Rs 10L penalty on Ritesh Properties’ MD

In its order Sebi said Managing Director and Promoter of RPIL,Sanjeev Arora,”disseminated misleading information of RPIL and tried to suppress negative information and made aggressive announcements on positive development with respect to the company.”

Sebi also said Arora influenced the price of the scrip of RPIL through personal trades during the investigation.

“… impose a penalty of Rs 10 lakh on the Noticee (Arora) which will be commensurate with the violations committed by him,” the Sebi order said.

It was observed that immediately before the investigation period RPIL,which was trading at Rs 3.52 apiece on the BSE on July 13,2006 witnessed a sharp upward movement and surged to Rs 141.15 at the end of January 21,2008.

It was observed that the Board of RPIL approved the joint collaboration agreement on August 12,2006 with Ansal Townships and Projects Ltd and informed the exchange on August 16,2006. As per the agreement,RPIL had signed a detailed agreement with Ansal to start a joint venture project in Ludhiana comprising of 60 per cent industrial park and 40 per cent residential area on the land belonging to RPIL.

Sebi’s investigation found the company had suppressed significant details such as the projected net worth and profits from the joint venture would be around Rs 800 crore and Rs 150 crore respectively (as compared to the then net profit of Rs 7.18 crore for the company in 2006-07) even though the information was available with it.

Although,the details were subsequently disclosed on January 8,2007,after the prices were fixed for preferential allotment to certain connected entities. It was further alleged that at the time of signing the joint venture on July 14,2006,real estate business was not included in the main objectives of RPIL.

At that time,name of the company was also only Ritesh Industries Ltd,which was later changed to Ritesh Properties and Industries in February 28,2007.

The market regulator also said Arora had made aggressive announcements on positive developments like NDTV subscribing to RPIL’s proposed preferential equity allotment about the company and withholding negative deatails.

On February 02,2008,RPIL made an announcement on to issue 1.92 lakh equity shares to NDTV Ltd. Subsequently,on April 01,2008,NDTV informed RPIL about its withdrawal of subscription to the proposed preferential equity allotment.

Sebi said that RPIL had not disclosed promptly about NDTV’s withdrawal to subscribe to its shares.

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