The promoters of Mundra Port and Special Economic Zone, who are planning an initial public offering (IPO) to raise about Rs 1,500 crore -1,800 crore, are facing a Sebi investigation for share price manipulation and aiding and abetting of Ketan Parekh entities in the stock market scam of 2000. According to the risk factors listed in the draft red herring prospectus submitted by the company to Sebi, there is an outstanding legal case involving the directors, promoters and entities that form part of the promoters, the Adani group. This includes proceedings relating to violation of securities laws and criminal complaint instituted by Sebi. “Five show-cause notices have also been issued to our promoters,” the prospectus says. The document says that Sebi has issued a show-cause notice to Crown International, Adani Agro and Adani Properties — the entities forming part of the promoter group — for aiding and abetting entities associated with Ketan Parekh in manipulating the price of the shares of Adani Enterprises. “The show-cause notice asks the entities why suitable action against them should not be taken under the above section, including directions prohibiting such entities from dealing in securities for a particular duration,” the company says. “In their reply dated December 19, 2005, and through personal hearings and further submissions dated September 11, 2006, the said entities have denied the allegations and have requested Sebi to drop these proceedings. The matter is currently pending.” Sebi has also filed a criminal complaint against Adani Enterprises, Adani Properties, Adani Agro and Rajesh S Adani (as a trustee of the Rajeshbhai S Adani Family Trust) regarding the execution of off-market deals in violation of the provisions of the Securities Contract Regulation Act, 1956. “It is alleged that the off-market deals transacted by the accused were executed after a considerable delay and hence were in violation of the above sections and the Sebi notification and the same is punishable,” the offer document says. When contacted, a company official said: “The offer document has been filed on the basis of the December 8, 2006, notification issued by Sebi. We have nothing else to say.” Sebi officials did not respond to an Indian Express e-mail asking for their comments on the company’s IPO or the show-cause notices involving its promoters. For the six months ended September 30, 2006, the company’s income from operations was Rs 232.74 crore. Net profit stood at Rs 126.11 crore for the six months ended September. Total cargo volume at Mundra Port increased 36.4 per cent from 8.6 million tonnes in 2005 to 11.7 million tonnes in 2006.
