2010 Euram 18,000 5,40,000
15-10-2010 Euram 25,300 7,59,000
19-10-2010 Euram 16,700 5,01,000
25-10-2010 Euram 16,600 4,98,000
02-11-2010 Euram 33,200 9,96,000
Total 16,00,000 4,80,00,000
28. Subsequently, shares were released into the demat accounts of Sub-
Accounts in India by custodian of shares. Following are the details of the
same.
Date of
receiving No. of shares
shares Name of entity receiving shares from GDR cancellation received
03-Aug-09 INDIA FOCUS CARDINAL FUND 7,50,000
12-Aug-09 KII LTD 23,40,000
23-Nov-09 INDIA FOCUS CARDINAL FUND 9,00,000
01-Jan-10 KII LTD 18,00,000
21-Jan-10 INDIA FOCUS CARDINAL FUND 6,60,000
04-Feb-10 INDIA FOCUS CARDINAL FUND 9,90,000
05-Mar-10 INDIA FOCUS CARDINAL FUND 15,00,000
10-May-10 INDIA FOCUS CARDINAL FUND 21,90,000
28-May-10 INDIA FOCUS CARDINAL FUND 12,00,000
20-Jul-10 INDIA FOCUS CARDINAL FUND 9,90,000
27-Jul-10 INDIA FOCUS CARDINAL FUND 13,50,000
43
Date of
receiving No. of shares
shares Name of entity receiving shares from GDR cancellation received
02-Sep-10 INDIA FOCUS CARDINAL FUND 18,00,000
01-Oct-10 INDIA FOCUS CARDINAL FUND 30,00,000
13-Oct-10 KII LTD 5,40,000
Total 4,80,00,000
29. 16,00,000 GDRs (100% of total GDRs issued) were cancelled by IFCF and KII
during the period July 31, 2009 to November 03, 2010. 14,44,000 out of
16,00,000 GDRs were cancelled by IFCF and rest 1,56,000 GDRs were
cancelled by KII.
30. The following chart depicts the complete process of acquisition of GDRs by
IFCF and KII from Vintage and cancellation of these GDRs.
44
31. The shares thus received by FIIs were then sold by them in the Indian
Markets. As seen in the case of other Examined Companies, a high
percentage of these shares then go to certain set of clients in Indian Stock
Markets.
32. The following are the details of counterparties of sale of shares by IFCF and
KII to Indian clients for the period of January 01, 2009 to September 21,
2011.
Sell Value
FII CP PAN CP NAME Sell Volume (Rs.) % to total Sale
IFCF AACCD7366D Delight Financial 2,21,56,688 12,68,65,267 51.38
IFCF AEUPN9210P VInod Amrutlaal Naai 82,35,444 4,98,64,172 19.10
IFCF AAACB4324K Basmati 31,46,551 2,48,58,504 7.30
IFCF ACRPP5552H SV Enterprises 23,11,178 2,30,72,059 5.36
IFCF AAACO3597K Oudh 17,96,694 1,50,22,854 4.17
IFCF Others 54,73,445 3,32,01,956 12.69
IFCF Total 4,31,20,000 27,28,84,812 100.00
Sell Value
KII AACCD7366D Delight Financial 14,69,688 81,10,078 31.40
KII AEUPN9210P VInod Amrutlaal Naai 9,29,835 54,82,870 19.87
KII ACRPP5552H SV Enterprises 6,51,286 65,42,180 13.92
Others 16,29,191 1,11,18,347 34.81
KII Total 46,80,000 3,12,53,475 100.00
33. IFCF and KII sold 4,78,00,000 shares out of 4,80,00,000 shares they received
post cancellation of GDRs. Total proceeds they received post sale of these
shares is Rs. 30,41,38,287.
34. 87.31% of the shares sold by IFCF have been sold to five clients which
includes Basmati, SV and Oudh. Similarly, 65.19% of the shares sold by KII
have been purchased by top three counterparties.
Utilisation of GDR proceeds by Avon:-
35. The utilisation of GDR proceeds by Avon was investigated to determine the
manner in which Avon has utilised GDR issue proceeds. It was observed from
the investigation that similar to the case of Asahi, the major part of the GDR
proceeds (66.27% of total capital raised via GDRs) was not received by Avon
in India. The funds were transferred directly to either subsidiary in U.A.E. or
to other foreign based entities which are also linked with AP GDR Scheme.
45
36. Summons and e-mails were sent to Avon seeking details regarding utilisation
of GDR proceeds by the company. The information and documents sought in
the summons are detailed below:-
36.1. Details of usage of proceeds of the GDR Issues by Avon, along

funds.
36.2. Copies of bank account statements of Avon maintained with
Euram Bank.
36.3. Copies of bank account statements of Avon in India highlighting
Directors.
Avon.
36.6. Copies of all the agreements between Avon and Panasia
36.8. Details of the conditions that were laid upon Avon for the
with Euram.
36.9. Copy of any other agreement that Avon had with Euram apart
36.10. Details of any agreement of Avon regarding financing for the
36.11. Copies of agreements that Avon had with Vintage and AP.
36.12. Details of nature of business of the subsidiary of Avon in U.A.E
viz, Avon Corporation FZE (Avon FZE).
36.13. Copies of Bank Account Statements of Avon FZE.
with Panasia.
36.15. Name of the directors and promoters of Avon at the time of
issue of GDRs.
36.16. Details of money paid by Avon FZE, be it on account of purchases
or expenses or loan, to other entities for more than USD 25,000
from incorporation. Avon was specifically asked to provide
details like name of entities to which payments were done,
purpose of payments and amount paid by Avon FZE.
36.17. Audit Report of Avon FZE along with financial statements for the
statements of Avon FZE
37. From the perusal of documents submitted by Avon to SEBI, following has
been observed:-
46
37.1. Out of the USD 1,00,00,000 raised by Avon, USD 92,83,114 was
transferred to Avon FZE and rest USD7,16,886 was either utilized
as GDR expense or transferred to Avon in India. USD 26,55,404 was
then transferred from Avon FZE to Avon in India. Thus, on a net
basis USD 66,27,710 or around 66% of GDR proceeds were
transferred to Avon FZE. Avon has not been able to provide SEBI
with any document which can be relied upon for examining
utilisation of this USD 66,27,710 by Avon FZE.
37.2. Avon FZE was floated as a 100% subsidiary of Avon in Dubai in
March 2010 and is in the business of trading in metal sheets and
mechanical structures.
37.3. Avon FZE entered into an agreement with an AP related entity viz,
Ababil Star General Trading LLC6 (Ababil). As per the Agreement
Avon was to pay USD 40,00,000 to Ababil for the purchase of
second hand machinery.
37.4. On August 18, 2009, a payment of USD 15,00,000 was made by
Avon to Ababil under the aforesaid agreement. However, no other
payment was made to Ababil by Avon after that.
37.5. Ababil was also one of the front entity portrayed as initial investor
by Panasia/AP in the 2nd GDR issue of K Sera. Ababil was shown to
have invested USD 36,71,600 in the GDR issue of K Sera on
October 16, 2009 as initial investor.
37.6. As per the clarification given by Mr. Pankaj Saraiya, MD & CEO of
Avon, aforementioned agreement with Ababil was entered into for
buying second hand machinery under the planning of
manufacturing products using this machinery in Dubai. Later on
Ababil was not able to meet its commitment. Thereafter, Avon has
been trying to recover the payment made to Ababil.
38. From the above, it is seen that Avon transferred USD 1.5 million to AP
related entity viz, Ababil. The explanation provided by Avon does not appear
to be plausible in view of the connection between Ababil and AP (Ababil is
mentioned as initial investor in the GDR issues). This appears to be a case of
the issuer company compensating AP through its subsidiary
39. Mr. Pankaj Saraiya also appeared in person on April 13, 2012 at SEBI Head
Office for recording of statements under oath wherein, he reiterated the
submissions which was made by the company in response to SEBI summons.
40. No information has been provided till date by Avon with respect to the
following:
40.1. Bank Account Statements of Avon FZE required to examine the

flow of funds transferred out of bank account of Avon FZE.
6
Ababil is a company based in Dubai, with which Asahi was found to be having financial transactions.
Ababil was also one of the investors in GDR issue of K Sera
47
40.2. Avon was specifically asked to provide details (including name of
entity to which payment has been done, purpose of payment and
amount paid) of money paid by its foreign subsidiary. However,
Avon did not provide any such detail to SEBI.
41. The fact that Avon did not provide crucial documents such as bank account
statements of Avon FZE only strengthens the suspicion that the proceeds of
the GDR issue of Avon have not been utilised in a legitimate manner.
42. It is suspected by SEBI that the last stage of AP GDR scheme involves
repayment of GDR Issue proceeds to AP by Avon through its foreign
subsidiary viz, Avon FZE. However, Avon did not provide any such
information which would have helped SEBI in determining the actual flow of
funds back to AP or AP related entities (other than USD 1.5 million
transferred to Ababil).
Misleading Submissions by Avon:-
43. It is also observed that false submissions were made by Avon to SEBI. The
false submissions were particularly with respect to the Pledge Agreement
and Loan Agreement having Euram, Vintage (signed by AP) and Avon as
parties. Following are the submissions by Avon which were found to be
false:-
44. Avon made false submission that it did not have any agreement with
Vintage. It is clearly mentioned in the Loan Agreement signed between
Vintage and Euram that Pledge Agreement signed between Avon and Euram
is part of the Loan Agreement. Similarly it is mentioned in the Pledge
Agreement that the Pledgor has received the Loan Agreement and agrees to
its conditions.
45. Avon made submissions that it did not have any arrangement with AP for
subscription of GDRs. As explained in the preceding paragraphs, the
complete GDR issuance was done on the basis of AP GDR Scheme.
46. Avon denied having any agreement with Euram. This is clearly an attempt by
management of Avon to mislead SEBI investigations by providing false
information as Mr. Pankaj Saraiya himself had signed the Pledge Agreement
with Euram which stated that the GDR proceeds are kept as security against
the loan taken by Vintage.
Despite Pledge and Loan Agreements signed among Euram, Avon and
Vintage, Avon denied that that the company had any agreement with Euram
other than the Escrow account agreement.
48
47. Avon denied having any agreement with any entity for the purpose of
financing of the GDR issue. However, it is clear from the facts that the GDR
issue was subscribed and financed by AP in connivance with the company.
48. All of the above false submissions were reiterated and confirmed, under
oath, by Mr. Pankaj Saraiya, MD & CEO of Avon, during the personal hearing
held on April 13, 2012 in SEBI HO.
foreign subsidiary strongly supports the suspicion of SEBI that part of the
proceeds of GDR issue were routed back to AP entities.
49
(III) CAT TECHNOLOGIES LTD
1. There were two GDR issues by CAT. First in 2007 and then in 2009. Panasia
was appointed as the LM to both the GDR issue by the company.
1st GDR Issue
2. First GDR Issue was of USD 6.46 Million and it closed on July 27, 2007 with
full subscription. The allotment of 43,04,348 Global Depository Receipts
representing 2,58,26,088 equity shares of Rs 10/- each at USD 1.50 by the
company was done on July 27, 2007.
3. Prior to GDR issue, CAT had 57,50,400 fully paid equity shares. Therefore, the
equity shares represented by the 1st GDR issue were approximately 449.11%
of CAT's outstanding share capital at the time of GDR issue.
4. The total capital raised by CAT vide 1st GDR issue was USD 64,56,522.00
which is equal to Rs. 26,13,60,010.60 considering conversion price of USD 1 =
Rs. 40.48 as on July 27, 2007. The market cap of CAT prior to GDR issue was
Rs. 3,00,00,000. Therefore, the capital raised by GDR issue was 871.20% of
the market capital of the company prior to GDR issue.
5. The last traded price of CAT on BSE on July 27, 2007 was Rs. 5.22. The highest
and lowest price of CAT for period of three months from April 27, 2007 to
July 27, 2007 was Rs. 6.03 and Rs. 4.37 respectively. The price which
subscribers paid for each share underlying GDRs was Rs. 10.12 (USD 1 = Rs.
40.48 as on July 27, 2007) which was 193.87% of the price of the scrip on July
27, 2007.
2nd GDR Issue
6. Another allotment of 15,95,333 GDRs representing 4,78,59,990 equity

shares of Rs 10/- each at USD 6.27 was done by the company on November
06, 2009.
7. Prior to 2nd GDR issue, CAT had 31,576,488 fully paid equity shares.
Therefore, the equity shares represented by the 2 nd GDR issue were
approximately 151.57% of CAT's outstanding share capital at the time of GDR
issue.
8. The total capital raised by CAT vide 2nd GDR issue was USD 1,00,02,737.91
which is equal to Rs. 46,83,28,190 considering conversion price of USD 1 =
Rs. 46.82 as on November 06, 2009. The market cap of CAT prior to GDR
50
issue was Rs. 50,81,00,000. Therefore, the capital raised by GDR issue was
92.17% of the market capital of the company prior to GDR issue.
9. The last traded price of CAT on BSE on November 06, 2009 was Rs. 16.09.
The highest and lowest price of CAT for period of three months from August
06, 2009 to November 06, 2009 was Rs. 17.43 and Rs. 5.95 respectively. The
price which subscribers paid for each share underlying GDRs was Rs. 9.79
(USD 1 = Rs. 46.82 as on November 06, 2009) which was 60.82% of the price
of the scrip on November 06, 2009.
10. Following are the details of investors in the 1st GDR issue of CAT, as provided
by the company.

Rexflec Ltd (Rexflec) 7,00,000 10,50,000 16.26
Trendsetter 8,00,000 12,00,000 18.59

Futura Group Ltd (Futura) 8,00,000 12,00,000 18.59
Tradetec 10,04,348 15,06,522 23.33
Imagination 10,00,000 15,00,000 23.23
11. Following are the details of investors in the 2nd GDR issue of CAT, as provided
by the company.

Futura 4,95,333 31,05,738 31.05

Tradetec 6,00,000 37,62,000 37.61
Trendsetter 5,00,000 31,35,000 31.34
12. These investors are common to other GDR issues managed by Panasia.
Following addresses of these entities were made available to SEBI by CAT.
Name of Subscriber Address
Rexflec Level 41, Emirates Towers, Sheikh Zayed Road,

Dubai
Trendsetter
Level 42, Suntec 4, 8 Temasek BLVD, Singapore -
51
038988
Futura 15A, West Road, Westcliff-on-sea, Essex SSO 9AU
Tradetec Level 47, Prudential Tower, 30 Cecil Street,

Singapore - 049712
Email: investuk@figuragroup.com
Imagination Level 39, One Exchange Square, Central HongKong
13. As in the case of other GDR issues examined by SEBI, none of the initial
investors could be contacted. SEBI received confirmation from regulators of
respective jurisdictions that these entities/firms named as initial investors
could not be traced.
Loan & Pledge Agreement signed among CAT, Vintage & Euram:-
subscription of both the GDR issues of CAT was also done using loan taken
from Euram. The Loan and Pledge Agreement signed among CAT, Vintage
and Euram is the key to issuance and subscription of GDRs.
15. The pledge and Loan agreements among CAT, Vintage and Euram are similar
to that of other companies investigated by SEBI. These agreements are part
of AP GDR scheme.
16. Euram provided the copy of the Pledge and Loan agreements for GDR issues
of CAT to SEBI. However, from the perusal of the documents provided, it
appears that there are several typographical errors in the agreements which
have been ignored by the signatories to the agreements and which have
been described in subsequent paragraphs.
17. The Loan and Pledge Agreement signed for 1st and 2nd GDR issue of CAT
contain similar clauses. The agreement signed for 2nd GDR issue in 2009 are
discussed in detail below.
ISSUE 2 (2009)
18. A loan agreement (Loan Agreement: K271009-002) dated October 27, 2009 ,
was signed between Euram and Vintage. The agreement was signed by AP as
Managing Director on behalf of Vintage.
52
to take down GDR issue of 15,95,333 Luxemburg public offering and may
only be transferred to Euram account no: 540013 for CAT Technologies Ltd..
Loan Agreement.

21. The Euram account no: 540012 is the bank account of Vintage maintained
with Euram. On perusal of this account it was found that the account is used
by AP to borrow a Loan from Euram for subscription to GDRs of Issuer
companies and receiving those GDRs from the companies.
22. The Euram account no: 540013 is the bank account of CAT maintained with
23. A Pledge Agreement was also signed between CAT and Euram. The
agreement was signed by Mr. Dhiraj Jaiswal on October 27, 2009 on behalf of
CAT as Managing Director of CAT. He and his other family members are
promoters of CAT.
24. There is no announcement to the Exchange or market regarding the Pledge

and Loan Agreement by the company.
25. According to the Pledge Agreement, CAT has been referred as "Pledgor'' and
Euram has been referred to as ''Bank''.
"By loan agreement K271009-002(hereinafter referred to as ''Loan Agreement'')

dated October 27, 2009, the Bank granted a loan (hereinafter referred to as the
''Loan'') to Vintage FZE, AAH-213, Al Ahamadi House, Jebel Ali Free Trade Zone,
Jebel Ali, Dubai, United Arab Emirates (''the Borrower") in the amount of $ USD
53
1,00,02,737.91. The Pledgor has received a copy of the Loan Agreement No.
K2710009-002and acknowledges and agrees to its terms and conditions."
27. From the above preamble of Pledge Agreement, it is clear that Mr. Dhiraj
Jaiswal and CAT were also the party to the Loan Agreement.
" 2. Pledge
the balance of funds up to the amount of $ USD 1,00,02,737.91 existing from time to
credited at any particular time therein. The interest rate on deposit in the amount of
the facility amount of the loan will be fixed at 2.5% p.a.
''6. Realization of the Pledge
54
Bank.
Borrower’s payments may be contestable. ''
30. As the account no. 540013 is the account which CAT has maintained with
Euram to keep the proceeds of GDRs, it is clear that CAT has pledged money
(as mentioned in Loan agreement of Vintage). CAT and Vintage are partners
to the scheme of converting a loan into GDR proceeds and the latter is then
used to secure the former. The objective is of misleading the market that
capital has been raised abroad.
features of this scheme to fraudulently raise capital by the Issuer Company.
ISSUE 1 (in 2007)
32. A Loan agreement was also signed between Vintage and Euram previously on
July 23, 2007 in relation to first GDR issue of CAT.
33. Similarly, a Pledge Agreement was signed between CAT and Euram on July
20, 2007.
34. The Loan agreement and Pledge Agreement signed 1st time were exactly
similar to the 2nd Loan Agreement and Pledge Agreement except following
differences:
55
34.1. The loan agreement mentions the name of Kohinoor Broadcasting
Corporation Ltd's (Kohinoor) as the issuer company for which the
loan is provided. The nature and purpose of the Loan Agreement
states that,
" to provide funding enabling Vintage to take down GDR issue of

Kohinoor Broadcasting Corporation Ltd's (Kohinoor) Luxemburg
public offering and may only be transferred to Euram account no:
540013 for CAT Technologies Ltd...''
34.2. Thus the Loan and Pledge Agreement were signed for the
subscription of 1st GDR issue of 43,04,348 GDRs of CAT
Technologies Ltd which closed on July 27, 2007 but mentioned the
name of Kohinoor, presumably due to a typographical error.
34.3. The Loan amount was USD 64,56,522.00, as was the size of GDR
issue.
35. It seems that the Loan agreement signed between Vintage and Euram,
inadvertently, mentioned GDR issue of Kohinoor instead of GDR issue of CAT.
The GDR issue of Kohinoor also closed on July 20, 2007 and the capital raised
was USD 70,08,000. The GDR issue of Kohinoor was also managed by
Panasia. The repetitiveness and gravity of the fraudulent methodology used
by Panasia is apparent.
36. The Pledge Agreement was once again signed by Mr. Dhiraj Jaiswal without
the knowledge of shareholders.
37. All other terms & conditions of the Loan and Pledge Agreement were same .
CAT wherein the latter supports the former through pledging of GDR
proceeds.
39. On July 28 , 2007 , CAT informed BSE that that the Board of Directors of the
Company at its meeting held on July 27, 2007 approved the Placing
Agreement, Deposit Agreement, Escrow Agreement and offering circular in
respect of GDR issue and allotted 2,58,26,088 Equity Shares of Rs 10/- each
underlying 43,04,348 GDR's Issued in the name of Depository i.e. Deutsche
Bank Trust Company Americas. It is now clear from the investigation
conducted that the said public announcement by CAT was done to mislead
retail investors in believing that the GDRs were subscribed by genuine
foreign investors, whereas in reality, GDRs were subscribed by Vintage in
connivance with CAT.
40. CAT did not make any public announcement regarding the GDR issue in 2009.
56
issued, thereby becoming the majority share holder of CAT.
42. These GDRs were then transferred to other FIIs mostly through over the
counter transactions. Following table gives the detail of transfer of GDRs of
CAT from account of Vintage (maintained with Euram) to that of other FIIs.
Issue 1 (2007)
Date of Name of Name of Seller Quantity Value of Trading Value per
Acquisition Acquirer of GDRs GDR platform GDR($)
11-Dec-07 Sophia Euram Via Kas 8,00,000 10,01,801 Exchange 1.25
Bank Netherland
03-Jan-08 Rhodes Euram via Athena 7,00,000 10,02,702 Exchange 1.43
08-Jan-08 Rhodes Euram via Athena 5,00,000 9,01,401 Exchange 1.80
24-Jan-08 Mavi Not Available 2,25,000 2,59,459 Exchange 1.15
04-Apr-08 Rhodes Euram via Athena 10,00,000 7,52,502 Exchange 0.75
16-Nov-09 IFCF Euram Bank 1,00,000 1,55,000 OTC 1.55
16-Nov-09 KII Euram Bank 75,000 1,17,180 OTC 1.56
20-Nov-09 IFCF Euram Bank 20,000 24,000 OTC 1.20
Total 34,20,000 42,14,045
Issue 2 (2009)
Date of Name of Name of Seller Quantity Value of Trading Value per

platform GDR($)
Acquisition Acquirer of GDRs GDR
10-11-2009 IFCF Euram Bank 13,685 1,30,008 OTC 9.5
43. The cancellation of the GDRs of CAT for the first GDR issue started from
December 20, 2007 and continued till November 20, 2009. Following are the
details of cancellation requests that were completed by ODB till June 30,
2012.
Transaction Entities cancelling GDRs on behalf of GDRs Cancelled Shares Released

Date FIIs/Sub-Accounts
20-12-2007 Brown Brothers Harriman 2,50,000 15,00,000
02-01-2008 Brown Brothers Harriman 50,000 3,00,000
57
28-01-2008 Investec Bank (Switzerland) AG 2,10,000 12,60,000
22-05-2009 KAS Depository Trust Company 2,50,000 15,00,000
17-11-2009 Euram Bank, Vienna 1,00,000 6,00,000
20-11-2009 Euram Bank, Vienna 20,000 1,20,000
Total 25,80,000 1,54,80,000
44. Therefore, for the first GDR issue of CAT, out of 43,04,348 GDRs issued,
25,80,000 (59.99% of GDR issued) were cancelled . There was no cancellation
of the GDRs of the company after November 20, 2009 till June 30, 2012.
45. For second GDR issue of CAT in 2009, cancellation happened only on one
occasion by IFCF. Following is the detail of cancellation of GDR for second
issue of CAT.

12-01-2010 Euram Bank, Vienna 13,685 4,10,550
46. Subsequently, shares were released into the demat accounts of Sub-
Accounts in India by custodian of shares. Following are the details of the
same.
Issue 1 (2007)
Date of receiving Name of entity receiving shares from GDR

shares cancellation No. of shares received
4-Dec-2007 RHODES DIVERSIFIED 15,00,000
31-Dec-2007 RHODES DIVERSIFIED 12,00,000
04-Jan-2008 RHODES DIVERSIFIED 3,00,000
07-Jan-2008 SOPHIA GROWTH 15,00,000
29-Jan-2008 MAVI INVESTMENTS FUND LTD 12,60,000
58
11-Feb-2008 RHODES DIVERSIFIED 3,00,000
18-Feb-2008 SOPHIA GROWTH 6,00,000
15-Apr-2008 RHODES DIVERSIFIED 4,50,000
22-May-2008 SOPHIA GROWTH 7,50,000
25-May-2009 ARES DIVERSIFIED 15,00,000
23-Nov-2009 KII LTD 4,50,000
Total 1,54,80,000
Issue 2 (2009)
Date of receiving Name of entity receiving shares from GDR

shares cancellation No. of shares received
47. For second GDR issue of CAT, out of 15,95,333 GDRs issued, 4,10,550 (0.85%
of GDRs issued) were cancelled.
48. The shares thus received by FIIs were then sold by them in the Indian
Markets. As seen in the case of other Examined Companies, a high
percentage of these shares then go to certain set of Indian clients.
49. The following are the details of counterparties to the sale of shares by Sub-
Accounts to Indian clients during the period January 01, 2009 to September
21, 2011.
Sell Value
IFCF AAACO3597K Oudh 1,49,999 18,10,488 61.17
IFCF AAACB4324K Basmati 94,990 10,49,662 38.74
IFCF Others 211 3,753 0.09
IFCF Total 2,45,200 28,63,902 100.00
Sell Value
ESPIRIT TECHNOLOGIES
Mavi AACCE0781B PRIVATE LTD 5,31,732 13,32,932 42.20
Mavi ABSPJ3747J DINESH KUMAR JAISWAL 3,62,695 9,66,131 28.79
Mavi ADTPB3843L LAXMIPERSHAD JAISWAL 3,21,076 8,58,100 25.48
Mavi Others 44,497 1,16,137 3.53
Mavi Total 12,60,000 32,73,300 100.00
Sell Sell Value

FII CP PAN CP NAME Volume (Rs.) % to total Sale
59
Sell Sell Value
Rhodes AAACB4324K Basmati 5,92,150 31,85,993 39.5

Rhodes AACCE0781B PRIVATE LTD 5,94,465 16,85,895 39.6
NEWGEN INTERNATIONAL
Rhodes AACCN3776H PRIVATE LTD 1,50,000 8,11,500 10.0
Rhodes AABCA6702F Alka 1,50,000 4,47,000 10.0
Rhodes Others 13,385 67,059 0.9
Rhodes Total 15,00,000 61,97,446 100.0
Sell Sell Value

Sophia AACCE0781B PRIVATE LTD 6,03,268 17,10,572 40.2
Sophia AAACB4324K Basmati 3,00,000 17,50,500 20.0
Sophia ACLPJ8528K DHIRAJ KUMAR JAISWAL 2,22,900 5,94,916 14.9
Sophia ADTPB3843L LAXMIPERSHAD JAISWAL 1,77,100 4,51,584 11.8
Sophia AABCA6702F Alka 1,50,000 4,47,000 10.0
Sophia Others 46,732 1,15,428 3.1
Sophia Total 15,00,000 50,70,000 100.0
50. From the counterparty analysis of the sell trades of Sub-Accounts, it is

observed that Indian entities like Alka, Basmati and Oudh have been the
major counterparties, apart from promoter related entities.
Utilisation of GDR proceeds by CAT:-
51. The utilisation of GDR proceeds by CAT was investigated to determine the
manner in which CAT has utilised GDR issue proceeds. Similar to the case of
other Examined Companies, almost 100% of GDR proceeds was not received
by CAT in India. The funds were transferred directly to either subsidiary in
U.A.E. or to other foreign based entities for which no explanation was
provided to SEBI.
52. Summons and emails were sent to CAT seeking details regarding utilisation
52.1. Details of usage of proceeds of the GDR Issues by CAT, along

funds.
52.2. Copies of bank account statements of CAT maintained with
Euram Bank.
52.3. Copies of bank account statements of CAT in India highlighting
60
Directors.
CAT.
52.6. Copies of all the agreements between CAT and Panasia
52.8. Details of the conditions that were laid upon CAT for the
with Euram.
52.9. Copy of any other agreement that CAT had with Euram apart
52.10. Details of any agreement of CAT regarding financing for the
52.11. Copies of agreements that CAT had with Vintage and AP.
52.12. Details of nature of business of the subsidiary of CAT in U.A.E viz,
CAT Technologies FZE (CAT FZE).
52.13. Copies of Bank Account Statements of CAT FZE.
with Panasia.
52.15. Name of the directors and promoters of CAT at the time of issue
of GDRs.
52.16. Details of money paid by CAT FZE, be it on account of purchases
or expenses or loan, to other entities for more than USD 25,000
from incorporation. CAT was specifically asked to provide details
like name of entities to which payments were done, purpose of
payments and amount paid by CAT FZE.
52.17. Audit Report of CAT FZE along with financial statements for the
statements of CAT FZE
53. Summons dated April 16, 2012 was issued to the Managing Director of CAT
to compel appearance in person on April 27, 2012. Company vide email
dated April 20, 2012, sought extension of time for the compliance of
summons. On such request, date of personal appearance was changed.
However, CAT once again vide email dated April 23, 2012 sought extension
beyond April 30, 2012. Vide email dated April 25, 2012, new date for
personal appearance was given as May 02, 2012. However, CAT has till date
not complied with this summon.
54. From the perusal of partial information submitted by CAT, following has
been observed:-
54.1. That all of USD 64,56,522 raised by CAT in its first GDR issue was
transferred to its foreign based subsidiary CAT FZE.
61
54.2. USD 98,00,000 out of USD 1,00,02,737.90 raised by CAT in its
second GDR issue(i.e. 98% of total GDR issues size) was transferred
to CAT FZE. Rest of the GDR proceeds were utilized as GDR
expense
54.3. Thus CAT did not receive any funds out of their GDR proceeds in
India and all of it was transferred to entities based outside India.
55. CAT like other Examined Companies was also unable to provide any reliable
document to show the proper utilisation of the GDR proceeds. Mostly the
information regarding CAT FZE was not provided to SEBI. Following
information was not provided to SEBI despite being asked specifically in
summons dated January 12, 2012 and email dated April 20, 2012:-
55.1. Information like the account statement of the Euram bank

account of CAT was incomplete. According to submissions of
CAT, approximately Rs. 22.31 crore was transferred to CAT FZE
from its Euram bank account during the period January 2008 to
March 2008. However, these transactions do not get reflected in
the bank account statement provided by CAT. Vide letter dated
July 19, 2012, CAT was, once again asked to provide the
complete bank account statement i.e. for the period January 09,
2008 to March 31, 2008, which would reflect the transfer of
funds to CAT FZE. CAT has not replied to the aforesaid letter of
SEBI, till date.
55.2. Documentary proof of the utilisation of GDR proceeds.
55.3. Bank Account Statements of CAT FZE required to examine the
flow of funds transferred to CAT FZE.
55.4. Details of nature of business and Audit reports of CAT.
55.5. Details of payments done to Panasia and other AP Entities.
55.6. Details (including name of entity to which payment has been
done, purpose of payment and amount paid) of money paid by
CAT FZE.
55.7. Details with respect to subsidiary of CAT viz. address, contact
person and contact no.
55.8. Name of the directors of CAT at the time of issuance of GDRs
Misleading Submissions by CAT
56. It is also observed that false submissions were made by CAT to SEBI,
particularly with respect to the Pledge Agreement and Loan Agreement
having Euram, Vintage and CAT as parties. Following are the submissions
made by CAT which were found to be false:-
57. CAT submitted that it did not have any agreement with Vintage. It was
clearly mentioned in the Loan Agreement signed between Vintage and
Euram that Pledge Agreement signed between CAT and Euram is part of the
62
Loan Agreement. Similarly it is mentioned in the Pledge Agreement that the
Pledgor has received the Loan Agreement and agrees to its conditions.
58. CAT submitted that it did not have any arrangement with AP for subscription
of GDRs. As explained, the complete GDR issuance was done on the basis of
arrangement between AP and companies like CAT.
59. CAT denied having any agreement with Euram which puts condition on
withdrawal of GDR issue proceeds. This is again false as the GDR issue
proceeds were pledged by CAT against loan taken by Vintage.
60. CAT also denied having an agreement with Euram other than Escrow account
agreement which is false due to the fact that Pledge Agreement was signed
between CAT and Euram.
61. CAT denied having any agreement with any of the entity for the purpose of
financing of the GDR issue. It specifically denied having any agreement with
Vintage and AP.
62. It is suspected by SEBI that the last stage of AP GDR scheme involves
repayment of GDR Issue proceeds to AP by the Examined Company through
its foreign subsidiaries. Despite the fact that almost entire GDR proceeds of
the two GDR issues of CAT were transferred to CAT FZE, it did not provide
any such information which would have helped SEBI in determining the
actual flow of funds back to Vintage.
foreign subsidiary of CAT strongly supports the suspicion of SEBI that part of
the proceeds of GDR issue were routed back to AP entities.
63
(IV) IKF TECHNOLOGIES LTD
1. There were two GDR issues by IKF. First in 2007 and then in 2009.
2. Panasia was appointed as the LM to both the GDR issue by the company.
1st GDR Issue
3. First GDR Issue was of USD 11 Million and it closed on March 30, 2007 with
full subscription. The allotment of 1,10,00,000 Global Depository Receipts
company was done on March 30, 2007.
4. Prior to GDR issue, IKF had 10,66,90,000 fully paid equity shares. Therefore,
the equity shares represented by the 1st GDR issue were approximately
123.72% of IKF's outstanding share capital at the time of GDR issue.
5. The total capital raised by IKF vide 1st GDR issue was USD 1,10,00,000.00
Rs. 43.60 on March 30, 2007. The market cap of IKF prior to GDR issue was
6. The last traded price of IKF on BSE on March 30, 2007 was Rs. 7.46. The
highest and lowest price of IKF for period of three months from December
30, 2006 to March 30, 2007 was Rs. 10.89 and Rs. 3.89 respectively. The price
Rs. 43.60 as on March 30, 2007) which was 48.70% of the price of the scrip
on March 30, 2007.
2nd GDR Issue
7. Another allotment of 54,13,048 GDRs representing 162,391,440 equity

shares of Rs 10/- each at USD 2.03 was done by the company on May 15,
2009.
8. Prior to 2nd GDR issue, IKF had 268,190,000 fully paid equity shares.
Therefore, the equity shares represented by the 2nd GDR issue were
approximately 60.55% of CAT's outstanding share capital at the time of GDR
issue.
9. The total capital raised by IKF vide 2nd GDR issue was USD 1,09,88,487.44
which is equal to Rs. 54,44,79,552.70 considering conversion price of USD 1
= Rs. 49.55 as on May 15, 2009. The market cap of IKF prior to GDR issue was
64
10. The last traded price of IKF on BSE on May 15, 2009 was Rs. 2.97. The
highest and lowest price of IKF for period of three months from February 15,
2009 to May 15, 2009 was Rs. 3.20 and Rs. 2.02 respectively. The price which
subscribers paid for each share underlying GDRs was Rs. 3.35(USD 1 = Rs.
49.55 as on May 15, 2009) which was 112.80 % of the price of the scrip on
May 15, 2009.
11. Following are the details of investors in the 2nd GDR issue of IKF, as per the
submissions of the company.
Name of Subscriber
Echelon India Investments
Ltd (Echelon)
Imagination Network
(Imagination)
Knightbridge Management
Inc.(Knightbridge)
Tradetec
Trendsetter
12. Most of these investors are common to other GDR issues managed by
Panasia. As in the case of other GDR issues examined by SEBI, none of the
initial investors could be contacted at the addresses provided by the
company to SEBI.
Loan & Pledge Agreement signed among IKF, Vintage & Euram:-
subscription of both the GDR issues of IKF was also done using loan but taken
from separate Banks.
14. The Loan and Pledge Agreement signed by IKF for its first GDR issue were
with a Portugal based bank, Banco Efisa ("Banco'').
15. The Loan and Pledge Agreement for second GDR Issue were signed among
IKF, Vintage and Euram and are similar to that of other companies
investigated by SEBI. These agreements are part of AP GDR scheme. The
same are discussed in detail below:-
65
ISSUE 2 (in 2009)
16. A loan agreement (Loan Agreement No. K040509-002) dated April 28, 2009,
to take down GDR issue of IKF Technologies Ltd. Luxemburg public offering
and may only be transferred to Euram account no: 540040 for IKF
Technologies Ltd.
Loan Agreement.

19. The Euram account no: 540040 is also the bank account of IKF maintained
with Euram for the purpose of depositing proceeds of GDR issue.
20. A Pledge Agreement dated April 28, 2009 is also signed between Mr. Sunil
Kumar Goel and Euram. The agreement is signed by Mr. Sunil Kumar Goel on
behalf of IKF as Whole Time Director of IKF. He is also one of the promoters
of IKF.
21. There is no announcement to the public regarding the Pledge and Loan
Agreement by the company.
22. According to the Pledge Agreement, IKF has been referred as "Pledgor'' and
Euram has been referred to as ''Bank''.
66
"By loan agreement K040509-002(hereinafter referred to as ''Loan Agreement'')
dated April 28, 2009, the Bank granted a loan (hereinafter referred to as the
1,09,88,487.44. The Pledgor has received a copy of the Loan Agreement and
24. From the above preamble of Pledge Agreement, it is clear that Mr. Sunil
Kumar Goel and IKF were also the party to the Loan Agreement.
" 2. Pledge
67
Bank.
27. As the account no. 540040 is the account which IKF has maintained with
Euram to keep the proceeds of GDRs, it is clear that IKF has pledged money
(as mentioned in Loan agreement of Vintage).
features of this scheme to fraudulently raise capital by the Issuer Company
ISSUE 1 (in 2007)
29. A Loan Agreement (titled as Credit Agreement) was signed between Seazun
Ltd7 ("Seazun"), as Borrower, and Banco Efisa , S.F.E., S.A., as Bank, for a loan
term facility of USD 1,40,00,000 on March 27, 2007.
30. The purpose of the Credit Agreement is stated as;
7
In the aforesaid Credit Agreement, Seazun Ltd is mentioned as a company incorporated in the British
Virgin Islands with registered number 400452 (the Borrower). It has come to the notice of SEBI, that
Seazun later changed its name to Clifford Capital Partners AG SA.
68
" The Borrower shall use the proceeds of the Advance to subscribe for global
depository receipts to the value of up to $14,000,000 issued by IKF on the
terms of the Listing Particulars to be delivered to the Luxembourg Stock
Exchange."
31. Similarly another agreement with the title Account Charge Agreement is
signed between Banco and IKF. The agreement was signed by Mr. Mukesh
Kumar Goyal on March 27, 2007 on behalf of IKF. He was director of the
company at the time of signing of Account Charge Agreement.
32. The Account Charge in the agreement is stated as below:-
"Account Charge
 Subject to the terms of this Agreement, IKF deposited in its designated

account with the Bank (hereinafter the Account) an amount not exceeding
US$ 14,000,000 as security for all the obligations of Seazun under the Loan
Agreement (hereinafter the Secured Obligations), and with full title
guarantee hereby assigns to and charges by way of first fixed charge in
favour of the Bank all the rights, title, interest and benefit in and to the
Account as well as all the moneys from time to time standing to the credit
thereof and all interest from time to time payable in respect thereof. Such
assignment and charge shall be a continuing security for the due and
punctual payment and discharge of the Secured Obligations.
 Upon payment of all or part of the amounts due under the Loan Agreement,
IKF may withdraw from the Account the equivalent amount.
 IKF covenants with the Bank that it will on demand pay and discharge the
Secured Obligations when due to the Bank.
 At any time after the Bank shall have demanded payment of all or any of the
Secured Obligations the Bank may without further notice apply all or any
part of the Deposit against the Secured Obligations in such order as the Bank
in its discretion determines.
 IKF hereby irrevocably appoints by way of security the Bank as the attorney
of IKF with full power in the name and on behalf of IKF to sign, seal and
deliver any deed, assurance, instrument or act in order to perfect this charge
and at any time after an event of default by IKF to sign, seal and deliver any
deed assurance, instrument or act which may be required for the purpose of
exercising fully and effectively all or any of the powers hereby conferred to
the Bank to take all necessary action whether in the nature of legal
proceedings or otherwise to recover any moneys which may be held in the
Account and to give valid receipts for payment of such moneys and also for
the purpose of enforcement and realisation of the security hereby created."
69
33. On September 28, 2007, IKF wrote a letter to Banco, requesting Banco to
close its account maintained with the bank and transfer the amount of USD
46,49,000 in its account to the account of Seazun maintained with Banco.
different subscribers occur through the scheme between AP/Vintage and IKF
wherein the latter supports the former through pledging of GDR proceeds.
35. On April 02, 2007, IKF made a public announcement on the website of BSE
that the board of IKF has approved and authorized to execute documents for
the GDR issue of USD 11 million.
36. On May 15, 2009, IKF informed BSE that the Board of Directors of the
Company approved the allotment of 16,23,91,440 equity shares of Rs 1/-
each underlying 54,13,048 GDR's issued in the name of Depository (The Bank
of New York Mellon).
37. It is now clear from the investigation conducted that the aforesaid public
announcements by IKF were done to mislead retail investors in believing that
the GDRs were subscribed by genuine foreign investors, whereas in reality,
GDRs were subscribed by Seazun/Vintage in connivance with IKF.
38. After the issuance of GDRs, the GDRs were purchased by FIIs registered in
India for conversion and sale in Indian markets.
39. These GDRs were transferred to FIIs mostly through over the counter
transactions. Following table gives the detail of transfer of GDRs of IKF to the
FIIs.
Issue 1 (2007)
Date of Name of Name of Seller Quantity Value of Trading Value

Acquisition Acquirer of GDRs GDR platform per GDR
acquired Acquired ($) ($)
21-May-07 Mavi Investec Bank 3,00,000 6,33,000 OTC 2.11
25-May-07 Mavi Investec Bank 4,00,000 9,24,000 OTC 2.31
22-Jun-07 Mavi Investec Bank 5,00,000 11,80,000 OTC 2.36
25-Jun-07 Mavi Investec Bank 5,00,000 11,60,000 OTC 2.32
18-Jul-07 Rhodes NA* 10,00,000 24,80,000 OTC 2.48
27-Jul-07 Rhodes NA 10,00,000 23,70,000 OTC 2.37
30-Jul-07 Rhodes NA 4,00,000 8,85,768 Market 2.21
06-Aug-07 Rhodes NA 1,00,000 2,21,442 Market 2.21
29-Aug-07 Mavi Investec Bank 5,00,000 10,15,000 OTC 2.03
14-Sep-07 Mavi Investec Bank 5,00,000 11,45,000 OTC 2.29
21-Sep-07 Rhodes NA 10,00,000 10,04,003 Market 1.00
70
Date of Name of Name of Seller Quantity Value of Trading Value
Acquisition Acquirer of GDRs GDR platform per GDR
acquired Acquired ($) ($)
28-Sep-07 Rhodes NA 11,00,000 11,02,201 Market 1.00
03-Oct-07 Rhodes Euram Via Kas Bank 5,00,000 5,01,501 Market 1.00
Total 78,00,000 1,46,21,915
*NA- Not available
40. Apart from the above FIIs, Lotus Global Investments Ltd, Sub-Account, also
purchased and cancelled GDRs of 1st GDR issue of IKF. Total 32,00,000 GDRs
of IKF were purchased by Lotus Global Investments Ltd between June 12,
2007 to September 19, 2007.
41. Details of purchase by FIIs of second GDR issue.
Issue 2 (2009)
Date of Name of Name of Seller Quantity of Value of Trading Value

Acquisition Acquirer GDRs GDR platform per
acquired Acquired ($) GDR($)
22-Jul-09 KII Euram Bank 45,000 1,00,699 OTC 2.24
27-Jul-09 IFCF Euram Bank 4,70,000 11,75,000 OTC 2.50
07-Aug-09 IFCF Euram Bank 2,00,000 5,00,000 OTC 2.50
24-Aug-09 IFCF Euram Bank 40,000 96,000 OTC 2.40
07-Sep-09 IFCF Euram Bank 1,70,000 3,65,500 OTC 2.15
19-Nov-09 IFCF Euram Bank 44,000 1,10,000 OTC 2.50
17-Dec-09 IFCF Euram Bank 65,000 1,52,100 OTC 2.34
09-May-10 IFCF Euram Bank 6,50,000 14,75,500 OTC 2.27
12-May-11 IFCF Euram Bank 15,00,000 34,50,156 OTC 2.30
Total 31,84,000 74,24,955
42. The cancellation in the GDRs of IKF for first GDR issue started from May 29,
2007 and continued till November 02, 2007. Following are the details of
cancellation requests that were completed by ODB.
Transaction Entity cancelling GDRs GDRs

Date Cancelled
29-May-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 4,00,000

04-Jun-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 3,00,000
12-Jun-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND(96780) 2,00,000
14-Jun-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 5,00,000
17-Jul-07 GOLDMAN SACHS AND CO NY, UNITED STATES (90004) 10,00,000
18-Jul-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 5,00,000
18-Jul-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 5,00,000
10-Aug-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 5,00,000
16-Aug-07 BK JULIUS BAER,ZUR, SWITZERLAND (90258) 5,00,000
05-Sep-07 INVESTEC BK (SWITZ)/CL,ZURICH, SWITZERLAND (96780) 5,00,000
71
Transaction Entity cancelling GDRs GDRs
Date Cancelled
17-Sep-07 BK JULIUS BAER,ZUR, SWITZERLAND (90258) 5,00,000

18-Sep-07 BROWN BROTHERS HARRIMAN CO,NY, UNITED STATES (94276) 4,00,000
02-Nov-07 BROWN BROTHERS HARRIMAN CO,NY, UNITED STATES (94276) 2,00,000
Total 1,10,00,000
43. 100% of the GDRs issued by IKF in March 2007 were cancelled by November
2007. The cancellation of GDRs was done on behalf of Sub-Accounts Mavi,
Rhodes and Lotus Global investments Ltd. Details of shares received in India
by the Sub-Accounts post cancellation are as given below:-
Sub-Account receiving
Date of receiving shares from GDR No. of shares
01-Jun-2007 Mavi 48,00,000
05-Jun-2007 Mavi 36,00,000
13-Jun-2007 Lotus 24,00,000
14-Jun-2007 Lotus 60,00,000
18-Jul-2007 Rhodes 1,20,00,000
19-Jul-2007 Lotus 60,00,000
19-Jul-2007 Mavi 60,00,000
13-Aug-2007 Lotus 60,00,000
14-Aug-2007 Mavi 60,00,000
21-Aug-2007 Lotus 60,00,000
21-Aug-2007 Rhodes 48,00,000
30-Aug-2007 Rhodes 60,00,000
07-Sep-2007 Mavi 60,00,000
11-Sep-2007 Lotus 60,00,000
20-Sep-2007 Rhodes 12,00,000
24-Sep-2007 Lotus 60,00,000
24-Sep-2007 Mavi 60,00,000
24-Sep-2007 Rhodes 60,00,000
28-Sep-2007 Rhodes 96,00,000
03-Oct-2007 Rhodes 24,00,000
04-Oct-2007 Rhodes 84,00,000
05-Oct-2007 Rhodes 24,00,000
12-Oct-2007 Rhodes 36,00,000
05-Nov-2007 Rhodes 48,00,000
Total 13,20,00,000
72
44. The cancellation of the GDRs of IKF for second GDR issue started from May
15, 2009 and continued till December 18, 2009. Following are the details of
cancellation requests that were completed by ODB.
Transaction Brokerage cancelling GDRs Shares Sub- Date of

Date GDRs Cancelled Released Account receiving
receiving shares
shares
JPM CL CORP.,BK ,
30-Jul-09 UNITED STATES 45,000 13,50,000 KII 31-Jul-09
30-Jul-09 Euram 4,70,000 1,41,00,000 IFCF 31-Jul-09
10-Aug-09 Euram 2,00,000 60,00,000 IFCF 11-Aug-09
25-Aug-09 Euram 40,000 12,00,000 IFCF 26-Aug-09
08-Sep-09 Euram 1,70,000 51,00,000 IFCF 09-Sep-09
20-Nov-09 Euram 44,000 13,20,000 IFCF 23-Nov-09
18-Dec-09 Euram 65,000 19,50,000 IFCF 21-Dec-09
Total 10,34,000 3,10,20,000
45. 10,34,000 GDRs of IKF out of total 54,13,048 issued( 19.10% of the GDRs
issued) in May 2009 were cancelled between July 30, 2009 to December 18,
2009. No other cancellation was observed in the GDRs of IKF after December
2009.
46. The following are the details of counterparties to the sale of shares by IFCF
to Indian clients during the period January 01, 2009 to September 21, 2011.
Sell Value % to total

FII CP PAN CP NAME Sell Volume (Rs.) Sale
IFCF AAACO3597K Oudh 38,80,064 1,66,88,888 19.8
IFCF AAACM6094R Infin Ltd Angel 27,27,931 1,18,53,432 13.9
IFCF AAACJ8850C JMP 18,61,726 81,07,007 9.5
IFCF AABCA6702F Alka 10,94,788 47,07,588 5.6
Others 29,29,468 1,27,26,629 14.9
IFCF Total 1,96,07,456 8,67,92,834 100.0
47. From the counterparty analysis of the sell trades of IFCF, it is observed that
Indian clients like Alka, JMP, Basmati and Oudh have been the major
counterparties. In total, Alka, JMP, basmati and Oudh have purchased 71.2%
of shares sold by IFCF.
Utilisation of GDR proceeds by IKF:-
48. The utilisation of GDR proceeds by IKF was investigated to determine the
manner in which IKF has utilised GDR issue proceeds. It was observed after
73
the investigation that similar to the case of other Examined Companies, the
major portion of GDR proceeds was not received by IKF in India. The funds
were transferred directly to either subsidiary in U.A.E viz, Biofel FZE
(Biofel)or to other foreign based entities which are also linked with AP GDR
Scheme.
49. Summons were issued to IKF seeking details regarding utilisation of GDR
proceeds by the company. The information and documents sought in the
summons are detailed below:-
49.1. Details of usage of proceeds of the GDR Issues by IKF, along with
the documentary proof in support of the utilization of the funds.
49.2. Copies of bank account statements of IKF maintained with
Euram Bank.
49.3. Copies of bank account statements of IKF in India highlighting
Directors.
IKF.
49.6. Copies of all the agreements between IKF and Panasia
49.8. Details of the conditions that were laid upon IKF for the
with Euram.
49.9. Copy of any other agreement that IKF had with Euram apart
49.10. Details of any agreement of IKF regarding financing for the
49.11. Copies of agreements that IKF had with Vintage and AP.
49.12. Details of address, Contact person and contact number of
subsidiary of IKF viz, BIOFEL.
50. There were two bank accounts of IKF where GDR proceeds were deposited
by the company. The proceeds of first GDR issue (in 2007) were deposited in
Banco and that of second GDR issue (in 2009) were deposited in Euram. All
the summons and queries made to IKF were with regard to both the Bank
Accounts.
51. In response to summons dated April 9, 2012, Mr. N. V. Simhadri,

independent director of IKF, appeared in person on April 18, 2012 at SEBI
Office. However, Mr. Simhadri could not provide information on any of the
question asked by the Investigating Authority. On expressing his inability
regarding having any information about the company and its subsidiary
Biofel, he was asked to seek information from IKF and submit to SEBI by April
74
12, 2012. Following are the questions which were asked from Mr. Simhadri,
which he could not reply and agreed to provide later to SEBI:-
51.1. Name of directors/promoters of IKF during the issuance of

GDRs in 2007 and 2009
51.2. Purpose of payments done to a U.A.E. based company Citigate
Trade FZE.
51.3. Details of any agreement IKF had with Euram other than
already provided to SEBI by the company.
51.4. Details of any agreement IKF had with any entity regarding
financing of GDR issues.
51.5. Details of any agreement that IKF had with Vintage.
with Panasia.
51.7. Details of end use of GDR proceeds which were transferred to
U.A.E. based subsidiary of IKF viz, BIOFEL FZE (Biofel).
51.8. Details of debit and credit in the statement of bank accounts of
IKF with Banco.
51.9. Details of Bank account of Biofel with explanation of all the
debits and credits.
51.10. Details of nature of business of Biofel.
51.11. Details of purchases and expenses done by Biofel from
incorporation till date containing details viz, entity name, entity
address, purpose of payment and amount.
51.12. Further details concerning Biofel like Audit reports and bank
account statement was also sought.
52. Thereafter IKF provided partial information vide letter dated April 24, 2012.
However, the most crucial information, i.e. regarding the utilisation of GDR
proceeds by Biofel which were transferred directly from Euram account of
IKF, was not provided. This information has not been provided to SEBI till
date by the company.
53. From the perusal of the partial information made available to SEBI, following
has been observed:-
53.1. Out of total USD 1,09,88,487.44 raised through second GDR issue,
USD 75,49,000 (68.70% of total capital raised via second GDR
issue)was transferred to Biofel.
53.2. IKF made a payment of USD 16,75,000 to Citigate Trade FZE on
August 12, 2009. As per the remarks in Bank statement of IKF with
Euram, the transfer was on account of the payment as per contract
of BIO fuel plant. No detail of this contract was provided by IKF to
SEBI. SEBI also examined the bank account of Vintage with Euram.
On same day i.e. August 12, 2009, USD 16,75,000 was transferred
to the loan account of Vintage as part repayment of the loan taken
by Vintage.
75
53.3. USD 1,75,000 was transferred to Premier Management
Consultancy Ltd, by IKF as payment against invoice of placement
fees. The address of Premier Management Consultancy Ltd and
Rexflec(the beneficial owner of Rexflec is AP and it is one of the
initial investors in the GDR issue of CAT, K Sera and Maars) is same
i.e. 306, Victoria House, Victoria Mahe, Seychelles.
53.4. IKF did not provide information like bank account statements and
utilisation of funds regarding Biofel FZE to SEBI. However, in the
annual report of the company for the year 2011-12, following is
mentioned;
''During the year the Company has received / transferred its full
GDR proceeds. There is a Foreign Exchange Fluctuation loss of Rs.
56,324,255.02 in respect of Advances given to BIOFEL, FZE on
account of BIO Fuel Project and amount repatriated into India. Out
of the Loss a sum of Rs. 34,127,526 is adjusted from Capital
Reserve and the balance amount of Rs. 22,196,729.02 is adjusted
from Profit & Loss Account.''
54. Thus, it appears that IKF has tried to write off the funds transferred to Biofel
as losses, as suspected by SEBI. However, as explained in following Para, IKF
did not provide adequate information to SEBI to examine this issue.
55. IKF like other Examined Companies was unable to provide any reliable
document to show the proper utilisation of the GDR proceeds by its
subsidiaries. Critical information sought regarding Biofel was not provided
to SEBI. Following information was not provided to SEBI:-
55.1. Bank Account Statements of Biofel required to examine utilisation

of GDR proceeds by Biofel.
55.2. Details of nature of business and Audit reports of Biofel.
55.3. Details like name of entities involved, amount used, and purpose
behind the purchases, expenses and payments done by Biofel.
55.4. Contact details of Biofel.
Misleading Submissions by IKF
56. Investigation has revealed that IKF like all other Examined Companies also
provided false information and concealed material information to SEBI to
mislead the investigation. Following false information was furnished to SEBI
by the company:-
57. IKF made wrong submission that it did not have any agreement with Vintage.
The Loan Agreement signed between Vintage and Euram clearly mentions
that Pledge Agreement signed between IKF and Euram is part of the Loan
76
Agreement. Similarly it is mentioned in the Pledge Agreement that the
Pledgor has received the Loan Agreement and agrees to its conditions.
58. IKF made wrong submissions that it did not have any arrangements with AP
for subscription of GDRs. As explained the complete GDR issuance was done
on the basis of AP GDR Scheme.
59. IKF denied having any agreement with Euram which puts condition on
withdrawal of GDR issue proceeds.
60. IKF also denied having an agreement with Euram other than Escrow account
agreement.
61. IKF denied having any agreement with any of the entity for the purpose of
Vintage and AP. Further, IKF did not mention about its Account Charge
Agreement with Banco. IKF also did not provide any information regarding
the Credit Agreement of Seazun which was signed between Seazun and
Banco.
62. IKF authorised transfer of funds (US $ 46,49,000) from its account with Banco
where GDR proceeds were deposited to the account of Seazun. On
September 28, 2007, a letter signed by Mr. Mukesh Kumar Goel, director of
IKF , was sent to Banco with following instructions:-
"We request you to transfer the same amount of USD 4,649,000 from our
account towards closure of deposit, to the account of Seazun Limited with
Banco Efisa.
We hereby also authorize the bank to transfer from our current account the
necessary amounts to face payments of interest and fees due in the referred
company account resulting from loan granted by the bank."
It is clearly a transaction done by IKF from its own reserves to settle the
outstanding liabilities of Seazun which had taken loan from IKF. However,
IKF did not provide SEBI details of this transaction when IKF was asked to
provide the details of utilisation of the GDR proceeds. On the contrary, IKF
informed SEBI that it has repatriated and utilised 1,00,00,000 out of the GDR
proceeds of first issue. This is false as it transferred US $ 46,49,000 from its
account to the account of Seazun to settle its loan liability.
63. The above explained falsification of information regarding Loan and Account
Charge Agreements signed with respect to first GDR issue and Pledge and
Loan Agreements signed with respect to second GDR issue and concealment
of information regarding utilisation of funds by Biofel strongly supports the
suspicion of SEBI that the funds transferred to Biofel were routed back to AP
entities/Vintage/Seazun for repayment of loan taken for the purpose of
subscription of GDRs
77
(V) K SERA SERA LTD
1. There were two GDR issues by K Sera. First in 2007 and then in 2009.
2. Panasia was appointed as the LM to both the GDR issue by the company.
1st GDR Issue
3. First GDR Issue was of USD 25 Million and it closed on November 02, 2007
with full subscription. The allotment of 47,61,900 Global Depository Receipts
company was done on November 02, 2007.
4. Prior to GDR issue, K Sera had 1,95,12,625 fully paid equity shares and
38,40,524 fully paid redeemable preference shares of Rs. 10.0. Therefore,
the equity shares represented by the 1st GDR issue were approximately
203.91% of K Sera's outstanding share capital at the time of GDR issue.
5. The total capital raised by K Sera vide 1st GDR issue was USD 2,49,99,975
which is equal to Rs. 98,42,49,015.8 considering conversion price of USD 1 =
Rs. 39.37 on November 02, 2007. The market cap of K Sera prior to GDR issue
was Rs. 71,02,00,000. Therefore, the capital raised by GDR issue was
6. The last traded price of K Sera on BSE on November 02, 2007 was Rs. 38.20
The highest and lowest price of K Sera for period of three months from
August 02, 2007 to November 02, 2007 was Rs. 17.05 and Rs. 38.20
respectively. The price which subscribers paid for each share underlying
GDRs was Rs. 20.67 (Rs. 39.37 as on November 02, 2007) which was 54.11%
of the price of the scrip on November 02, 2007.
2nd GDR Issue
7. Another allotment of 44,75,238 GDRs representing 13,42,57,140 equity

shares of Rs 10/- each at USD 6.70 was done by the company on October 16,
2009.
8. Prior to 2nd GDR issue K Sera had 6,71,31,624 fully paid equity shares.
Therefore, the equity shares represented by the 2nd GDR issue were
approximately 199.99% of K Sera's outstanding share capital at the time of
GDR issue.
9. The total capital raised by K Sera through 2nd GDR issue was USD
2,99,84,094.60 which is equal to Rs. 1,38,73,64,057 considering conversion
price of USD 1 = Rs. 46.27 as on October 16, 2009. The market cap of K Sera
78
prior to GDR issue was Rs. 1,37,95,00,000. Therefore, the capital raised by
GDR issue was 100.57% of the market capital of the company prior to GDR
issue.
10. The last traded price of K Sera on BSE on October 16, 2009 was Rs. 21.40.
The highest and lowest price of K Sera for period of three months from July
16, 2009 to October 16, 2009 was Rs. 12.31 and Rs. 22.05 respectively. The
price which subscribers paid for each share underlying GDRs was Rs. 10.33
(USD 1 = Rs. 46.27 as on October 16, 2009) which was 48.28% of the price of
the scrip on November 06, 2009.
11. Following are the details of investors in the 1st GDR issue of K Sera as per the
submissions of the company:-.

Rexflec 5,00,000 26,25,000 10.50
Figura 4,21,900 22,14,975 8.86
Tradetec 9,90,000 51,97,500 20.79
Knightsbridge Management
Inc. 10,00,000 52,50,000 21.00
Flamboyant 9,00,000 47,25,000 18.90
Greenwich 9,50,000 49,87,500 19.95
12. Following are the details of investors in the 2nd GDR issue of K Sera, as per
the submission of the company:-

Dynamic holding
Investment Corp 5,75,000 38,52,500 12.85
Greenwich 4,75,000 31,82,500 10.61
Ababil 3,25,000 21,77,500 7.26
Figura 5,48,000 36,71,600 12.25
Flagstaff 5,23,000 35,04,100 11.69
Tradetec 4,69,238 31,43,895 10.49
Imagination 5,25,000 35,17,500 11.73
Echelon 5,50,000 36,85,000 12.29
Flamboyant 4,85,000 32,49,500 10.84
13. Most of the above subscribers were observed to be investors in several other
GDR issues of Indian companies which were managed by Panasia. The
79
addresses of these subscribers which was made available to was used to
contact them. However, all the attempts to contact these subscribers were
unsuccessful, just like in all the other cases where LM to the GDR issue was
Panasia. Ababil Star Trading company could also not be contacted. It may be
noted that Avon entered into agreements with Ababil. However, SEBI was
unable to locate and contact Ababil on addresses provided to SEBI by K Sera
or Avon.
Loan & Pledge Agreement signed among K Sera, Vintage & Euram:-
subscription of both the GDR issues of K Sera was also done using loan taken
from Euram. The Loan and Pledge Agreement signed among K Sera, Vintage
and Euram is the key to issuance and subscription of GDRs.
15. The pledge and Loan agreements among K Sera, Vintage and Euram are
similar to that of other companies investigated by SEBI. These agreements
are part of AP GDR scheme.
16. The second GDR issue of K Sera which happened in 2009 is discussed in detail
below.
ISSUE 2 (in 2009)
17. A loan agreement (Loan Agreement: K061009-002) dated October 06, 2009,
to take down GDR issue of 44,75,238 Luxemburg public offering and may
only be transferred to Euram account no: 540019, K Sera Sera Productions
Ltd8.
Loan Agreement.
8
K Sera Sera Ltd was earlier known as K Sera Se ra Productions Ltd.
80
20. The Euram account no: 540019 is the bank account of K Sera maintained
21. A Pledge Agreement is also signed between K Sera and Euram. The
agreement is signed by Mr. Hussain Sattaf on October 08, 2009 on behalf of
K Sera as Director of K Sera.
23. According to the Pledge Agreement, K Sera has been referred as "Pledgor''
"By loan agreement K061009-002 (hereinafter referred to as ''Loan Agreement'')

dated October 06, 2009, the Bank granted a loan (hereinafter referred to as the
2,99,84,094.60. The Pledgor has received a copy of the Loan Agreement and
25. From the above preamble of Pledge Agreement, it is clear that Mr. Hussain
Sattaf and K Sera were also the party to the Loan Agreement.
" 2. Pledge
81
the balance of funds up to the amount of $ USD 2,99,84,094.60 existing from time to
credited at any particular time therein. The interest rate on deposit in the amount of
the facility amount of the loan will be fixed at 2.5% p.a.
27. Further, following conditions have been put in the Pledge agreement for the
Bank.
28. As the account no. 540019 is the account which K Sera has maintained with
Euram to keep the proceeds of GDRs, it is clear that K Sera has pledged
82
the loan given by Euram to Vintage as borrower of funds for subscription of
GDR issue (as mentioned in Loan agreement of Vintage)
ISSUE 1(in 2007)
29. A Loan agreement was also previously signed between Vintage and Euram on
October 30, 2007 for providing funding for the 1st GDR issue of K Sera.
30. Similarly, a Pledge Agreement was signed between K Sera and Euram on
October 30, 2007.
31. The Loan agreement and Pledge Agreement signed 1st time were exactly
similar to 2nd Loan Agreement and Pledge Agreement except following
differences:
31.1. The Loan Agreement and Pledge Agreement were signed for the
subscription of 1st GDR issue of 47,61,900 GDRs of K Sera Sera Ltd
which closed on November 02, 2007.
31.2. The Loan amount of USD 2,49,99,975 was exactly equal to the size
of GDR issue.
31.3. The Pledge Agreement was signed by Mr. Rajesh Pavithram, as

Managing Director of K Sera Sera Productions Ltd.
32. All other terms & conditions of the Loan and Pledge Agreement were same
as that of the 2nd issue.
different subscribers occur through the scheme between AP/Vintage and K
Sera wherein the latter supports the former through pledging of GDR
proceeds.
34. On November 02, 2007, K Sera informed BSE that the Company successfully
concluded placement of 47,61,900 GDRs and received about US $ 25 Million
through the GDR issue. The Board of Directors of K Sera at its meeting held
on November 02, 2007 approved and allotted 47,61,900 Global Depository
Receipts and 4,76,19,000 Equity Shares of Rs 10/- each represented in the
said GDR.
35. On October 16, 2009 K Sera informed BSE that the Company successfully
concluded placement and allotment of 44,75,238 GDRs.
36. It is now clear from the investigation conducted that the aforesaid public
announcements by K Sera were done to mislead retail investors in believing
that the GDRs were subscribed by genuine foreign investors, whereas in
reality, GDRs were subscribed by Vintage in connivance with K Sera.
83
37. The GDRs of K Sera were purchased by Sub-Accounts in overseas market .

The detail of the purchase of 1st GDR issue of K Sera is given below:-
Issue 1( in 2007)
Date Name of Name of Quantity of GDRs Value of GDRs Trading Value

Acquirer Seller Acquired Acquired ($) Platform per
GDR($)
27-Dec-07 Rhodes NA 1,50,000 11,26,876 Exchange 7.51
15-Jan-08 Sophia NA 1,50,000 10,51,801 Exchange 7.01
17-Jan-08 Rhodes NA 1,50,000 10,51,801 Exchange 7.01
1-Apr-08 Sophia NA 2,60,000 9,01,801 Exchange 3.47
23-Apr-08 Rhodes NA 1,50,000 9,76,726 Exchange 6.51
05-Aug-08 Rhodes NA 94,000 5,00,138 Exchange 5.32
12-Dec-08 Sophia NA 20,000 61,800 OTC 3.09
29-May-09 KII Euram 9,25,000 20,04,660 OTC 2.17
9-Jun-09 KII Euram 3,00,000 9,97,970 OTC 3.33
14-Jul-09 KII Euram 1,75,000 3,96,900 OTC 2.27
26-Nov-09 IFCF Euram 98,000 2,30,300 OTC 2.35
30-Nov-09 IFCF Euram 1,45,000 3,30,600 OTC 2.28
4-Dec-09 IFCF Euram 76,000 2,05,200 OTC 2.70
17-Dec-09 IFCF Euram 1,26,000 2,98,620 OTC 2.37
4-Jan-10 KII Euram 2,36,000 5,28,111 OTC 2.24
13-Jan-10 KII Euram 3,09,143 7,16,717 OTC 2.32
Total 44,30,900 1,49,26,329
38. The purchases by FIIs for second GDR issue of K Sera were as follows:-
Issue 2 (in 2009)

GDR($)

14-Jan-10 KII Euram 17,000 1,23,379 OTC 7.26
20-Jan-10 KII Euram 1,90,000 13,78,944 OTC 7.26
20-Jan-10 KII Euram 1,25,000 9,05,940 OTC 7.25
84
GDR($)

26-Jan-10 KII Euram 80,000 5,78,995 OTC 7.24
27-Jan-10 KII Euram 65,000 4,29,156 OTC 6.60
21-Nov-10 IFCF Euram 1,30,000 10,10,100 OTC 7.77
Total 13,85,500 1,00,43,434
39. The details of cancellation of GDRs for receipt of underlying shares is given
below:-
Issue 1 (in 2007)
Transacti Entities cancelling GDRs on behalf GDRs Shares Sub-

on Date of FIIs/Sub-Accounts Cancelled Released Account Date of
receiving receiving
shares shares
17-01-08 BROWN BROTHERS HARRIMAN CO 1,50,000 15,00,000 Rhodes 17-01-08
22-01-08 BROWN BROTHERS HARRIMAN CO 1,50,000 15,00,000 Sophia 23-01-08
25-01-08 BROWN BROTHERS HARRIMAN CO 1,50,000 15,00,000 Rhodes 28-01-08
11-03-08 BROWN BROTHERS HARRIMAN CO 1,50,000 15,00,000 Sophia 13-03-08
24-04-08 BROWN BROTHERS HARRIMAN CO 45,000 4,50,000 Sophia 07-05-08
06-06-08 BROWN BROTHERS HARRIMAN CO 60,000 6,00,000 Rhodes 09-06-08
15-12-08 JULIUS BAER, ZUR, SWITZERLAND 20,000 2,00,000 Sophia 16-12-08
22-05-09 KAS DEPOSITARY TST/CUST, 2,99,000 29,90,000 ARES 25-05-09
03-06-09 KAS DEPOSITARY TST/CUST, 2,46,000 24,60,000 ARES 04-06-09
03-06-09 JPM CL CORP.,BK, UNITED STATES 3,25,000 32,50,000 KII 04-06-09
08-09-09 Euram 85,000 8,50,000 IFCF 09-09-09
25-11-09 Euram 85,000 8,50,000 IFCF 26-11-09
27-11-09 Euram 98,000 9,80,000 IFCF 30-11-09
01-12-09 Euram 1,45,000 14,50,000 IFCF 02-12-09
04-12-09 Euram 76,000 7,60,000 IFCF 07-12-09
18-12-09 Euram 1,26,000 12,60,000 IFCF 21-12-09
07-01-10 Euram 1,80,000 18,00,000 IFCF 08-01-10
13-01-10 Euram 6,01,757 60,17,570 IFCF 14-01-10
15-01-10 JEFFERIES CO INC, 3,09,143 30,91,430 KII 18-01-10
Total 47,61,900 4,76,19,000
85
Issue 2 (in 2009)
Transaction Entities cancelling GDRs on GDRs Shares Sub- Date of

Date behalf of FIIs/Sub-Accounts Cancelled Released Account receiving
receiving shares
shares
15-Jan-10 Euram 1,37,500 41,25,000 IFCF 20-01-10
19-Jan-10 JEFFERIES CO INC 17,000 5,10,000 KII 21-01-10
20-Jan-10 Euram 1,64,000 49,20,000 IFCF 21-01-10
21-Jan-10 Euram 1,25,000 37,50,000 IFCF 22-01-10
21-Jan-10 JEFFERIES CO INC 1,90,000 57,00,000 KII 22-01-10
25-Jan-10 Euram 2,00,000 60,00,000 IFCF 27-01-10
26-Jan-10 Euram 75,000 22,50,000 IFCF 27-01-10
27-Jan-10 Euram 57,000 17,10,000 IFCF 28-01-10
27-Jan-10 JEFFERIES CO INC 1,25,000 37,50,000 KII 28-01-10
Total 12,35,500 3,70,65,000
40. On receipt of the underlying shares, the Sub-Accounts sold the shares in the
Indian market and interestingly, as has been observed for other Examined
Companies, the main counterparties to these sales were AP related entities
such as Basmati and Oudh:-
Sell value % to total

FII CP PAN CP Name Sell Volume (Rs.) Sale
IFCF AAACO3597K Oudh 54,37,005 6,80,62,401 19.9
IFCF AACCN3776H Newgen International 27,66,800 3,44,53,906 10.1
IFCF Others 1,06,44,646 13,40,04,591 39.1
IFCF Total 2,70,12,750 34,21,13,600 100.0

KII AACCN3776H Newgen International 57,18,100 8,30,76,318 25.8
KII AAACB4324K Basmati 43,31,324 5,46,65,391 17.0
KII AAACO3597K Oudh 24,92,795 3,12,28,167 9.7
Others 1,21,19,211 15,26,73,849 47.5
KII Total 2,46,61,430 32,16,43,725 100.0

Rhodes ACRPP5552H SV 11,35,560 1,34,10,847 36.2
Rhodes AAACO3597K Oudh 5,87,765 70,53,180 19.1
Rhodes AAACB4324K Basmati 5,82,642 70,06,128 18.9
Rhodes AABCA6702F Alka 2,27,550 38,79,728 10.5
Others 4,66,483 56,68,654 15.3
Rhodes Total 30,00,000 3,70,18,536 100.0
86
Sophia AAACO3597K Oudh 4,11,236 55,62,066 20.2
Jitendra Patel (Excel
Sophia AAACE2875N Paints Pvt Ltd) 3,17,730 43,00,528 15.6
Sophia ACRPP5552H SV 1,95,695 20,61,398 7.5
Others 7,50,545 1,07,07,248 38.9
Sophia Total 20,00,000 2,75,22,638 100.0
Utilisation of GDR proceeds by K Sera:-
41. The utilisation of GDR proceeds by K Sera was investigated to determine the
manner in which K Sera has utilised GDR issue proceeds. It was observed
after the investigation that similar to the case of other Examined Companies,
the major portion of GDR proceeds was not received by K Sera in India. The
funds were transferred directly to either subsidiary in U.A.E. or to other
foreign based entities which are also linked with AP GDR Scheme.
42. Summons and emails were sent to K Sera seeking details regarding utilisation
42.1. Details of usage of proceeds of the GDR Issues by K SERA, along

funds.
42.2. Copies of bank account statements of K SERA maintained with
Euram Bank.
42.3. Copies of bank account statements of K SERA in India
highlighting transactions related to repatriation of GDR
proceeds.
Directors.
K SERA.
42.6. Copies of all the agreements between K SERA and Panasia
42.8. Details of the conditions that were laid upon K SERA for the
with Euram.
42.9. Copy of any other agreement that K SERA had with Euram apart
42.10. Details of any agreement of K SERA regarding financing for the
42.11. Copies of agreements that K SERA had with Vintage and AP.
42.12. Details of nature of business of foreign subsidiaries of K SERA.
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42.13. Bank Account Statement of all the subsidiaries of K Sera
including K Sera Sera Production FZE (K SERA FZE), a U.A.E based
subsidiary of K Sera.
with Panasia.
42.15. Name of the directors and promoters of K SERA at the time of
issue of GDRs.
42.16. Details of money paid by the foreign subsidiaries, be it on
account of purchases or expenses or loan, to other entities for
more than USD 25,000 from incorporation. K SERA was
specifically asked to provide details like name of entities to
which payments were done, purpose of payment and amount
paid by its foreign subsidiaries.
42.17. Audit Reports of foreign subsidiaries of K Sera along with their
financial statements for the year ending March 2010 and March
2011.
statements of foreign subsidiaries
42.19. The end use of the funds transferred to Foreign subsidiaries of K
Sera.
43. From the perusal of the information made available to SEBI by K Sera,
following has been observed:-
43.1. K Sera FZE is engaged in the business of general trading.

43.2. USD 10,65,750 was paid by K Sera to Panasia and companies
associated with Panasia.
43.3. From the Euram Bank account statement of K Sera it is observed
that they had received USD 5,000,000/- on 17.11.10 from Alkarni
Holdings Ltd. and repaid same on 10.01.11. Alkarni Holdings Ltd is
connected to Arun Panchariya.
43.4. USD 70,50,000 out of USD 2,49,99,975 raised by K Sera in its first
GDR issue was transferred to foreign based entities including K
Sera FZE.
43.5. USD 2,02,27,143 out of USD 2,99,84,094.60 raised by K Sera
through its second GDR issue was transferred to foreign based
entities including K Sera FZE
43.6. There are several occasions when K Sera FZE has received funds
from Ababil. As mentioned earlier, Ababil has received funds from
Asahi and Avon on few occasions. Asahi and Avon did not provide
rationale behind these transactions.
44. The Managing Director of K Sera was summoned to appear at SEBI Head
Office on March 26, 2012 and June 18, 2012 for recording of statement
under oath. On March 26, 2012 Mr. Shrikanth Maheshwari, CFO of K Sera
appeared and on June 18, 2012, Brigadier Vinod Ahuja, Whole Time Director
88
of the company appeared for recording of statement. During the recording of
statement on June 18, 2012 Brigadier Ahuja submitted under oath that
records at Dubai offices are missing due to malafide conduct of the previous
MD of K Sera.
45. K Sera like other Examined Companies was also unable to explain the
purpose behind payments made by its U.A.E based subsidiary. On being
summoned to provide details of all the payments made by K Sera FZE,
company submitted that;
"the records at Dubai are missing due to malafide conduct of the previous
MD who replaced our manager for just 7 days. FIR No. 70/2012 has been
registered in Amboli Police Station in Mumbai as also case has been
registered in Dubai. "
46. Like all other companies examined by SEBI, K Sera also did not cooperate
with SEBI in providing critical information required to determine the manner
in which GDRs were ultimately utilized. Following information/documents
were not provided to SEBI by K Sera:-
46.1. Complete Bank account statements of its subsidiaries from

inception till date. Vide email dated June 26, 2012, K Sera was
once again asked to provide complete bank account statements of
its subsidiaries , yet it did not provide the same.
46.2. K Sera also did not provide details like name of payee entity,
purpose of money paid by foreign subsidiaries.
47. Thus , from the above sequence of events its is observed that K Sera failed to
provide critical information like the particulars of end use of GDR proceeds
by its foreign subsidiaries. Since majority of GDR proceeds were transferred
to K Sera FZE, it was important to examine the usage of funds by K Sera FZE.
Misleading Submissions by K Sera
48. Investigation has revealed that K Sera like all other Examined Companies also
provided false information and concealed material information to SEBI to
mislead the investigation. Following false information was furnished to SEBI
by the company:-
49. K Sera made wrong submission that it did not have any agreement with
Vintage. It was clearly mentioned in the Loan Agreement signed between
Vintage and Euram that Pledge Agreement signed between K Sera and Euram
is part of the Loan Agreement.
89
50. K Sera has submitted that it did not have any arrangement with AP for
subscription of GDRs. As explained the complete GDR issuance was done on
the basis of AP GDR Scheme.
51. K Sera denied having any agreement with Euram, other than the Escrow
account agreement.
52. K Sera denied having any agreement with any of the entity for the purpose of
Vintage and AP.
53. All the above mentioned false submissions were again reiterated by Brigadier
Vinod Ahuja during statement of recording held on June 18, 2012. Brigadier
Vinod Ahuja also denied that K Sera has any agreement with AP, his brother
SP or any of the entities related to both of them. It is Interesting to note that,
SP was appointed as the chairman of K Sera in October 2012.
54. As per the submissions of K Sera they have denied any transaction with any
of the companies mentioned in interim order of SEBI dated Sept. 21, 2011 or
any of subsidiaries of such companies except transactions with Maars
Infratech Pvt. Ltd. & Maars. However, as per the submissions of Asahi,
transactions were observed between Asahi FZE and K Sera FZE, which is
Dubai based 100% subsidiary of K Sera.
foreign subsidiary strongly supports the suspicion of SEBI that part of the
proceeds of GDR issue were routed back to AP entities.
90
(VI) MAARS SOFTWARE INTERNATIONAL LTD
1. The GDR Issue of Maars for US $ 17.22 Million closed on August 10, 2007 and
was fully subscribed with allotment of 73,80,000 GDRs representing
7,38,00,000 equity shares of Rs 10/- each at USD 2.43.
3. Prior to GDR issue, Maars had 6,61,60,200 fully paid equity shares of Rs. 10
each and 1,12,60,000 Preference shares of Rs. 10 each. Therefore, the equity
shares represented by the GDRs were approximately 95.32% of Maars
outstanding share capital '(including Preference Share Capital) at the time of
issue.
4. The total capital raised by Maars through GDR issue was USD 1,79,33,400
Rs. 40.67 as on August 10, 2007. The market cap of Maars prior to GDR issue
was Rs. 27,52,00,000. Therefore, the capital raised by GDR issue was
5. The last traded price of Maars on BSE on August 10, 2007 was Rs. 4.16. The
highest and lowest price of Maars for period of three months from May 10,
2007 to August 10, 2007 was Rs. 4.35 and Rs. 3.2 respectively. The price
Rs. 40.67 as on August 10, 2007) which was 237.57% of the price of the scrip
on August 10, 2007.
6. Following are the details of investors in the GDR issue of Maars as submitted
by the company.

Rexflec 13,80,000 33,53,400 18.70
Figura 15,00,000 36,45,000 20.33
Tradetec 14,50,000 35,23,500 19.65
Imagination 14,80,000 35,96,400 20.05
Trendsetter 15,70,000 38,15,100 21.27
7. All the above subscribers were observed to be investors in several other GDR
issues of Indian companies which were managed by Panasia. All the attempts
to contact these subscribers were unsuccessful, just like in all the other cases
where LM to the GDR issue is Panasia. None of the letters, emails or
91
summons got delivered to these subscribers due to either email or contact
addresses being wrong. Even the financial market regulators regulating the
region where these subscribers were located could not trace these
subscribers. In most of the cases reply was received from the respective
regulators that the address does not exist.
Loan & Pledge Agreement signed among Maars, Vintage & Euram:-
8. The issuance and subscription of GDRs of Maars was done using loan taken
from Euram. The GDR issue of Maars is also issued using AP GDR Scheme and
Loan and Pledge Agreement signed among Maars, Vintage and Euram is the
key to issuance and subscription of GDRs.
9. A loan agreement dated July 27, 2007, was signed between Euram and
Vintage. The agreement was signed by AP as Managing Director on behalf of
Vintage on July 31, 2007.
to take down GDR issue of Maars' Luxemburg public offering and may only
be transferred to Euram account no: 540016 of Maars .
11. The Euram account no: 540016 is the bank account of Maars maintained
Loan Agreement.

92
13. A Pledge Agreement was also signed between Maars and Euram. The
agreement was signed by Mr. Pravin Jain on behalf of Maars as Director of
Maars.
15. According to the Pledge Agreement, Maars has been referred as "Pledgor''
"By loan agreement (hereinafter referred to as ''Loan Agreement'') dated July ,

2007, the Bank granted a loan (hereinafter referred to as the ''Loan'') to Vintage
FZE, AAH-213, Al Ahmadi House, Jebel Ali Free Trade Zone, Jebel Ali, Dubai, United
Arab Emirates (''the Borrower") in the amount of $ USD 17,933,400.00 million. The
Pledgor has received a copy of the Loan Agreement and acknowledges and agrees
to its terms and conditions."
17. From the above preamble of Pledge Agreement, it is clear that Mr. Pravin
Jain and Maars were also the party to the Loan Agreement.
" 2. Pledge
93
6. Realization of the Pledge
Bank.
Borrower’s payments may be contestable.
20. As the account no. 540016 is the account which Maars has maintained with
Euram to keep the proceeds of GDRs, it is clear that Maars has pledged
the loan given by Euram to Vintage as borrower of funds for subscription of
GDR issue (as mentioned in Loan agreement of Vintage).
Maars wherein the latter supports the former through pledging of GDR
proceeds.
64. On August 16, 2007, Maars informed BSE that the Board of Directors of the
Company at its meeting held on August 10, 2007 approved the allotment of
underlying Equity shares of 7,38,00,000 of Rs 10/- each fully paid-up against
issue of 7,380,000 GDRs favoring Deutsche Bank Trust Company Americas. It
94
is now clear from the investigation conducted that the aforesaid public
announcement by Maars was done to mislead retail investors in believing
that the GDRs were subscribed by genuine foreign investors, whereas in
reality, GDRs were subscribed by Vintage in connivance with Maars.
issued, thereby becoming the majority share holder of Maars. As on August
10, 2007, Vintage was holding almost 95.32% of the capital of Maars.
23. The GDRs held by Vintage were then transferred to other FIIs which then
cancelled and converted these GDRs into shares and sold it in Indian
Markets. The transactions were mostly OTC. But in the case of Sub-Accounts
like Mavi, Sophia and Rhodes, SEBI has been informed by the respective Sub-
Accounts that the acquisition of GDRs has happened through transactions on
exchanges, therefore the details of seller is not available with the FII/Sub-
Account. Following are the details of acquisition of GDRs of Maars by the
Sub-Accounts:-
Date Name of Name Quantity of Value of Trading Value per

Acquirer of GDRs GDRs Platform GDR($)
Seller Acquired Acquired
($)
20-Nov-07 Rhodes NA 11,00,000 8,81,980 Exchange 0.80
19-Dec-07 Rhodes NA 12,50,000 10,02,251 Exchange 0.80
08-Jan-08 Rhodes NA 6,00,000 10,51,651 Exchange 1.75
24-Jan-08 Mavi NA 4,50,000 5,40,990 Exchange 1.20
15-Sep-08 Rhodes NA 3,25,000 2,47,572 Exchange 0.76
15-Sep-08 Sophia NA 6,75,000 5,14,189 Exchange 0.76
03-Sep-09 KII Euram 4,50,000 2,26,800 OTC 0.50
Total 74,75,000 62,17,434
24. The cancellation of the GDRs of Maars started from December 07, 2007 till
September 22, 2009. Following are the details of cancellation requests that
were completed by ODB till June 30, 2012 along with the name of Sub-
Accounts which received shares post cancellation of GDRs.
95
Transaction Sub-Account receiving GDRs Shares Date of
Date shares after cancellation Cancelled Released receiving
of GDRs shares
07-12-07 Rhodes 6,00,000 60,00,000 10-Dec-07
13-12-07 Rhodes 2,00,000 20,00,000 14-Dec-07
20-12-07 Rhodes 3,00,000 30,00,000 24-Dec-07
24-12-07 Rhodes 3,75,000 37,50,000 27-Dec-07
28-12-07 Rhodes 3,00,000 30,00,000 31-Dec-07
02-01-08 Rhodes 3,75,000 37,50,000 04-Jan-08
04-01-08 Sophia 2,00,000 20,00,000 07-Jan-08
09-01-08 Rhodes 4,00,000 40,00,000 10-Jan-08
09-01-08 Sophia 6,00,000 60,00,000 10-Jan-08
14-01-08 Rhodes 75,000 7,50,000 15-Jan-08
14-01-08 Sophia 75,000 7,50,000 15-Jan-08
28-01-08 Mavi 2,60,000 26,00,000 29-Jan-08
19-09-08 Sophia 4,55,000 45,50,000 22-Sep-08
04-09-09 IFCF 6,25,000 62,50,000 07-Sep-09
10-09-09 KII 4,50,000 45,00,000 11-Sep-09
22-09-09 IFCF 5,02,800 50,28,000 23-Sep-09
Total 57,92,800 5,79,28,000
25. The shares received by Sub-Accounts such as, Rhodes, Sophia, IFCF and KII
were then sold in the Indian Stock markets. Following table provides the
details of the top counterparties of the sale of shares by these Sub-Accounts
during the period January 01 2007 to September 21, 2011.
Sell Sell value % to total

FII CP PAN CP Name Volume (Rs.) Sale
Mavi AAACB4324K Basmati 16,59,858 67,52,550 63.8
Mavi AABCA6702F Alka 6,47,500 26,61,225 24.9
Mavi ACRPP5552H SV Enterprises 1,92,318 7,82,707 7.4
Mavi Others 1,00,324 4,06,797 3.9
Mavi Total 26,00,000 1,06,03,279 100

Rhodes ACRPP5552H SV Enterprises 17,78,870 1,31,86,581 20.7
Rhodes AAACJ8850C JMP 10,82,219 76,21,952 12.6
Rhodes AADPS8309K Bharat C Shah 8,83,913 69,29,878 10.3
Rhodes AAVPR5584R Ajay Roongta 9,21,143 40,12,300 10.7
Rhodes Others 39,45,858 2,77,76,936 45.7
Rhodes Total 86,12,003 5,95,27,647 100
96
Somerset ACRPP5552H SV Enterprises 8,00,000 65,69,000 17.9
Somerset AAACC4789R Cherry Cosmetics 6,22,505 31,68,550 13.9
Somerset Others 30,52,495 2,26,83,950 68.2
Somerset Total 44,75,000 3,24,21,500 100

SPM Financial
Sophia AALCS3212Q Advisory 14,84,983 57,22,244 17.3
Sophia ACRPP5552H SV Enterprises 19,37,625 49,88,506 22.5
Sophia AABCA6702F Alka 5,80,290 23,50,175 6.7
Sophia Others 45,97,102 1,38,96,537 53.5
Sophia Total 86,00,000 2,69,57,462 100
26. Rhodes and Sophia ( both are separate classes of investment of Somerset
India Fund (Somerset)) in total purchased 49,50,000 GDRs of Maars (67.07%
of total GDRs issued by Maars). Out of these, 39,55,000 GDRs (79.90% of
GDRs purchased by Rhodes and Sophia) were cancelled by Rhodes and
Sophia resulting in 3,95,50,000 shares. Somerset (including Rhodes and
Sophia) sold off 2,16,87,003 shares. Indian Clients like SV, JMP, Ajay Roongta,
Alka and SPM Financial Advisory were the major CP to all of these trades.
27. Mavi cancelled GDRs of Maars and received 26,00,000 shares. It sold all of it
in Indian markets. 96.1 % of the shares sold by Mavi were purchased by
Basmati, Alka and SV.
28. IFCF also sold 61,31,239 shares of Maars. 60.2 % of shares sold by IFCF were
purchased by Basmati, SV, JMP and SPM Financial Advisory Ltd.
Utilisation of GDR proceeds by Maars:-
29. Summons and emails were sent to Maars in relation to the GDR issuance by
the company. The information sought from the company was specifically to
determine the end use of GDR proceeds by the company.
30. Maars has not provided any of the information sought vide summons dated
January 12, 2012. Two reminders were also sent by SEBI to them. Maars
repeatedly requested for additional time, but never provided the
information which was sought from the company. Following information was
sought from the company vide aforesaid summons:-
97
30.1. Details of usage of proceeds of the GDR Issues by Maars, along
funds.
30.2. Copies of bank account statements of Maars maintained with
Euram Bank.
30.3. Copies of bank account statements of Maars in India highlighting
Directors.
Maars.
30.6. Copies of all the agreements between Maars and Panasia
30.8. Details of the conditions that were laid upon Maars for the
with Euram.
30.9. Copy of any other agreement that Maars had with Euram apart
30.10. Details of any agreement of Maars regarding financing for the
30.11. Copies of agreements that Maars had with Vintage and AP.
30.12. Details of nature of business of foreign subsidiaries of Maars.
30.13. Bank Account Statement of the foreign subsidiaries of Maars.
with Panasia.
30.15. Name of the directors and promoters of Maars at the time of
issue of GDRs.
30.16. Details of money paid by the foreign subsidiaries, be it on
account of purchases or expenses or loan, to other entities for
more than USD 25,000 from incorporation. Maars was
specifically asked to provide details like name of entities to
which payments were done, purpose of payment and amount
paid by its foreign subsidiaries.
30.17. Audit Reports of foreign subsidiaries of Maars along with their
financial statements for the year ending March 2010 and March
2011.
statements of foreign subsidiaries
31. The managing director of Maars was also summoned to appear in person at
SEBI Head Office with documents sought. The summon was acknowledged by
the company and an extension of two months was sought.
32. Despite seeking repeated extensions of deadlines to reply to the summons,

Maars did not provide any information to SEBI. Further, no representative of
company appeared in SEBI office for recording of statement as summoned.
98
Due to non compliance by Maars in providing information to SEBI, the end
use of the GDR proceeds by the company could not be determined. This
strengthens the suspicion of SEBI that the company routed the GDR proceeds
back to AP entities for repayment of loan taken by Vintage.
33. It is also observed that the company did not disclose details of outstanding
GDRs in its quarterly disclosure of share holding pattern to exchanges. As per
BSE website, the equity held with custodians as Depository Receipts is shown
as nil for Maars even after issuance of GDR issue.
34. Considering the non cooperation by Maars in the investigation conducted by

SEBI, non compliance of summons issued by SEBI and using tactics to hamper
investigation (seeking repeated extensions but not replying to summons)
along with the material and documents made available to SEBI by Euram, it is
clear that the GDR issue of Maars was orchestrated in connivance with AP
after employing the AP GDR Scheme as explained in the case of other
Examined Companies.
99
Summary of role of entities involved in the market manipulation using
GDRs
Arun Panchariya & his associate companies
1. AP and his associate companies like Vintage, Alkarni, Alka and IFCF have
been the key players in the whole GDR scheme. It is observed that AP is
involved in each successive step in orchestrating the GDR scheme through
one of these companies. The subscription of GDR issue is happening through
Vintage. GDRs are then transferred to IFCF and other FIIs/Sub-Account.
These FIIs/Sub-Accounts sells it to Indian clients/CP Group, Alka being a part
of it. There are other financial transactions in overseas markets which
involves Alkarni.
2. Vintage has played the most important role in the AP GDR Scheme. The loan
for the subscription of GDR Issues of Examined Companies was taken by
Vintage against the collateral provided by the Issuer Company.
3. On perusal of the account statement of Vintage maintained with Euram

(540012), two way transactions were observed on the day of the issuance
of the GDRs. The securities (GDRs) issued were credited to the securities
account of Vintage (maintained with Euram) and the corresponding funds
were credited to the GDR account of issuer company (maintained with
Euram) from the Loan account of Vintage (maintained with Euram). This
GDR account of the issuer company, maintained with Euram, is also pledged
with Euram.
4. Following table provides the details of credit of funds to the account of

Vintage as a result of Loan Agreement with Euram.
Issuer Date of GDR Date of Credit of Total capital Loan received

Company issuance funds to Vintage raised by by Vintage
Account company (in
US $)
Asahi 29-04-2009 29-04-2009 29,91,000 29,91,000
IKF 15-05-2009 15-05-2009 54,13,048 54,13,048
Avon 19-06-2009 19-06-2009 16,00,000 16,00,000
K Sera 16-10-2009 16-10-2009 44,75,238 44,75,238
CAT 06-11-2009 06-11-2009 15,95,333 15,95,333
5. Following table provides the details of credit of securities (GDRs) into the
securities account no. 5400012 of Vintage maintained with Euram from
January 2009 onwards:-
100
Issuer Date of GDR Date of Credit No. of GDRs No. of GDRs
Company issuance of GDRs to issued by received by
Vintage Company Vintage
Asahi 29-04-2009 29-04-2009 29,91,000 29,91,000

IKF 15-05-2009 15-05-2009 54,13,048 54,13,048
Avon 19-06-2009 19-06-2009 16,00,000 16,00,000
K Sera 16-10-2009 16-10-2009 44,75,238 44,75,238
CAT 06-11-2009 06-11-2009 15,95,333 15,95,333
6. Therefore, for each of the GDR issuance, the securities (GDRs) were credited
to the account of Vintage as it is the actual investor in the GDRs of the
Examined Companies.
7. As discussed, all the foreign entities stated to be the initial investors in the
GDR issue of Examined Companies were not traceable by even the regulators
of their jurisdictions where these foreign entities were supposed to be
residing.
8. Panasia is the LM in all of the GDR issue which were examined in this matter.
Panasia which was under control of AP at the time of issuance of GDRs of
Examined Companies has furnished wrong information regarding initial
investors of the GDRs of the Examined Companies. Panasia also did not
comply with SEBI summons dated January 13, 2012. Panasia denied
providing information regarding initial investors of all the GDR issues which
were managed by it.
9. In response to SEBI email dated June 15, 2010 seeking information on trades
done by IFCF in the GDRs of Indian companies, AP, on behalf of IFCF, vide
email dated July 12, 2010, had interalia, made following false submissions:
a. All the investors in IFCF are exclusively non-Indian.

b. IFCF is not aware of the identity of the counterparties to the GDRs
purchased by it.
10. AP and Panasia also made several false submissions in their replies dated
December 05, 2011 and November 29, 2011, respectively, to SEBI.
Examined Companies & their Directors/ Promoters
11. The Examined Companies and their directors and promoters pledged the
funds received through the issuance of GDRs to Euram/Banco to securitize
the loan taken by Vintage/Seazun to subscribe to the GDRs of the company.
12. The companies were aware of the fact that the subscription of the GDR issue
was done using loan taken by Vintage/Seazun. Examined Companies made
misleading public announcements and provided false information to BSE and
SEBI with the intention of disguising their structured GDR issue as genuine
101
capital raising exercise. Following are the misleading information provided by
all the Examined Companies:-
12.1. Examined Companies informed BSE and general public regarding

the raising of capital through issuance of GDRs for utilisation by the
company . The information was misleading as the capital was raised
using loan taken from foreign banks and was pledged with the
same bank by the company. Thus there was nil funds available with
the Examined Companies for utilisation post GDR issue.
12.2. Companies filed information regarding initial investors of GDR issue
with BSE. However, as explained earlier, the names of initial
investors provided was false as the real subscriber to the GDR
issues was Vintage/Seazun.
13. Examined Companies were non-compliant to summons issued by SEBI in

many ways. Examined Companies furnished wrong information and
concealed material information from SEBI either in their replies to SEBI or by
way of statements given under oath, in person, before Investigating
Authority. There was, thus, malafide intention on the part of
directors/promoters/officials of the Examined Companies, to hamper the
investigation carried out by SEBI.
14. The directors/promoters/officials of the Examined Companies are as much

responsible for the fraudulent issuance of GDRs with the help of AP, as AP
himself.
India Focus Cardinal Fund
15. IFCF acted as the main link between the trading of GDRs in overseas market
and the sale of the underlying shares resulting out of conversion of GDRs in
the Indian markets. Following is the summary of trading done by IFCF during
the period January 01, 2009 to September 21, 2011 in the examined scrips.
Buy Sell Buy Sell Value

Company
Volume Volume Value (Rs.)
Asahi 0 6,44,81,646 0 11,89,67,319
Avon 0 4,31,20,000 0 27,28,84,812
CAT 0 2,45,200 0 28,63,902
IKF 0 1,96,07,456 0 8,67,92,834
K Sera 0 2,70,12,750 0 34,21,13,600
Maars 0 61,31,239 0 2,17,12,348
Total 84,53,34,814
16. As explained earlier IFCF was totally under the control of AP during the
period of investigation. It was disclosed to SEBI by Euram that IFCF was a
broad based fund. However, during the course of investigation it was
102
revealed that IFCF is not a broad based fund. Following are the details of
investment in Class A shares of IFCF.
Name of % holding in
Investors Class A shares of
IFCF
Euram 63.11%
Atique 29.06%
Citco Bank 7.82%
17. Euram informed SEBI that it has invested in Class A shares of IFCF exclusively
on behalf of Vintage. Vintage is owned by Alkarni which in turn is owned by
AP and his family members. Therefore, IFCF does not appear to be a broad
based fund and its major investors are actually Indian citizens. IFCF cannot
distance itself from the actions of AP, as;
 AP is 100% shareholder of CCPL. CCPL is in turn 100% shareholder

of IFCF.
 AP is chief investment officer of CCPL. CCPL is Investment manager
of IFCF. CCPL is also the FII and IFCF is registered as its Sub-Account
in India.
 AP and family members are investors in Alkarni which in turn is
investor in Vintage. Vintage is the exclusive investor in Class A
shares of IFCF.
Other FIIs/Sub-Accounts.
18. Other FIIs/Sub-Accounts were also observed to be repetitively cancelling
GDRs of Examined Companies and selling in Indian markets. The
counterparties to these FIIs/Sub-Accounts were also CP Group members
related to AP.
19. Sophia, Rhodes and Mavi have been mainly observed to be actively trading in
a manner similar to that of IFCF. Following table provides the details of major
counterparties of sale of shares of Examined Companies by Mavi, Sophia &
Rhodes.
Sell Sell Value % to total
Scrip FII CP PAN CP NAME Volume (Rs.) Sale
CAT Mavi AACCE0781B ESPIRIT TECHNOLOGIES PVT LTD 5,31,732 13,32,932 42.2
CAT Mavi ABSPJ3747J DINESH KUMAR JAISWAL 3,62,695 9,66,131 28.8
CAT Mavi ADTPB3843L LAXMIPERSHAD JAISWAL 3,21,076 8,58,100 25.5
CAT Mavi Others 44,497 1,16,137 3.5
CAT Mavi Total 12,60,000 32,73,300 100.0
Maars Mavi AAACB4324K Basmati 16,59,858 67,52,550 63.8
Maars Mavi AABCA6702F Alka 6,47,500 26,61,225 24.9
Maars Mavi ACRPP5552H SV Enterprises 1,92,318 7,82,707 7.4
Maars Mavi Others 1,00,324 4,06,797 3.9
Maars Mavi Total 26,00,000 1,06,03,279 100.0
103
Sell Sell Value % to total
Scrip FII CP PAN CP NAME Volume (Rs.) Sale
CAT Rhodes AAACB4324K Basmati 5,92,150 31,85,993 39.5
CAT Rhodes AACCE0781B PRIVATE LTD 5,94,465 16,85,895 39.6
NEWGEN INTERNATIONAL
CAT Rhodes AACCN3776H PRIVATE LTD 1,50,000 8,11,500 10.0
CAT Rhodes AABCA6702F Alka 1,50,000 4,47,000 10.0
CAT Rhodes Others 13,385 67,059 0.9
CAT Rhodes Total 15,00,000 61,97,446 100.0
K Sera Rhodes ACRPP5552H SV 11,35,560 1,34,10,847 36.2
K Sera Rhodes AAACO3597K Oudh 5,87,765 70,53,180 19.1
K Sera Rhodes AAACB4324K Basmati 5,82,642 70,06,128 18.9
K Sera Rhodes AABCA6702F Alka 2,27,550 38,79,728 10.5
K Sera Others 4,66,483 56,68,654 15.3
Rhodes Total 30,00,000 3,70,18,537 100.0
Maars Rhodes ACRPP5552H SV Enterprises 17,78,870 1,31,86,581 20.7
Maars Rhodes AAACJ8850C JMP 10,82,219 76,21,952 12.6
Maars Rhodes AADPS8309K Bharat C Shah 8,83,913 69,29,878 10.3
Maars Rhodes AAVPR5584R Ajay Roongta 9,21,143 40,12,300 10.7
Maars Rhodes Others 39,45,858 2,77,76,936 45.7
Maars Rhodes Total 86,12,003 5,95,27,647 100.0
Sell Sell value
Scrip FII CP PAN CP Name Volume (Rs.) % to total Sale
Maars Sophia AALCS3212Q SPM Financial Advisory 14,84,983 57,22,244 17.3
Maars Sophia AABCA6702F Alka 5,80,290 23,50,175 6.7
Maars Sophia Others 45,97,102 1,38,96,537 53.5
Maars Sophia Total 86,00,000 2,69,57,462 100.0
K Sera Sophia AAACO3597K Oudh 4,11,236 55,62,066 20.2
K Sera Sophia AAACE2875N Jitendra Patel 3,17,730 43,00,528 15.6
K Sera Sophia ACRPP5552H SV 1,95,695 20,61,398 7.5
K Sera Others 7,50,545 1,07,07,248 38.9
K Sera Sophia Total 20,00,000 2,75,22,638 100.0
CAT Sophia AACCE0781B PRIVATE LTD 6,03,268 17,10,572 40.2
CAT Sophia AAACB4324K Basmati 3,00,000 17,50,500 20.0
CAT Sophia ACLPJ8528K DHIRAJ KUMAR JAISWAL 2,22,900 5,94,916 14.9
CAT Sophia ADTPB3843L LAXMIPERSHAD JAISWAL 1,77,100 4,51,584 11.8
CAT Sophia AABCA6702F Alka 1,50,000 4,47,000 10.0
CAT Sophia Others 46,732 1,15,428 3.1
CAT Sophia Total 15,00,000 50,70,000 100.0
20. Mavi has not provided the details of all the beneficial owner (natural person)
of the respective funds that have dealt in the GDRs of Examined Companies.
104
21. KII has also acted in a manner similar to IFCF. KII also provided SEBI copy of
their agreement with Vintage and AP. From the perusal of the aforesaid
agreements, it clear that KII had done dealings in the GDRs of Examined
Companies on directions from Vintage/AP. Credo Capital PLC is an FII related
to Credo Investments Holding Ltd and has KII as its Sub-Account. Thus it is
clear that Credo Capital PLC was aware of the agreements between Credo
and Vintage. Thus Credo Capital PLC failed, as an FII, to prevent KII from
dealing in the GDRs and shares of Examined Companies despite being aware
of the agreements among, Credo, KII and Vintage.
22. Apart from the above, the trading of shares received by the Sub-Accounts
after cancellation in Indian Stock and offloading of such shares by these Sub-
Accounts/FIIs to Indian retail investors with the help of AP related entities is
explained in the interim order dated September 21, 2011.
23. With regards, to other Sub-Accounts, viz, Mavi, Sophia and Rhodes, although
they have denied any links with AP, their trading conduct as explained in this
report and in Interim Order dated September 21, 2011 and the above data
suggests that many of their orders were also matched with AP entities.
However, a detailed examination regarding these sub-accounts would be
dealt in a supplementary report.
Indian Counterparty Group members (CP Group)
24. SV, Alka, Oudh, Basmati and JMP were also observed to be repetitively
appearing as counterparties to the sell trades of Sub-Accounts. Apart from
JMP, rest four of the said clients have been found to be related to AP. These
clients after purchasing from the Sub-Accounts sold the shares to Indian
retail clients and thus completed the disposing of the GDRs.
25. These CP Group members have provided liquidity to the shares of Examined
Companies to let Sub-Accounts successfully offload their holdings.
26. SV, who is having connections with Ashok, brother of AP and SP has not
complied to the summons issued to it. SV did not reply to the Interim Order
and letters sent thereafter in this regard. Mr. Sarfaraz Khan Pathan,
proprietor of SV, appeared in SEBI on May 28, 2012 and assured that a reply
to the Interim Order and summons will be submitted to SEBI. However, SEBI
has not received any response from Mr. Sarfaraz Khan Pathan after May 28,
2012. Thus, SV and Mr. Sarfaraz Khan Pathan have not complied to the
summons issued by SEBI.
27. Apart from the aforementioned CP Group members which were identified in
the Interim Order, certain trading entities are also found to be purchasing
shares from Sub-Accounts in large concentration and selling to Indian retail
clients within a short period of time. The detailed investigation of these
entities is covered in supplementary report.
105
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Investigation IN THE Matter OF Market Manipulation Using GDR Issues

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Investigation IN THE Matter OF Market Manipulation Using GDR Issues

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Annexure 2

INVESTIGATION REPORT IN THE MATTER OF MARKET

H. Analysis of transaction regarding Asiatexx Enterprises Limited..... Error! Bookmark not

The detailed investigation of creation of false market by clients connected to AP and

PART 1 - SCHEME OF MANIPULATION OF INDIAN

Alkarni Alkarni Holdings Ltd, a company registered in British Virgin Island

AP Mr. Arun Panchariya

Ashok Mr. Ashok Panchariya, brother of AP & Satish Panchariya

CCPL Cardinal Capital Partners Ltd, a company owned 100% by AP and it

CP Group Counterparty Clients Group, Group of Indian

Euram European American Investment Bank AG, Austria , It is a bank

Examination Period of January 01, 2009 to September 21, 2011 (unless

1. Asahi Infrastructure & Projects Ltd

4. IKF Technologies Ltd.

IFCF India Focus Cardinal Fund, a fund based in Mauritius and is

Issuers / Indian companies which issue GDRs.

LM Lead Manager to GDR Issues

Mavi Mavi Investment Fund Ltd., Sub-Account

director of the fund until September 29, 2011.

Pledge An Agreement signed between foreign bank (Euram or Banco )

Sophia Sophia Growth – A share Class of Somerset Fund, Sub-Account

SP Mr. Satish Panchariya, brother of AP

Structured GDRs GDRs issued by companies with the help of AP wherein AP

Radhadevi Satish 15.00%

Sarita Arun 15.00%

Madhudevi Ashok 15.00%

Ashok Panchariya 2.50%

5. AP was the chief investment officer of CCPL. AP is also 100% shareholder of

6. CCPL is 100% shareholder of IFCF. CCPL also acts as Investment manager of

8. AP is the founder and director of Panasia. He is also 100% shareholder of

Name of Investors % of investment

12. AP and SP were also directors of Euram Asia.

13. Euram holds 51% shareholding in Euram Asia.

15. Examined Companies signed Pledge Agreements with Euram. According to

19. Ababil transferred funds to one of the subsidiary of K Sera in Dubai.

1.1 Step 1 of the GDR scheme is shown in following chart:-

1.5 The following is also secured as per the Loan agreement:-

 Pledge of certain securities held from time to time in the Borrower's

Shares Market Capital % Capital

1 IKF 31-03-07 11,000 Seazun 14,000 27-03-07 Banco 27-03-07

Step 2:- Cancellation of GDRs

3.5.1. Most of these are based in free zones of U.A.E.

(I) ASAHI INFRASTRUCTURE AND POJECTS LTD.

Summary of GDR issue:-

2. Panasia was appointed as the LM to the GDR issue by the company.

3. Asahi consolidated equity shares on November 04, 2010 from 10 equity

Subscribers of GDR Issue:-

8. Greenwich and Tradetec were observed to be investors in several other GDR

Greenwich Floor - 18, One International Finance Centre, 1 Harbour view

 Pledge of certain securities held from time to time in the Borrower's

18. The preamble of the Pledge Agreement states

"By loan agreement K210409-003 (hereinafter referred to as ''Loan Agreement'')

20. The pledge created in the Pledge Agreement is stated below:-

6. Realization of the Pledge

Acquisition, Cancellation and Sale of GDRs:-

Date of Name of Name Quantity of Value of Trading Value per

Transaction Date Entities cancelling GDRs on GDRs Shares Released

20-08-2009 INDIA FOCUS CARDINAL FUND 44,00,000

Utilisation of GDR proceeds by Asahi:-

38.1. Details of usage of proceeds of the GDR Issues by Asahi, along

40.1. Asahi submitted the details of utilisation of GDR proceeds.

43. Following documents/information sought vide summons/emails/letters were

51. Asahi also made a false submission of no restriction/condition on its GDR