Terming HBN Dairies & Allied Ltd’s intention as “malafide”, markets regulator Sebi has rejected the repayment proposal of the company, which mobilized illegal funds to the tune of Rs 1,137 crore from investors.
The Securities and Exchange Board of India (Sebi) found HBN failed to take any concrete steps for all these years to repay the investors’ money despite its own earlier repayment proposal in 2013.
“The initial repayment proposal was submitted on August 8, 2013. It is a matter of grave concern that after a lapse of a little more than three years, the company is still seeking a fresh proposal for repayment to investors,” it added.
Besides, HBN has failed to give any plausible explanation as to why the properties could not be sold since 2013, infact, the new proposal also does not give any firm timelines as to when the properties will be sold.
The current proposal, which envisages setting up of a special purpose entity (SPE), legal transfer of assets to the SPE, credit rating of the assets, obtaining insurance from an appropriate insurance company, among others will require substantial additional time for making repayments to the investors, Sebi Whole Time Member S Raman said in an order dated August 12.
The company had illegally mobilized funds amounting to Rs 1,137 crore from gullible investors.
“Almost 20 lakh investors of HBN are desperately waiting to get their money back. The company’s intentions have been malafide right from the very beginning till now. This is illustrated by HBN’s raising of funds in a blatantly illegal manner, flouting the directions of Sebi in respect of repayments to be made only through the escrow account, ‘repaying by cash’ to a huge extent of Rs 192.96 crore, the source of which remains unexplained even after 2 years.
“This new proposal is nothing but a ploy to drag on the matter without any reasonable end in sight,” he added.
Accordingly, Sebi has rejected the repayment proposal submitted by HBN.