1

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. Order/MC/HP/2022-23/17651-17665]
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,

1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND
IMPOSING PENALTIES) RULES, 1995 AND UNDER SECTION 23‐I OF
SECURITIES CONTRACTS (REGULATION) ACT, 1956 READ WITH RULE 5 OF
SECURITIES CONTRACTS (REGULATION) (PROCEDURE FOR HOLDING
INQUIRY AND IMPOSING PENALTIES) RULES, 2005.
In respect of –
1) Aster Silicates Ltd. (now Shri Aster Silicates Ltd.) (PAN: AABCA6474E)
having address at - B-506, “Infinity”, Near Hotel Ramada, Corporate Lane
Road, Satellite, Ahmedabad - 380015, Gujarat
2) Mahesh Maheshwari (PAN: ACDPM5613L) having address at - C-503,
Sanskar Flats, Behind Shalby Hospital, Opp. Karnavati Club, SG Highway,
Ahmedabad - 380015, Gujarat
3) Namrata Maheshwari (PAN: AFGPM6835A) having address at - C-503,
Sanskar Flats, Behind Shalby Hospital, Opp. Karnavati Club, SG Highway,
Ahmedabad – 380015, Gujarat
4) M/s Ambica Ceramics (Proprietor: Mrs. Namrata Maheshwari) (PAN:
AFGPM6835A) having address at - Maheshwari Block, C-504, Sanskar Flats,
Opp. Karnavati Club, SG Highway, Ahmedabad – 380015, Gujarat
5) M/s Orbit Corporation (PAN: AQZPP1920D) having address at - 464/B, Opp.
Haripura, Badh Patel Bhavan, Ahmedabad - 380016, Gujarat
6) M/s Shukan Enterprise (PAN: AAZPP0768M) having address at - 01, Ankur
Co-op Society - 2, NR Ankur Bus Stop, Naranpura, Ahmedabad – 380013,
Gujarat
7) M/s Karan Enterprise (PAN: AWSPP9675Q) having address at - G/22/257,
Shivam Apartment, Nava Vadaj, Ahmedabad – 380013, Gujarat
8) M/s Shreeji Machine Tools (PAN: AQSPP7982N) having address at - D-5/8,
Avas Co-op Society Ghatlodiya, Pavapuri Toad, Ghatlodia, Ahmedabad -
380061, Gujarat
9) M/s Shree Ganesh Engineering Corporation (PAN: ASOPP2722N) having
address at - A-6, Vishwas Apartment, Near Rang Sagar, Naroda Road, Sajipur
Bogha, Ahmedabad – 380061, Gujarat
10) M/s Krish Corporation (PAN: ARGPP2402G) having address at - Shop No.
3, Rajendra Shopping Centre, Rajendra Part Society, Odhav, Ahmedabad -
382415, Gujarat
11) M/s Arasuri Enterprise (PAN: AAZPP4676N) having address at - A/12,
Greencity Apartment, Near New Khodidas Chali, Asarwa, Ahmedabad -
380016, Gujarat
12) M/s Suraj Trading Corporation (PAN: AFFPM6604L) having address at -
C/2/21, Pavapuri Flats, Janta Nagar, Ghatlodiya, Ahmedabad - 380061,
Gujarat
13) M/s Bhavi Trading Company (PAN: AAZPP0768M) having address at - 11/1,
Dada Estate, B/s Umiya Way Bridge, Krishnastone, Sarkhej, Ahmedabad -
382210, Gujarat
14) M/s Chamunda Enterprise (PAN: ALAPC6731H) having address at - 208,
Ambicanagar Vibhag 1, Meghaninagar, Ahmedabad - 380013, Gujarat
15) M/s Saffron Capital Advisor Private Limited (PAN: AAKCS4666H) having
address at - H-130, Bhoomi Green, Raheja Estate Kulupwadi, Borivali East,
Mumbai - 400066
In the matter of Aster Silicates Limited
BACKGROUND
1. Securities and Exchange Board of India (hereinafter be referred to as, 'SEBI')
initiated adjudication proceedings against Aster Silicates Ltd. (now Shri Aster
Silicates Ltd.) (Noticee 1/Company/ASL), Mahesh Maheshwari (Noticee 2),
Adjudication Order in the matter of Aster Silicates Limited
Page 2 of 91
Namrata Maheshwari (Noticee 3), M/s Ambica Ceramics (Noticee 4), M/s Orbit
Corporation (Noticee 5), M/s Shukan Enterprise (Noticee 6), M/s Karan
Enterprise (Noticee 7), M/s Shreeji Machine Tools (Noticee 8), M/s Shree
Ganesh Engineering Corporation (Noticee 9), M/s Krish Corporation (Noticee
10), M/s Arasuri Enterprise (Noticee 11), M/s Suraj Trading Corporation (Noticee
12), M/s Bhavi Trading Company (Noticee 13), M/s Chamunda Enterprise
(Noticee 14) and M/s Saffron Capital Advisor Private Limited (Noticee 15)
pursuant to examination in the matter of Aster Silicates Limited. The Noticees 1
to 15 are collectively referred to as 'Noticees/You'.
2. Adjudication proceedings have been initiated against,
a) Noticees 1, 2 and 3 under section 15HA of the SEBI Act, 1992 (hereinafter
referred to as, ‘SEBI Act’) for alleged violations of sections 12A (a), (b)
and (c) of the SEBI Act read with Regulations 3 (a), (b), (c), (d), 4(1),
4(2)(f), (k) and (r) of the SEBI (Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market) Regulations, 2003 (hereinafter
referred to as, ‘PFUTP Regulations’).
b) Noticees 4 to 14 under section 15HA of the SEBI Act for alleged violations
of sections 12A (a), (b) and (c) of the SEBI Act read with Regulations 3
(b), (c), (d) and 4(1) of the PFUTP Regulations.
c) Noticees 1, 2 and 3 under section 15HB of the SEBI Act for alleged
violations of Regulations 57 (1) and 57 (2)(a) read with Clause
2(XVI)(B)(2) of part A of Schedule VIII and Regulation 60(7)(a) of the SEBI
(Issue of Capital and Disclosure Requirements) Regulations, 2009
(hereinafter referred to as, ‘ICDR Regulations’).
d) Noticee 1 under section 23E of Securities Contracts (Regulation) Act,
1956 (hereinafter referred to as, ‘SCRA’) for alleged violations of section
21 of the SCRA read with clauses 43 and 43A of the Listing Agreement.
e) Noticee 15 under section 15HB of the SEBI Act for alleged violation of the
provisions of Regulations 64(1) of ICDR Regulations and Regulation 13
Page 3 of 91
read with Clauses 1, 2, 3, 4, 6, 7 and 21 of the Code of Conduct for
Merchant Bankers specified in Schedule III of SEBI (Merchant Bankers)
Regulations, 1992 (hereinafter referred to as ‘Merchant Bankers
Regulations’).
APPOINTMENT OF ADJUDICATING OFFICER
3. SEBI appointed Shri Santosh Shukla as Adjudicating Officer under Section15-I

of the SEBI Act read with Rule 3 of the SEBI (Procedure for Holding Inquiry and
Imposing Penalties) Rules, 1995 and under Section 23‐I of Securities Contracts
(Regulation) Act, 1956 read with Rule 3 of Securities Contracts (Regulation)
(Procedure for Holding Inquiry and Imposing Penalties) Rules, 2005 (hereinafter
be referred to as the 'Adjudication Rules'), vide order dated May 13, 2019 to
inquire into and adjudge under section 15HA and 15HB of the SEBI Act and
section 23E of SCRA the aforesaid alleged violations against the Noticees.
Thereafter, Shri Amit Pradhan was appointed as Adjudicating Officer vide Order
dated January 07, 2020. Subsequently, the undersigned was appointed as
Adjudicating Officer (hereinafter referred to as “AO”) vide an order dated June
18, 2021.
SHOW CAUSE NOTICE, REPLY AND HEARING
4. Show Cause Notice No. EAD-2/AP/AKS/12503/1-14/2020 dated July 30, 2020

(hereinafter be referred to as, the “SCN”) was served upon Noticees 1 to 14 and
SCN No. EAD-2/AP/AKS/12502/1-2/2020 dated July 30, 2020 was served upon
Noticee 15 under Rule 4(1) of the Adjudication Rules, to show cause as to why
an inquiry should not be held and penalty not be imposed against the Noticees
under Section 15HA and 15HB of the SEBI Act and section 23E of SCRA for the
aforesaid alleged violations.
Page 4 of 91
5. The allegations levelled against the Noticees in the SCN are summarized as
below:
6. Company presently known as Shri Aster Silicates Ltd. is a delisted company.

Previously its share was listed on Bombay Stock Exchange Limited (BSE) and
National Stock Exchange Limited (NSE).
7. SEBI conducted an investigation into trading activity in the scrip for irregularity in
the utilization of proceeds of its Initial Public Offer (‘IPO’).
8. Company came with an IPO of 45,00,000 equity shares during June 24 - 28, 2010
with a face value of Rs.10 per share and issue price of Rs.118 per share,
aggregating Rs.53.10 crore for the purpose of expansion of manufacturing
facilities and certain other working capital requirements.
9. In the Company’s prospectus dated June 30, 2010 (the Prospectus) the objects
of the issue, cost of the project and means of finance were disclosed as under:
Object Amount (Rs. in lakhs)

Expansion of manufacturing facilities 4,432.19
Additional Working Capital requirements 750.00
Public Issue Expenses 500.00
Total Cost of the Project 5,682.19
Means of Finance
Description Amount (Rs. in lakhs)
Proceeds from IPO 5,310.00
Internal cash accruals 372.19
Total 5,682.19
10. It was further disclosed in the prospectus that the company proposed to enhance
its manufacturing capacity by adding a 300 metric tonnes per day (MTPD) facility
to manufacture Sodium Silicate to its existing capacity at Bharuch, Gujarat. The
details of the expansion plan as disclosed by the Company in the prospectus are
as follows:
Page 5 of 91
Sr. No. Particulars Amount (Rs. in lacs)
1 Land Development 71.20
2 Civil Works 440.00
3 Plant & Machinery 3665.99
4 Contingencies 200.00
5 Deposit with Gujarat Gas 55.00
Total 4,432.19
11. The Company also disclosed the list of vendors for procuring machineries for the
proposed expansion which included Ambica Ceramics with which it had already
placed an order for Rs.21.28 crores for procuring a furnace (300 mts capacity).
It was also disclosed therein that the actual suppliers of the equipment and the
price may differ after considering the conditions prevailing while placing the
orders.
12. It was mentioned in the prospectus that the Company has already incurred
certain expenditure on the expansion till May 21, 2010 i.e. before the raising of
funds through IPO. The details of the said expenditure are as follows:
Sr. No. Object Amount (Rs. in lakhs)

1 Land Development 13.04
2 Civil Works 303.79
3 Plant and Machinery 887.95
4 IPO expenses 50.97
Total 1255.75
13. The aforementioned deployment had been financed as following and shall be
recouped from the public issue proceeds:
Sr. No. Description Amount (Rs. in lakhs)

1 Internal accruals 372.19
Unsecured loans from Luniar Finstock Pvt. Ltd, 883.56
2
Ahmedabad
Total 1255.75
14. Company had 2 public issue accounts with HDFC Bank and the IPO proceeds
were transferred from the public issue account to its bank accounts as follows:
Page 6 of 91
Sr. Date of transfer Details of company’s bank accounts Amount credited (in
No. credited Rs.)
1. 27/07/2010 Credit in UBI- A/c. 4355010100086632 51,20,00,000
2. 27/07/2010 Credit in UBI- A/c. 4355010100086632 15,50,000
3. 17/8/2010 Credit in UBI- A/c. 4355010100086632 637
4. Total amount transferred to company’s bank accounts 51,35,50,637
5. Amount paid towards IPO expenses 1,74,49,363
6. Total (amount raised in IPO) = (4+5) 53,10,00,000
15. Vide summons dated July 16, 2015, September 01, 2015, September 16, 2015,
November 26, 2015, February 09, 2016 and emails dated February 02, 2018 and
February 05, 2018, ASL was advised to provide detailed information regarding
utilisation of IPO proceeds. The following details were inter-alia sought from it
regarding the utilisation of the issue proceeds:
i. Details of the object wise utilisation of the IPO proceeds.

ii. Bills/invoices and other documentary evidences in support of point (i) above.
iii. Bank statements highlighting the transfer of money to the vendors as
submitted in point (i) above.
16. Utilisation of IPO proceeds:
a) The Company, vide its emails dated December 28, 2015, July 12, 2016 and
an undated letter received by SEBI on May 23, 2016 furnished its reply
regarding utilisation of IPO proceeds and indicated the following breakup of
the utilisation of IPO proceeds:
Sr.N Particulars upto After Total As per

o. 21.05.2010 22.05.20 Expense Prospectu
* 10 s s
(𝐑𝐬. In (Rs. In (𝐑𝐬. In (𝐑𝐬. In
Lakhs) Lakhs) Lakhs) Lakhs)
1 Land Development and Civil Work 316.83 194.37 511.20 511.20
2 Purchase of Plant & Machinery 887.95 2,765.33 3,653.28 3,665.99
Page 7 of 91
3 Deposit with Gujarat Gas 65.72 65.72 55.00
Additional Working Capital 556.47 556.47 750.00
4
Requirement
5 Contingencies 200.00
6 Public issue Expenses 50.97 472.39 523.36 500.00
TOTAL 1,255.75 4,054.28 5,310.03 5,682.19
*May 21, 2010 is the date mentioned in the Prospectus upto which certain amount was utilised
towards the objects of the IPO before the IPO. It was also mentioned that this amount would be
recouped from the IPO proceeds.
b) On perusal of the list of vendors/suppliers as provided by the Company, it

was observed that top 15 entities or accounts, accounted for a majority of
the payment out of the IPO proceeds i.e. approximately 78.58% of the IPO
proceeds. It was also observed that some of these top vendors were
common across different heads under objects of the issue. The details of top
15 vendors/accounts to whom the payments were stated to have been made
from IPO proceeds is as follows:
Sr. Amount (in Percent to total

Vendor Name
No. Rs.) IPO proceeds
1 Neptune Enterprise 10,00,00,000 18.83%
2 Chamunda Enterprise 4,66,23,000 8.78%
3 Orbit Corporation 4,57,73,000 8.62%
4 Shukan Enterprise 4,05,28,203 7.63%
5 Karan Enterprise 3,30,00,000 6.21% 37.23 Crore
6 Shreeji Machine Tools 2,95,26,000 5.56% 70.11%
7 Shree Ganesh Eng. Co 2,78,25,000 5.24%
8 Krish Corporation 1,80,00,000 3.39%
9 Haren Chemical Agencies 1,57,74,833 2.97%
HDFC Share Appl. Refund
10
Interest 1,52,51,500 2.87%
11 Gujarat Gas Co. Ltd 1,44,63,373 2.72%
4.49 Crore
Saffron Capital Advisor P.L 1,07,83,817 2.03% 8.47%
12
13 Midas Autosoft Eng. P.Ltd. 76,76,556 1.45%
14 Saffron Global Mkt.P.Ltd. 70,73,936 1.33%
15 Western Press Pvt.Ltd. 50,00,000 0.94%

Total (top 15 entities) 41,72,99,218 78.58%
Payment of fees to certain agencies 2.15%
1,14,29,857
for IPO process
Remaining entities (98 entities) 10,22,96,543 19.27%
Grand Total 53,10,25,618 100%
Page 8 of 91
c) It was also observed that an amount of Rs.1.14 crore (2.15% of the total IPO
proceeds) was utilised towards payment of fees to SEBI, exchanges,
depositories, rating agency, advertisement etc.
d) For the entities mentioned in above table, the payment claimed to be made
by the Company out of the IPO proceeds to the 5 entities from Sr. no. 11 -
15 has been verified. In this regard, the reply of the Company has been
verified with the above entities who have confirmed of receiving the stated
amount in their accounts from the Company, and have also provided
supporting documents like bills/invoices/ledgers and bank statements
highlighting the stated transfers. The remaining Rs.10,22,96,543 i.e. 19.27%
of the total IPO proceeds, is spread over 98 entities i.e., an average
expenditure of Rs.10.43 lacs per entity.
e) It was observed that the major portion of the IPO proceeds i.e. 70.11% being
concentrated around top ten vendors/accounts mentioned in above table.
Among these 10 vendors 7 are the Noticees viz., Noticees 5 to 10 and 14.
Further, other Noticees, viz., Noticees 1, 2, 4 and 11 to 13 had either
transferred or received the money from the said 7 vendors. Accordingly, the
said 10 vendors/accounts and transactions with other Noticees were
analysed.
On the basis of said analysis following was observed with respect to said 10
vendors/accounts:
17. Neptune Enterprise (Neptune):
a) The Company vide its reply dated December 28, 2015 has stated that it paid
Rs.10 crore from the IPO proceeds to Neptune for purchase of Plant and
Machinery, which was disclosed as the main object of the IPO. The company
has claimed to have made payments to Neptune as under:
Page 9 of 91
Sr. Particulars Upto After Total
No. 21.05.2010* 22.05.2010 Expenses
All figures in Rs.
1 Land Development and Civil Work - - -

2 Purchase of Plant & Machinery - 10,00,00,000 10,00,00,000
3 Deposit with Gujarat Gas - - -
4 Additional Working Capital
- - -
Requirement
5 Contingencies - - -
6 Public issue Expenses - - -
TOTAL - 10,00,00,000 10,00,00,000
b) In this regard, the Company submitted copies of the invoices and ledgers
regarding the payments made to Neptune. However, the Company
submitted invoices only for an amount of Rs.46 lacs. The remaining invoices
amounting to Rs.9.54 crore (out of Rs.10 crores) were not provided by the
Company.
c) From the Company bank statement highlighting the payments made to

Neptune, it was observed that there was no fund transfer made by it to
Neptune. In fact, the amount of Rs.10 crores stated to be transferred to
Neptune out of IPO proceeds was transferred to Noticee 4. Thus, bank
details of Noticee 4 were sought from Kankaria Maninagar Nagrik Sahakari
Bank (KMNS Bank). On verification of the account opening form of Noticee
4, provided by KMNS Bank vide email dated June 08, 2016, it was observed
that Noticee 4’s proprietor is Noticee 3, who is also the Whole Time Director
of Noticee 1 and the wife of Noticee 2, the Managing Director of Noticee 1.
It is further observed that the amounts transferred by Noticee 1 to Noticee 4
were returned to it on the same day. The flow of said transaction is depicted
as follows:
Page 10 of 91
d) When the Company was enquired about the amount paid to Noticee 4
instead of Neptune, vide its letter dated February 14, 2018 it submitted that
upon the instructions of Neptune, it made payments to Noticee 4 on behalf
of Neptune.
e) In order to verify the aforesaid claims of the Company, Neptune was asked
to confirm if it had any business relation with the Company during 2010-2011.
Neptune vide letter dated June 08, 2016 categorically mentioned that it did
not have any business relation with the Company during 2010-2011.
f) Additionally, certain invoices provided by the Company were sent to Neptune

to confirm if the same were issued by Neptune to the Company. Also, a copy
of the bank statement of the Company, in which it had highlighted the
payment made to Neptune was sent to Neptune to confirm if it had received
the said payments in its account. Neptune, vide its letter dated April 29, 2016
disowned the above mentioned invoices and bank entries and reiterated that
it did not have any business transaction with the Company during 2010-
2011.
g) Further, Neptune vide its email dated March 13, 2018 clarified that it did not
transact with any such party as Noticee 4 during the year 2010-11 or earlier
than that and did not instruct the Company to make payment of Rs.10 crores
on its behalf to Noticee 4. It was having turn over around of Rs.1.19 crore in
total for the past 10 years and its business was quite low for last decade.
Page 11 of 91
h) With regard to the reason for transfer of Rs.10 crores from Noticee 4 to the
Company, Noticee 2 (on behalf of Noticee 4) vide letter dated February 14,
2018 stated that, it was direct payment given by Noticee 4 to the Company.
However, no further explanation regarding the nature of transaction or any
supporting documents was provided by him.
i) It is observed from the replies of Noticee 4 and the Company, that they failed
to submit any acceptable justification for the fund transactions between them
as detailed above. Further, Rs.10 crores out of the IPO proceeds were not
transferred by the Company to Neptune, instead it was transferred to the
Company’s related party Noticee 4, which in turn returned the money on the
same day to the Company. Also, the Company’s claim of Neptune having
instructed it to transfer the money to Noticee 4 was categorically denied by
Neptune. Considering the same, it was alleged that IPO proceeds to the tune
of Rs.10 crore have not been utilised in accordance with the objects of the
IPO as disclosed in the Prospectus of the Company.
18. Chamunda Enterprise (Noticee 14):
a) Noticee 1 vide its reply dated December 28, 2015 stated that it paid Rs.4.66
crore (8.78%) out of the IPO proceeds to Noticee 14 for the purchase of Plant
and Machinery, which was the main object of the IPO. The Company has
claimed to have made payments to Chamunda as under:
Sr.No. Particulars Upto After Total

21.05.2010* 22.05.2010 Expenses
All figures in Rs.

2 Purchase of Plant & Machinery 2,25,00,000 2,41,23,000 4,66,23,000
Page 12 of 91
4 Additional Working Capital
- - -
Requirement
TOTAL 2,25,00,000 2,41,23,000 4,66,23,000
regarding the payments made to Noticee 14. However, it was observed that
out of Rs.4.66 crore stated to be paid by the Company to Noticee 14, invoices
amounting to Rs.2,19,77,444/- (Rs.2.197 crores) have not been provided by
it.

Noticee 14, it was observed that an amount of Rs.4.66 crore was transferred
by it to Noticee 14. Amount of Rs.2.20 crore out of the Rs.4.66 crores was
immediately transferred by Noticee 14 to Noticee 4 and thereon transferred
back to the Company. The remaining amount of Rs.2.46 crore was
withdrawn as cash from Noticee 14’s bank account. The series of fund
transactions is explained in the figure as follows:
d) In order to verify the claims made by the Company, vide multiple summons
Noticee 14 was asked whether it had any business relations with the
Company during the year 2010-11. It was asked to provide reason(s), along
Page 13 of 91
with supporting documents (i) on the money received by it from the
Company; and (ii) the amount transferred by it to Noticee 4 or amount
withdrawn as cash.
e) During a statement recording of Noticee 2 dated February 08, 2018, he

produced a letter from Noticee 3, Proprietor: M/s Ambica Ceramics
authorising him to represent on behalf of Noticee 4.
f) Thereafter, vide email dated February 16, 2018 and March 13, 2018, Noticee
2 provided a clarification for the aforesaid transfer of funds, which is
tabulated below:
Sr. No. Amount Transferor name Receiver name Reason for transfer
ASL made payment to Ambica on behalf of
1 50,00,000 Chamunda Ambica
oral instruction of Chamunda Enterprise.
g) The aforesaid reply by Noticee 4 in this regard was found to be contradictory

to the flow of funds. The funds were transferred from Noticee 14 to Noticee
4, while Noticee 4 has provided an explanation for funds moving from the
Company to it on behalf of Noticee 14. Regarding the transfer of money from
Noticee 14 to it and then back to the Company, it was stated by Noticee 4
that it was direct payment given by Noticee 4 to the Company. However, no
supporting documents in this regard has been submitted by it or the
Company. Despite being given multiple opportunities to provide comments/
justifications, the Company and Noticee 4 have not been able to justify the
fund transactions post IPO and the flow of money from the vendor back in to
the account of the Company. Hence, the reply given by Noticee 4 was found
to be vague, incomplete and misleading.
Page 14 of 91
h) Thus, it was observed that the replies filed by the Company and Noticee 4
were vague and unsatisfactory and there was no plausible explanation for
the pattern of fund transfers/ cash withdrawals amounting to Rs.4.66 crore
transferred out of IPO proceeds to Noticee 14, as per the available records.
19. Orbit Corporation (Noticee 5):
Rs.4.57 crore (8.62%) from the IPO funds to Noticee 5 for purchase of
materials for land development, civil work as well for plant and machinery.
The Company has claimed to have made payments to Noticee 5 as under:
Sr.No. Particulars upto After Total
21.05.2010* 21.05.2010 Expenses
All figures in Rs.
1 Land Development and Civil Work 1,80,00,000 22,73,000 2,02,73,000
2 Purchase of Plant & Machinery 45,00,000 2,10,00,000 2,55,00,000
3 Deposit with Gujarat Gas
4 Additional Working Capital Requirement - - -
TOTAL 2,25,00,000 2,32,73,000 4,57,73,000
amounting to Rs.2,19,07,170/- (Rs.2.19 crores) have not been provided by
it.
c) From the Company bank statement highlighting the payments made to Orbit,
it was observed that amount of Rs.4.57 crore was transferred by the
Company to Noticee 5. Out of the said amount, amount of Rs.1.24 crore was
immediately transferred by Noticee 5 to Noticee 4 (Rs.64 lacs was
Page 15 of 91
transferred to Noticee 4 through Noticee 12) and subsequently transferred
withdrawn as cash from Noticee 5’s bank account. The series of transactions
is explained in the figure below:
d) Noticee 5 vide its letter dated December 19, 2016 stated as follows:
i. The amount received from the Company was payment received against
sales of goods.
ii. The amount transferred to Noticee 4 was payment for material
purchased.
iii. The cash withdrawn subsequent to the funds received from the
Company was for the purpose of day to day operations as it need to
make certain payments in cash.
iv. Noticee 5 have no personal relation/connection with the Company.
e) Since, the aforesaid reply of Noticee 5 was found to be vague and

unsatisfactory, further details were sought from it vide summons dated
January 25, 2018 and March 09, 2018. Noticee 5 vide its letter dated
February 20, 2018 stated that it has already submitted all documents with
Page 16 of 91
regard to summons issued to it. As the reply was again not found to be
satisfactory, Noticee 5’s proprietor viz, Mr. Yogesh Kumar B Patel was
summoned for personal appearance. Vide email dated March 19, 2018,
Noticee 5 reiterated that it has already submitted all documents in this
regard.
f) As Noticee 5 transferred an amount of Rs. 64,14,000 to its vendor Noticee

12 and Noticee 12 further transferred the same amount to Noticee 4.
g) Noticee 2 on behalf of Noticee 4, submitted reply to the said summons vide

email dated February 16, 2018 and March 13, 2018, wherein, he stated that
the reason for transfer of funds from Noticee 5 to Noticee 4 and thereafter to
the Company was direct payment from the transferor to receiver.
Additionally, Noticee 4 mentioned the reason for receiving Rs.64,14,000
from Noticee 12 as direct payments to it. However, no explanation or
documents have been provided by Noticee 4 in support of its reply. Thus,
Noticee 4 failed to justify the said fund transactions and therefore, the
aforesaid reply by Noticee 4 with respect to said transactions was found to
be vague, evasive and incomplete.
h) Noticee 5 had submitted that it has received and transferred funds from the
Company and to Noticee 4, respectively, as receipt/payment against sale of
goods. However, no documentary evidence was provided by it regarding the
nature of goods sold and purchased from the Company and Noticee 4,
respectively. In absence of the documentary evidence, the claims of the
Company regarding dealing with Noticee 5 for the purpose of objects of the
IPO could not be established from the replies of the Company, Noticee 4 and
5. With regards to the reasons provided for immediate cash withdrawal by
Noticee 5 pursuant to receipt of IPO funds from the Company, the same has
to be seen in conjunction with similar pattern of immediate cash withdrawals
across vendors such as in case Noticee 14. Thus, it was alleged that Noticee
Page 17 of 91
5 transferred part of the money to Noticee 4 directly or via its conduit Noticee
12 and withdrew the remaining as cash.
i) It was also observed that the replies filed by the Company, Noticee 4 and 5
were vague and unsatisfactory, they have failed to provide plausible
explanation for the pattern of fund transfers/ cash withdrawals amounting to
Rs.4.57 crore transferred out of IPO proceeds among them.
20. Shukan Enterprise (Noticee 6):
a) The Company vide its reply dated December 28, 2015 stated that it paid
Rs.4.05 crore (7.63%) from the IPO funds to Noticee 6 for purchase of plant
and machinery. The company has claimed to have made payments to
Noticee 6 as under:

21.05.2010 22.05.2010 Expenses
All figures in Rs.
TOTAL 2,35,00,000 1,70,28,203 4,05,28,203
amounting to Rs.1,70,28,203 (Rs.1.70 crores) have not been provided by it.

Shukan, it was observed that amount of Rs.4.05 crore was transferred by the
Page 18 of 91
Company to Noticee 6. Out of the said amount, Rs.1.70 crore was
immediately transferred by Noticee 6 to Noticee 4 and thereon transferred
withdrawn as cash from Noticee 6’s bank account. The series of transactions
is explained in the figure below:
d) Various summons were issued to Noticee 4 seeking justification for the

receipt of money from Noticee 6 and the further transfer of the money to the
Company. Noticee 2 on behalf of Noticee 4, submitted reply to the said
summons vide email dated February 16, 2018 and March 13, 2018, wherein,
he stated that the reason for transfer of funds from Noticee 6 to Noticee 4
were direct payments on behalf of the Company. Similarly, the reason for the
fund transfer from Noticee 4 to the Company was direct payment from
Noticee 4 to the Company. However, no explanation or documents have
been provided by Noticee 4 in support of its reply. Thus, Noticee 4 failed to
justify the said fund transactions and therefore, the aforesaid reply by
Noticee 4 with respect to said transactions was found to be vague and
incomplete.
e) It was also observed that the replies filed by the Company and Noticee 4
were vague and unsatisfactory and they have failed to provide plausible
Rs.4.05 crore transferred out of IPO proceeds to Noticee 6. Furthermore, as
in the aforesaid cases of Noticee 14 and Noticee 5, Noticee 6 also
Page 19 of 91
transferred part of the money to Noticee 4 and withdrew the remaining as
cash.
21. Karan Enterprise (Noticee 7):
Rs.3.30 crore (6.21%) from the IPO proceeds to Noticee 7 for purchases of
materials for land development and civil work as well for plant and
machinery. The company has claimed to have made payments to Noticee 7
as under:
21.05.2010 22.05.2010 Expenses
All figures in Rs.
1 Land Development and Civil Work 1,00,00,000 - 1,00,00,000
TOTAL 2,30,00,000 1,00,00,000 3,30,00,000
amounting to Rs.1,00,00,000 (Rs.1 crore) have not been provided by the
Company.

Karan, it was observed that amount of Rs.3.30 crore was transferred by the
Company to Karan. Out of the said amount, amount of Rs.1.00 crore was
immediately transferred by Karan to Noticee 4 and thereon transferred back
to the Company. The remaining amount of Rs.2.30 crore was withdrawn as
cash from Karan’s bank account. The series of transactions is explained in
Page 20 of 91
the figure below:
d) Noticee 2 on behalf of Noticee 4, submitted reply to the said summons vide

the reason for transfer of funds from Karan to Noticee 4 were direct payments
on behalf of the Company. Similarly, the reason for the fund transfer from
Noticee 4 to the Company was direct payment from Noticee 4 to the
Company. However, no explanation or documents have been provided by
Noticee 4 in support of its reply. Thus, Noticee 4 failed to justify the said fund
transactions and therefore, the aforesaid reply by Noticee 4 with respect to
said transactions was found to be vague and incomplete.
e) It was also observed that the replies filed by the Company and Noticee 4
were vague and unsatisfactory and they have failed to provide plausible
Rs.3.30 crore transferred out of IPO proceeds to Karan. Furthermore, as in
the aforesaid cases of Chamunda, Orbit and Shukan, Karan also transferred
part of the money to Noticee 4 and withdrew the remaining as cash.
22. Shreeji Machine Tools (Noticee 8):
a) The company vide its reply dated December 28, 2015 has stated that it paid
Rs.2.95 crore (5.56%) from the IPO proceeds to Shreeji for purchase of plant
and machinery. The company has claimed to have made payment to Shreeji
as under:
Page 21 of 91
Sr. No. Particulars upto After Total
21.05.2010 22.05.2010 Expenses
All figures in Rs.
6 Public issue Expenses - -
TOTAL 2,95,26,000 2,95,26,000
regarding the payments made to Shreeji. However, it was observed that no
invoice has been provided for the entire amount of Rs.2.95 crore stated to
be paid by the Company to Shreeji.

Shreeji, it was observed that amount of Rs.2.95 crore was transferred by the
Company to Shreeji. Out of the said amount, amount of Rs.1.62 crore was
immediately transferred by Shreeji to Noticee 4, Noticee 11 and to Noticee
13 and thereof, the said three Noticees transferred back the said amount to
the Company. The remaining amount of Rs.1.23 crore approx. was
withdrawn as cash from its bank account. The series of transactions is
explained in the figure below:
Page 22 of 91
d) Shreeji vide its letter dated February 19, 2016 provided a bank statement
highlighting the funds received by it from the Company and details of
payments received from the Company pursuant to the IPO. However, no
supporting documents including details of material sold or copies of invoices
were furnished. Hence, Shreeji’s reply was incomplete and failed to validate
the submissions made by the Company regarding transfer of IPO proceeds
to it for the purpose of objects disclosed in the Prospectus.
e) Noticee 2 on behalf of Noticee 4, submitted reply to the said summons vide

the reason for transfer of funds from Shreeji to Noticee 4 were direct
payments on behalf of the Company. Similarly, the reason for the fund
transfer from Noticee 4 to the Company was direct payment from Noticee 4
to the Company. However, no explanation or documents have been provided
by Noticee 4 in support of its reply. Thus, Noticee 4 failed to justify the said
fund transactions and therefore, the aforesaid reply by Noticee 4 with respect
to said transactions was found to be vague and incomplete.
f) It was also observed that the replies filed by the Company, Noticee 4 and
Shreeji were vague and unsatisfactory and they have failed to provide
plausible explanation for the pattern of fund transfers/ cash withdrawals
amounting to Rs.2.95 crore transferred out of IPO proceeds to Shreeji.
Further, Shreeji transferred part of the money to Noticee 4 directly or via its
conduit Noticee 11 and 13 and withdrew the remaining as cash, similarly, as
in the aforesaid cases of Chamunda, Orbit and Shukan.
23. Shree Ganesh Engineering Corporation (Noticee 9):
a) The company vide its reply dated December 28, 2015 has stated that it paid
Rs.2.78 crore (5.24%) from the IPO proceeds to Shree Ganesh for purchase
of plant and machinery. The company has claimed to have made payment
to Shree Ganesh as under:
Page 23 of 91
Sr. No. Particulars upto After Total
21.05.2010* 22.05.2010 Expenses
All figures in Rs.
TOTAL - 2,78,25,000 2,78,25,000
regarding the payments made to Shree Ganesh. Though there was a fund
transfer of Rs.2.78 crore out of the IPO proceeds by the Company to Shree
Ganesh, no supporting documents such as invoices have been provided for
claimed purchase of Rs.2.78 crore.
c) From the Company bank statement highlighting the payments made to Shree
Ganesh, it was observed that amount of Rs.2.78 crore was transferred by
the Company to Shree Ganesh. Out of the said amount, amount of
Rs.1,75,59,000 was immediately withdrawn as cash by Shree Ganesh. The
remaining amount of Rs.1,02,66,000 was transferred by Shree Ganesh to
Noticee 13, which was also immediately withdrawn as cash. The series of
transactions is explained in the figure as follows:
d) Further, similar to the earlier cases of Chamunda, Orbit and Shukan, the
money received by Shree Ganesh and subsequently by Noticee 13, was
Page 24 of 91
immediately withdrawn as cash.
e) Thus, it was also observed that the replies filed by the Company was vague
and unsatisfactory and it had failed to provide plausible explanation for the
pattern of fund transfers/ cash withdrawals amounting to Rs.2.78 crore
transferred out of IPO proceeds to Shree Ganesh.
24. Krish Corporation (Noticee 10):
Rs.1.80 crore (3.39%) from the IPO proceeds to Krish for purchase of plant
and machinery. The company has claimed to have made payment to Krish
as under:
Sr. Particulars Upto After Total

No. 21.05.2010* 22.05.2010 Expenses
All figures in
Rs.
2 Purchase of Plant & Machinery 1,55,00,000 25,00,000 1,80,00,000
4 Additional Working Capital - - -
Requirement
TOTAL 1,55,00,000 25,00,000 1,80,00,000
regarding the payments made to Krish. Though there was a fund transfer of
Rs.1.80 crore out of the IPO proceeds by the Company to Krish, no
supporting documents such as invoices have been provided for claimed
purchase of Rs.0.25 crore.
c) From the Company bank statement highlighting the payments made to Krish,
Page 25 of 91
it was observed that out of the total amount of Rs.1.80 crore, amount of
Rs.0.25 crore was transferred to Karan, instead of Krish. The said amount
was withdrawn by Karan as cash. Hence, only funds amounting to Rs.1.55
crore was transferred to Krish and this amount was entirely withdrawn by it
in cash. The series of transactions is explained in the figure as follows:
d) Similar to the earlier cases of Chamunda, Orbit and Shukan, the money
received by Krish was immediately withdrawn as cash. Thus, it was observed
that the replies filed by the Company was vague and unsatisfactory and it
had failed to provide plausible explanation for the pattern of fund transfers/
cash withdrawals amounting to Rs.1.80 crore transferred out of IPO
proceeds to Krish.
25. HDFC Share Application Refund Interest:
a) It was noted from the Final Monitoring report of the IPO of the Company that
there was a delay in the allotment due to an option given to the applicants to
withdraw their bids. The withdrawal option given to the applicants was due
to alleged non-disclosure of certain information (related to details of the
pledged shares of the promoter, non-repayment of loans, non-disclosure of
notices issued to the promoter and the company) in the RHP. The Company,
upon SEBI’s directions, had issued a public clarification for the allegations
Page 26 of 91
made and gave an option to the applicants to withdraw their bids, if they
wanted to. The period for the withdrawal option was for 10 days, from July
13, 2010 to July 23, 2010. In view of same, there was a delay in the dispatch
of refund to the applicants. Hence an interest of 15% for 15 days (amounting
to Rs.1,52,51,000) was paid to all the applicants.
b) Vide letter dated December 28, 2015, the Company submitted that amount
of Rs.1,52,51,500 was refunded to the bidders. Upon perusal of the bank
statements, it was observed that amount of Rs.1,52,51,000 was transferred
from the Company’s account (account no. 435501010086632, UBI bank) to
its refund account (account no. 00062300000499, HDFC Bank) on July 23,
2010 and subsequently refunded to the bidder’s bank account.
c) From the prospectus dated June 30, 2010, it was observed that the company
disclosed that expenses for the issue as follows:
Activity Expenses % of
(Rs. in Issue
Lacs) Size
BRLM 106.2 2.00%
Registrar to the Issue 1.50 0.03%
Syndicate Fees, Underwriting, Brokerage and Selling Commission 100.00 1.88%
Advertisement and marketing expenses 75.00 1.41%
Printing and stationery (including expenses on transportation of the
100.00 1.88%
material)
IPO Grading 4.00 0.08%
Others (Filing Fees with SEBI, BSE and NSE, legal fees, listing
113.30 2.13%
fees, RoC Fees, travelling and other miscellaneous expenses etc.)
d) Additionally, from the Company’s reply, it was observed that the refund of
interest was 29.13% of the total expenses incurred and paid out of the IPO
proceeds. In this regard, it is seen that the Company had earmarked Rs.5
crore for the IPO expense as detailed in the prospectus and as per its reply
dated December 28, 2015, it incurred a total expense of Rs.5.23 crore. Out
of this Rs.1.52 crore was for the payment of interest due to a delay which
was caused by the company’s lapse at not disclosing information in the RHP.
Page 27 of 91
e) Hence, the payment of interest on refund due to a lapse on the part of the
company, which led to the offer for withdrawal to be given to the bidders,
does not amount to utilisation of the funds in accordance with the IPO objects
as disclosed in prospectus. In view of the above, it is observed that the
amount of Rs.1.52 crore paid by the company for the payment of interest on
the refund of the IPO funds, was not utilised as per the objects of the IPO,
as disclosed in the prospectus.
26. On analysis of submissions of the Company, fund flow analysis, analysis of

invoices submitted by the Company and replies of vendors following was
observed with respect to aforesaid vendors regarding utilisation of IPO proceeds:
a) The Company had claimed that payment of Rs.10 crore out of the IPO
proceeds was made to Neptune for purchase of plant and machinery.
However, Neptune has denied receiving any money or having any business
relations with the Company during FY 2010-11. Instead it was observed that
the amount was actually transferred to Ambica, an entity related to the
Company. The entire amount of Rs.10 crore was thereafter immediately
transferred back to the Company by Ambica and no justifiable reason has
been given by the Company/Ambica in this regard.
b) For the payments purported to have been made to vendors Chamunda,

Orbit, Shukan, Karan, Shreeji, Shree Ganesh and Krish, a similar pattern
was observed wherein:
i. part of the payment received from the Company was

transferred back to the Company via related entity Ambica or
through conduits Suraj, Arasuri and Bhavi;
ii. remaining amount was either immediately withdrawn from
vendors’ accounts in cash or transferred to third parties’
accounts, from where the amounts were withdrawn in cash.
Page 28 of 91
iii. the amount of Rs.2.78 crores transferred to vendor Shree
Ganesh was entirely withdrawn in cash; and
iv. in case of vendor Krish, the Company had stated that
payments worth Rs.1.80 crores was made to Krish. However,
it was observed that only Rs.1.55 crores were paid to Krish.
The remaining amount of Rs.0.25 crores was paid to vendor
Karan. Also, the entire amount was withdrawn in cash by Krish
and Karan.
c) An unexplained similar patterns were observed with respect to the transfer

of funds by the Company, out of the IPO proceeds and stated to be made to
7 vendors viz. Chamunda, Orbit, Shukan, Karan, Shreeji, Shree Ganesh and
Krish for the purpose of objects under IPO. Such payments made to vendors
were either:
i. Partly/wholly retuned to the Company via its related entity
Ambica or through conduits Arasuri, Suraj and Bhavi; or
ii. Partly/wholly withdrawn as cash by these 7 vendors or conduit
entity Bhavi.
d) The Company had failed to provide sufficient documentary proof of

transactions and/or explanation on the nature of business with the 7 vendors
viz. Chamunda, Orbit, Shukan, Karan, Shreeji, Shree Ganesh and Krish. Out
of the said 7 vendors, 3 vendors had furnished incomplete / unsatisfactory
information or had not replied and the remaining 4 vendors were untraceable.
Details of the status of delivery of summons and replies received or not
received provided in the table as follows:
S. No. Vendor Delivered Replied Remark
1 Chamunda Yes No Did not reply
Orbit Vague and
2 Yes Yes
Unsatisfactory
3 Shukan No NA NA
4 Karan No NA NA
Page 29 of 91
5 Shreeji Yes Yes Incomplete reply
6 Shree Ganesh No NA NA
7 Krish No NA NA
e) Considering the suspicious pattern of fund flows of aforementioned

vendors/conduits and non-delivery of summons to most of the said
vendors/conduits, account opening details and KYC were sought from the
bank of such vendors/conduits. Observations on the basis of documents
furnished by the bank of such vendors/conduits are summarized as follows:
Name of the Name of the Account Name of the Bank Branch Status/Date
Vendor/Conduit Introducer Opening of Closure
Date
Vendors
Ambica Ceramics Mahesh A 23/11/2007 Kankaria Maninagar Nagrik Navrangpura 21/07/2011
Maheshwari Sahakari Bank Ltd. Branch
Chamunda Enterprise Proprietor, 05/07/2010 Sarvodaya Commercial Ashram Road Non-
Jolex Traders Co-op Bank Ltd Operative
Chamunda Enterprise N.A. 09/04/2010 The Bhuj Mercantile Co-Op Ahmedabad 14/02/2011
Bank Ltd
Orbit Corporation Proprietor, 17/07/2010 Sarvodaya Commercial Ashram Road Non-
Jolex Traders Co-op Bank Ltd Operative
Orbit Corporation N.A. 06/04/2010 The Bhuj Mercantile Co-Op Ahmedabad 23/10/2010
Bank Ltd
Shukan Enterprise Proprietor, 04/08/2010 Adarsh Co-op Bank Ltd Ashram Road Non-
Archita Operative
Enterprises
Shukan Enterprise Bhavi Trading 09/04/2010 The Bhuj Mercantile Co-Op Ahmedabad Dormant
Bank Ltd
Karan Enterprise  Proprietor, 21/12/2009 The Kukarwada Nag. Sah. Shahibag, Dormant
Archita Bank Ltd Ahmedabad since:
Enterprises 21/02/2011
 Bhavi
Trading Co.
Karan Enterprise Bhavi Trading 06/02/2010 The Bhuj Mercantile Co-Op Ahmedabad Dormant
Bank Ltd
Shreeji Machine Tools Shivam 03/07/2010 The Cosmos Co-op Bank Ashram Road N.A.
Enterprise Ltd.
Shreeji Machine Tools No Introducer 03/07/2010 Adarsh Co-op Bank Ltd Ahmedabad 25/11/2011
Shree Ganesh Shri Ambika 26/03/2009 Sarvodaya Commercial Ashram Road Non-
Engineering Co Engineering Co-op Bank Ltd Operative
Works
Krish Corporation Bhavi Trading 06/02/2010 The Bhuj Mercantile Co-Op Ahmedabad 30/10/2010
Bank Ltd.
Conduits
Arasuri Enterprise Shukan 13/07/2010 The Cosmos Co-op Bank Ashram Road 19/05/2012
Enterprises Ltd
Bhavi Trading Co No Introducer 28/07/2010 Adarsh Co-op Bank Ltd Ahmedabad Non-
Operative
Page 30 of 91
Bhavi Trading Co* Proprietor, 26/02/2009 Sarvodaya Commercial Ahmedabad Non-
Jolex Traders Co-op Bank Ltd. Operative
Suraj Trading* Proprietor, 06/07/2010 Sarvodaya Commercial Ashram Road Non-
Jolex Traders Co-op Bank Ltd. Operative
f) As observed from the above table, most of the vendors/conduits have opened
their bank accounts with Co-operative banks at Ashram Road, Ahmedabad
during July-August 2010 i.e., after the closure of the IPO and before the credit
of IPO proceeds in ASL’s account on July 27, 2010 of ASL. Further, these
accounts were either closed or became non-operational soon after the IPO.
Also, the said vendors/conduits have common introducers for opening of the
bank accounts in said Co-operative banks. Details of the same are as follows:
i. Chamunda, Orbit, Bhavi and Suraj were commonly introduced

by Jolex Traders.
ii. Karan and Krish were commonly introduced by introducer
Bhavi Trading.
iii. Shukan and Karan were commonly introduced by Archita
Enterprise, whose account in Adarsh Cooperative Bank was
opened a week before Shukan’s bank account opened in the
said bank.
iv. Arasuri’s introducer was Shukan and Shukan had another
bank account in the Cosmos Cooperative Bank, wherein, one
of the vendors i.e. Shreeji Machine Tools was the introducer.
v. Shukan and conduit Bhavi have the same signatory/proprietor
i.e. Vishnubhai Mafatlal Patel.
vi. Shukan and Bhavi have common PAN number -
AAZPP0768M.
g) In view of above, it is observed that the said vendors, whom payment had
been made by the Noticee 1, had never dealt with the Noticee No. 1 before
the commencement of IPO. It is also observed that these vendors had opened
bank accounts with nondescript banks in Ahmedabad before the IPO of the
Company, the Noticee 1.
Page 31 of 91
27. In view of above, considering the lack of justification by way of invoices for all
transactions/other supporting documents; misleading information submitted by
Noticee 4 regarding fund transfers out of IPO proceeds; unexplained manner of
return of funds to Noticee 1 majorly via Noticee 4, an entity connected to it; and/or
unexplained cash withdrawals of significant amounts (of part or entire amount
received from Noticee 1 by the vendors/conduits, the money claimed to be
utilised out of IPO proceeds for purchases from the said vendors was not utilised
in accordance with the objects of the IPO as disclosed in the prospectus of the
Noticee 1. Also, the above mentioned findings are corroborated by the fact that
the said vendors viz, Orbit (Noticee 5), Shukan (Noticee 6), Karan (Noticee 7),
Shreeji (Noticee 8), Shree Ganesh (Noticee 9), Krish (Noticee 10), Chamunda
(Noticee 14) and conduits viz, Arasuri (Noticee 11), Suraj (Noticee 12) and Bhavi
(Noticee 13) could either not be reached at the available addresses or did not
reply or given inadequate reply. Accordingly, it was alleged that the above
vendors / conduits were only front entities of Noticee 1, to route the IPO money
back to it, without deploying the same for the objectives as disclosed in its
prospectus.
28. On April 20, 2016, investigation team conducted a site visit of the manufacturing
unit of Noticee 1 at Jhagadia Industrial Estate, Bharuch. During site visit it was
observed that Noticee 1 had a manufacturing plant at the address mentioned in
its prospectus (for whose expansion the IPO was stated to have been raised),
however, the plant was non-operational and there was no indication of any
construction or installations of new machine or the date of purchase or installation
or construction of the said machinery(ies) as stated in the prospectus of Noticee
1.
29. Vide letter dated February 08, 2018, Noticee 1 provided a set of documents
containing – (a) copy of the minutes of the Audit Committee meetings dated from
May 30, 2011 to August 14, 2013 (10 meetings in total); (b) copy of the minutes
Page 32 of 91
of its Board Meetings from 2008-2013; and (c) copy of the resolutions passed in
said Board Meetings. On perusal of the same, it was observed that the copies of
its board meeting minutes, audit committee meeting minutes and the resolutions
passed in said board meetings as provided by it for the period from 2008-2013
were unsigned and on plain paper. As the said documents were not certified
copies, the investigation team had not considered them as official minutes of
Noticee 1 board or audit committee meetings/decisions. Also, its Audit
Committee minutes for the period between IPO and May 31, 2011 were not
furnished by Noticee 1. Accordingly, it was alleged that Noticee 1 had not been
able to justify by way of its board meeting minutes or Audit Committee meeting
minutes that the utilization of IPO proceeds was deliberated upon by the Audit
Committee or in any of its board meetings pursuant to the IPO.
30. In view of the above, it was alleged that Noticees 4, 5, 6, 7, 8, 9, 10, 11, 12, 13
and 14 aided Noticee 1 by being party to sham fund transactions pursuant to the
IPO by virtue of which Noticee 1 failed to utilize the IPO proceeds in accordance
with the objects stated in the IPO, as disclosed in its prospectus.
Mis-utilisation of IPO proceeds:
31. It was observed that majority of the payments stated to be made to 8 vendors/
accounts viz. Neptune, Orbit, Chamunda, Shukan, Karan, Shreeji, Shree Ganesh
and Krish was said to be towards purchase of plant and machinery, which was
disclosed as one of the main objects of the IPO. None of the aforesaid 8 vendors
were figuring in the list of vendors, as disclosed by Noticee 1 in the prospectus.
However, the list (which contained a disclaimer that it was subject to change) had
Ambica Ceramics, Noticee 4 as the topmost vendor accounting for majority of the
expenditure proposed for plant and machinery.
32. Refund of share application amount was not included under the public issue
expenses head of objects of the issue.
Page 33 of 91
33. Noticee 1 vide its email dated March 07, 2018 has submitted that except Haren,
it knew the other top vendors only for capital goods purchase in the year 2010-
11. Except for certain transactions for which supporting invoices/bills have been
provided by it with corresponding fund transfers, for bulk of transactions, Noticee
1 has failed to provide any documentary evidence of purchase of any material
out of IPO proceeds. In this regard, in absence of invoice/bills, the company has
also failed to produce any alternate proof such as copies of
communications/negotiations made with vendors or agreements entered into
such vendors for purchase of materials for the objects of the IPO, wherein
purchase of significant amounts are involved. The same is also not supported by
fund transfers to vendors.
34. Out of said 9 vendors/account, apart from Neptune, Orbit, Shreeji and Haren,
remaining 5 entities are either not traceable or have not responded to SEBI
summons, despite multiple attempts.
35. The topmost vendor viz., Neptune has categorically denied of having any
business relation with Noticee 1 and issuing the invoices as claimed by Noticee
1. The bank statement analysis clearly shows that no payment was made to
Neptune and the funds were actually transferred to connected entity viz. Noticee
4 which immediately returned the entire amount back to Noticee 1. Noticee 1 has
not been able to furnish any plausible explanation or documentation to support
the said transfer being made for objects of the IPO. Hence, the claim of Noticee
1 that an amount of Rs.10 crores was utilised out of the IPO proceeds to make
purchases from Neptune is false and the entire amount of Rs.10 crores were not
utilised in accordance with the objects of the IPO.
36. As regards the other 7 top vendors viz, Chamunda, Orbit, Shukan, Karan,
Shreeji, Shree Ganesh and Krish, considering the lack of justification given by
way of invoices/other supporting documents, funds returned back from the
Page 34 of 91
vendors to Noticee 1 majorly via Ambica, Noticee 4, an entity connected to the
Noticee 1, and/or cash withdrawal (of part or entire amount received from Noticee
1) by the vendors , it is alleged that the entire amount of the IPO proceeds stated
to be paid to these vendors was not utilised in accordance with the objects of the
IPO. As regards the payment made towards refund of interest, since the same
was not found to be categorised as a public issue expense to be incurred out of
the IPO proceeds, the same was also alleged as not been utilised towards the
IPO objects. The details of the amount non-utilised of the IPO proceeds by
Noticee 1 is summarised as follows:
Vendor / Amount Amount returned Amount withdrawn as Net amount which can
account transferred to back to ASL (directly cash by entities be stated to be not
name the vendors by vendors / by other (directly by vendors / utilised as per objects in
by ASL (in entity) – in Rs. by other entity) – in Rs. prospectus – in Rs.
Rs.)
Neptune 10,00,00,000* 10,00,00,000 NA 10,00,00,000
Chamunda 4,66,23,000 2,20,00,000 2,46,23,000 4,66,23,000
Orbit 4,57,73,000 1,24,14,000 3,33,59,000 4,57,73,000
Shukan 4,05,28,203 1,70,00,000 2,35,00,000 4,05,00,000
Karan 3,30,00,000 1,00,00,000 2,30,00,000 3,30,00,000
Shreeji 2,95,26,000 1,52,00,000 1,23,39,045 2,75,39,045
Shree Ganesh 2,78,25,000 0 2,78,25,000 2,78,25,000
Krish 1,80,00,000 0 1,80,00,000 1,80,00,000
Refund interest
1,52,00,000 NA NA 1,52,00,000
payment
Total 35,64,75,203 17,66,14,000 16,26,46,045 35,44,60,045#
*Amount transferred to Ambica Ceramics and returned to ASL. No transfer was made to Neptune.
# Does not include Rs.28,203 and Rs.19,86955 transferred by ASL to Shukan and Shreeji , which neither returned
to ASL nor withdrawn as cash. Hence no adverse inference drawn.
Page 35 of 91
37. From the summary of the analysis of the IPO proceeds it is evident that Noticee
1 had not utilised the IPO proceeds towards the objects stated in the Prospectus
and same can be depicted as follows:
38. Thus, it was alleged that out of total IPO proceeds of Rs.53,10,00,000/-,
Rs.35,44,60,045/- was not utilised in accordance with the objects stated in the
IPO, as disclosed in the prospectus.
39. Wrong disclosure/ non-disclosure of material information in the

Prospectus by Noticee 1:
40. It was observed that there were certain major transfers from Noticee 1 bank
account (UBI Bank A/c - 4355010100086632) after receipt of IPO proceeds,
which are tabulated below:
S. No. Name of counterparty Amount transferred (in Rs.)

1 Lunia Finlease Ltd. 17,00,00,000
2 Flyhigh Exports Pvt. Ltd. 5,00,00,000
3 JNB Sidhu Finance Pvt. td. 2,50,00,000
4 Baccate Securities 2,50,00,000
5 Ramdev Marketing 1,50,00,000
6 Benchmark Builtcon 1,15,00,000
7 Savasthi Investment 50,00,000
Total 30,15,00,000
Page 36 of 91
41. Noticee 1 submitted that the aforesaid transfers were repayment of short term
loans undertaken by it for the purpose of capital and working capital requirements
during the period April 2010 - July 2010. In support of its reply, it submitted a
ledger account of the loans undertaken during the period April 2010-July 2010
and the corresponding loan agreements.
42. The major lenders, as mentioned by Noticee 1 in its reply dated February 02,
2018 are as follows:
Lender name Amount of loan stated to Date (or period) during
S. No. be undertaken before IPO which loan was
(Rs.) undertaken
17,00,00,000 17 April, 2010- 14 June,
1 Lunia Finlease Pvt. Ltd
2010
2 Flyhigh Exports Pvt. Ltd 5,00,00,000 9-18 June, 2010
3 Baccate Securities & Marketing Ltd 2,50,00,000 12-19 May, 2010
4 JNB Sidhu Finance Ltd. 2,50,00,000 June 2010
5 Benchmark Build Con Pvt. Ltd 1,15,00,000 10-11 May,2010
6 Savasthi Investments 50,00,000 June 2010
7 Ramdev Marketing Pvt. Ltd 1,50,00,000 July 2010
Total 30,15,00,000
43. It was observed from the bank statement of Noticee 1 that it had received
amounts to the extent of Rs.30.15 crore from the aforesaid 7 entities during the
period April 2010 – July 2010.
44. Vide summons dated November 18, 2016, November 30, 2016 and December
13, 2016, the aforesaid entities were summoned to explain the fund transfers
along with documentary proof, if any. In this regard, the summons could not be
delivered to Lunia Finlease Pvt. Ltd. and Ramdev Marketing Pvt. Ltd. as they
were ‘not available at address’ and ‘left the premise’, respectively. Thus,
confirmation regarding whether the said transfers were towards loan and its
repayment could not be ascertained for Lunia Finlease Pvt. Ltd. and Ramdev
Marketing Pvt. Ltd. Other five entities viz., Flyhigh Exports Pvt. Ltd, Baccate
Securities & Marketing Ltd., JNB Sidhu Finance Ltd., Savasthi Investments and
Benchmark Build Con Pvt. Ltd, have confirmed of providing short term loans to
Noticee 1 as specified by Noticee 1.
Page 37 of 91
45. In view of the bank statements, ledgers of Noticee 1, loan agreements and the
replies of the counterparties, it is observed that the Company took material loans
to the tune of Rs.30.15 crore before and after the IPO. The prospectus dated
June 30, 2010 was perused to ascertain, if Noticee 1 had disclosed the details of
such loans taken by it. It was observed that it had disclosed the loans taken from
SICOM and SIDBI in its prospectus. It had also disclosed loans in its prospectus
(at page 62) that an amount of Rs.12.55 crores was already deployed towards
the objects of IPO as on May 21, 2010 (i.e., before the prospectus date). In this
regard, it was also disclosed that the said deployment was financed to the extent
of Rs.8.83 crore of unsecured loans from “Luniar Finstock Pvt. Ltd”, which would
be recouped from the IPO proceeds. Hence, apart from Luniar Finstock Pvt. Ltd,
SIDBI and SICOM as mentioned above, there was no mention in the prospectus
regarding any loans taken by Noticee 1 from the other entities.
46. On perusal of the documents submitted vide Noticee 1, company viz, Lunia
Finlease Pvt. Ltd. appeared in the bank statements as well in the ledger of
Noticee 1 with respect to loan of Rs.17 crore taken by it during the period April
2010 - June 2010 from Lunia Finlease Pvt. Ltd. Noticee 1 vide its email dated
March 13, 2010 has confirmed that it made an error in the disclosure of loan of
Rs.8.83 crore as shown at page 62 of the prospectus, and the actual name of the
company from which they had taken loan was Lunia Finlease Pvt. Ltd and not
Luniar Finstock Pvt. Ltd. Therefore, iIt is observed that Noticee 1 made wrong
disclosure in the prospectus with respect to the loan of Rs.8.83 crore taken from
Lunia Finlease Pvt. Ltd., wherein it mentioned that the same was undertaken
from Luniar Finstock Pvt. Ltd.
47. With respect to the remaining amount of Rs.21.32 crore (i.e., loan amount of
Rs.30.15 crore less Rs.8.83 crore) undertaken by Noticee 1, the observations
were as under:
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a) The loan of Rs.1.5 crore taken from Ramdev Marketing was after the date
of filing of prospectus.
b) Regarding the remaining amount of Rs.19.82 crore, it was observed that

no details of the loans was disclosed in the prospectus. Noticee 1 vide its
statement recorded on February 02, 2018 has also admitted that “except
for Luniar Finstock, we have not disclosed the details of the loans in the
prospectus issued to the public at the time of IPO”.
48. In view of above, it was observed that Noticee 1 had not made disclosures in the
prospectus regarding amount of Rs.19.82 crore, and made wrong disclosures
regarding amount of Rs.8.83 crore from Lunia Finlease Pvt. Ltd. with respect to
the loans undertaken by it. The details of the loans undertaken by Noticee 1 and
not disclosed/ wrongly disclosed are summarised as follows:
Particulars: loans taken from Type of violation Amount (in Rs. crore)
Lunia Finlease Pvt. Ltd Wrong disclosure in
8.83
prospectus
Sub Total: Wrong disclosure in
8.83
prospectus
Lunia Finlease Pvt. Ltd No disclosure in prospectus 8.17
Flyhigh Exports Pvt. Ltd No disclosure in prospectus 5
Baccate Securities & Marketing Ltd No disclosure in prospectus 2.5
JNB Sidhu Finance Ltd. No disclosure in prospectus 2.5
Benchmark Build Con Pvt. Ltd No disclosure in prospectus 1.15
Savasthi Investments No disclosure in prospectus 0.5
Sub Total: No disclosure in prospectus 19.82
Total 28.65
49. Additionally, upon perusal of the prospectus, it was also observed that Noticee 1
had stated that none of the machine suppliers that it intended to purchase
machinery from, were related to it or its promoters. However, it is observed that
Ambica Ceramics is connected to Noticee 1, since Ambica Ceramic’s proprietor
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Ms. Namrata Maheshwari, Noticee 3 is a director of Noticee 1 and also the wife
of Mr. M.A. Maheshwari, Noticee 2, Managing Director of Noticee 1. In view of
same, it is noted that Noticee 1 made a wrong disclosure in the prospectus
regarding having no connection with one of the proposed vendors.
50. The Company in its Annual Report for FY 2010-11 at page 6 stated that - “the
money raised through IPO was utilized for the purpose for which it was raised”.
However, it was observed that it did not utilise Rs.35,44,60,045/- out of the IPO
proceeds. In view of same, it is noted that Noticee 1 made wrong disclosure in
its Annual Report for the FY 2010-2011 regarding the complete utilization of the
IPO proceeds.
51. It was also observed that Noticee 1 did not utilize Rs.35,44,60,045/- of the IPO
proceeds in accordance with the IPO objects as disclosed in the prospectus. The
prospectus provided the wrong disclosures regarding the IPO objects, as Noticee
1 never intended to utilize the IPO proceeds to the extent of Rs.35,44,60,045/-
for the objects stated in the prospectus.
Non-Disclosures under Listing Agreement:
52. NSE and BSE were asked whether they received any disclosures from Noticee
1 under the Listing Agreement. BSE vide letter dated August 31, 2015 and
September 12, 2018 stated that there was no specific disclosure made by
Noticee 1 under Clause 43 and Clause 43A of the Listing Agreement. NSE vide
letter dated December 08, 2015 stated that Noticee 1 has not disclosed the
details of utilization of funds raised through the public issue of shares in the year
2010 and deviation from objects of the issue.
53. In view of the above, it was alleged that Noticee 1 has failed to comply with
Clause 43 and 43A of Listing Agreement read with section 21 of the SCRA.
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54. In view of the above, it was alleged that,
a) Noticee 1 violated sections 12A (a), (b) and (c) of the SEBI Act read with
Regulations 3 (a) (b), (c), (d), 4(1), 4(2)(f), (k) and (r) of PFUTP
Regulations.
b) Noticee 2 and 3 were in charge of Noticee 1 at the time of aforesaid
violations committed by Noticee 1 and thus, responsible for the conduct of
the business of the Company, as well as the Company. Considering the
same, it was alleged that Noticee 2, the Managing Director of Noticee 1
and Noticee 3, Whole Time Director of Noticee 1 violated sections 12A (a),
(b) and (c) of the SEBI Act read with regulations 3 (a) (b), (c), (d), 4(1),
4(2)(f), (k) and (r) of the PFUTP Regulations.
c) Noticees 4 to 14 violated sections 12A (a), (b) and (c) of the SEBI Act read
with regulations 3 (b), (c), (d) and 4(1) of the PFUTP Regulations.
d) Noticee 1 failed to disclose material information, which was true and
adequate, so as to enable the applicants in the IPO of Noticee 1 to take
an informed investment decision. Thus, Noticee 1, along with its Managing
Director and Whole Time Director i.e. Noticee 2 and 3 violated regulations
57 (1) and 57 (2)(a) read with Clause 2(XVI)(B)(2) of part A of Schedule
VIII and regulation 60(7)(a) of the ICDR Regulations.
e) Noticee 1 failed to disclose to the stock exchanges, quarterly statement
regarding material deviations in the use of proceeds of the public issue in
accordance with Clauses 43 and 43A of the Listing Agreement and thus,
it failed to comply with section 21 of the SCRA read with clauses 43 and
43A of the Listing Agreement.
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55. Allegations with respect to Saffron Capital Advisor Private Limited (Noticee
15):
56. Vide e-mail dated March 07, 2018 and March 14, 2018, Noticee 15 stated that
for the purpose of due diligence with respect to the loans undertaken by the
Company, it relied upon the following documents:
a) For the period upto March 31, 2010, it relied on the audit report provided
by the Statutory Auditor of the Company.
b) For the period from April 01, 2010 to May 28, 2010, it relied upon the
certificate dated May 28, 2010 issued by the Statutory Auditor of the
Company viz., M/s H.B. Patel & Associates certifying that Rs.8.83 crore
was taken as unsecured loan from Luniar Finstock Pvt. Ltd. It also relied
upon the relevant ledger extracts provided by the Company for unsecured
loans from April 01, 2010 to May 28, 2010, wherein the outstanding
balance of Luniar Finstock Pvt. Ltd. as of March 31, 2010 was Rs.1.51
crore, whereas it was Rs.16.51 crore as on May 28, 2010.
c) For the period after May 28, 2010, it relied upon undertakings from Mr.
M.A. Maheshwari, Managing Director of the Company that no significant
material development has taken place subsequent to the financial year
ended 2010 and that he has reviewed the Prospectus and the Prospectus
did not contain any untrue statement of a material fact or omitted to state
a material fact.
57. In view of above it was observed that:
a) Noticee 15 has relied mainly upon the certificate issued by the Statutory
Auditor of the Company, the ledger balance extract provided by the
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Company and the undertakings by the Company with respect to the
disclosures in the Prospectus.
b) The loans were undertaken from various entities during April 2010- June
2010 which was well before the Prospectus date i.e. June 30, 2010.
c) Noticee 15 being a BRLM to the issue can call for any reports, documents,
papers, information, etc. which also include the bank account statements
from the Company in order to verify that the statements made in the issue
are true and correct. In the instant case, it should have examined the bank
statements of the Company and should have asked questions on the
reasons for raising loans. Instead, it relied solely on the certificates and
ledgers provided by the Company/Statutory Auditor.
58. It was further alleged that Noticee 15, being BRLM to the IPO, failed to exercise
due diligence and proper care to satisfy itself about the veracity and adequacy of
disclosures in the offer document and thereby failed to fulfil its obligations in a
professional manner. Thus, it was alleged that the Noticee 15 violated the
provisions of Regulations 64(1) of ICDR Regulations and Regulation 13 read with
Clauses 1, 2, 3, 4, 6, 7 and 21 of the Code of Conduct for Merchant Bankers
specified in Schedule III of Merchant Bankers Regulations.
59. The aforesaid alleged violations, if established, make the Noticees liable for
monetary penalty under Section 15HA and 15HB of the SEBI Act and Section
23E of SCRA as applicable to them.
60. SCN was duly served to the Noticees. Noticees 2, 3, 4 and 15 filed their reply to
the SCN. Noticees 2, 3 and 4 had submitted their reply on November 02, 2020
and December 01, 2020. Noticee 15 has submitted its reply on Janaury 26, 2021.
Noticee 2 has submitted additional submissions on June 17, 2022. The SCN was
served to the Noticee 1, Noticee 5 and Noticees 9 to 14 through paper publication
and to the Noticees 6 to 8 through Courier. However, Noticee 1 and Noticees 5
to 14 did not file any reply to the SCN.
Page 43 of 91
61. The key submissions of the Noticee 2, 3, 4 and 15 are summarised below:
Noticee 2:
62. Noticee 2 submitted that

a) He was the Managing Director of ASL up until July 12, 2016. He was also the
Promoter of ASL from inception of the company up until SICOM Investments
and Finance Limited (SIFL) and SICOM Ltd. (along with SIFL referred to as
‘SICOM’) acquired 42% equity in ASL in January 2013.
b) He is qualified as a mechanical engineer. Under his supervision, ASL set up
two furnaces of 150 tonnes each in 2010-2011, which were the biggest
furnaces in Asia. The Sodium Silicate made by ASL was a special food grade
in line with the international standards (i.e. low iron content, lead free and low
heavy metal content).
c) ASL was engaged in the manufacturing of sodium silicate, which is used for
manufacture of toothpaste. The company had started its operation from the
year July 1996 at an initial capacity of 25 tonnes per day. Subsequently, with
growing sales, ASL had two plants, one in Kheda in Gujarat which had
capacity of manufacturing 100 tonnes per day of sodium silicate and the other
in Jagadia in Gujarat which had a capacity of manufacturing 50 tonnes per
day of sodium silicate.
d) Around 2007 for practical and commercial reasons, ASL decided to increase
the capacity at the Jagadia plant by 300 tonnes per day especially, due to
demand of 300 tonnes from a long-term customer i.e. an American company
JM Huber Corporation. There was one furnace at the plant and the capacity
of the same furnace was proposed to be expanded. In this regard on March
03, 2010 ASL secured a loan of Rs.14 crores from SICOM and also obtained
a sanction letter from the State Bank of India to the tune of Rs.14 crore. In
addition, ASL also took unsecured loans of Rs. 29 crores to complete major
civil works at the plant in Jagadia. In fact, most of civil work was completed by
Page 44 of 91
July 2010 (including set up of plant and machinery). At the same time, ASL
also decided to raise funds by way of a public issue. Accordingly, ASL
appointed a merchant banker and opened the issue for subscription during
the period June 24, 2010 to June 28, 2010 and the prospectus was filed on
June 30, 2010.
e) While the capacity at the plant was increased, the plant had to shut down on
June 28, 2011 due to non-availability of gas from the service provider in the
region. Given that this was out of control of ASL, in the anticipation of obtaining
gas in the future, ASL continued expansion of the third furnace and begun civil
work for the fourth furnace. In the meantime, ASL was in need of working
capital and, therefore, approached SICOM for the same. SICOM verified the
unit at Jagadia, including through its independent valuer (valuation report
dated March 19, 2012). This included verification of the machinery, furnaces,
civil work, etc. and mapping the same with what was set out in the Prospectus.
f) On December 03, 2012 SIFL, thereafter, extended a loan of Rs.20 crores. This
involved pledge of shares. Later, on December 11, 2012 SICOM (parent
company of SIFL) also gave a loan of Rs.50 crores. This involved pledge of
shares as well as pari passu charge of SIFL. Thus, SIFL and Sicom together
had given a total loan of Rs.70 crores. In fact, they appointed nominee
directors on the board of ASL. They appointed their CA and CS from Bombay.
During this period the unit practically remained shut due to no gas or very
limited gas. The plant began its production only in July 2013. Since the plant
was shut for two years, there were many issues in respect of the machinery
parts etc., however, the same were resolved and ASL started showing sales.
Thereafter, the plant faced another breakdown due to heavy rains and floods
in the region where the plant was located in and around July 23, 2013. ASL
were forced to incur a lot of cost to revive the plant. In April 2014, ASL faced
another problem in the form of there being severe shortage in Soda Ash (key
ingredient for manufacture of Sodium Silicate) industry in India as well as
worldwide. ASL had very limited access to the raw material and at a very high
cost. With growing fuel cost and non-availability of the essential raw material,
Page 45 of 91
ASL had no option but to shut down the plant. ASL, thereafter, made attempts
to revive the plant and accordingly reached out to financiers for working capital
to revive the plant. However, there was no success in the same.
g) In July 2018, the accountant of ASL filed a petition before the National
Company Law Tribunal, Ahmedabad Bench ("NCLT") for non-payment of
salary, in terms of The Insolvency and Bankruptcy Code, 2016 ("IBC"). By way
of order dated October 15, 2018, the NCLT allowed the petition and held that
"On perusal of the application as well as documents annexed thereto filed by
the operational creditor under section 9 of the Code, this bench being satisfied
that the corporate debtor failed to discharge the liability as mentioned in this
company petition...this Bench admits this petition u/s 9 of the Code declaring
moratorium...".
h) The NCLT also appointed Mr. Parag Sheth as Interim Resolution Professional
to carry out the functions as mentioned under the IBC. Thereafter, the NCLT
has passed an order for liquidation of ASL. On September 14, 2020, Noticee
2 was made aware of the terms and conditions for participation in sale process
of assets of ASL.
i) In view of the above, it is clear that Noticee 2 have always acted in a bona fide
manner. In fact, Noticee 2 had to give up majority stake in the company he
created. However, the Noticee 2 was unfortunate in all its endeavours to revive
the business. The Noticee 2 have faced tremendous losses due to unfortunate
circumstances.
j) The allegations framed in the SCN relate to the IPO, which was more than
nine years ago. The SCN does not provide any explanation to justify the
inordinate and unconscionable delay in initiation of proceedings against
Noticee 2. The initiation of proceedings by SEBI after such a long delay,
severely prejudices the ability of Noticee 2 to adequately respond to the SCN
since the documents/ facts pertaining to utilization of the funds post the IPO
is not readily available with Noticee 2.
k) The requirement to preserve documents under various legislations is not more
than seven to eight years. Also, he had not been associated with ASL since
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July 12, 2016. He cannot be expected to retain the documents relating to
usage of funds post the IPO or coherently recollect the factual background in
that regard. In this regard, Noticee 2 relied upon several judgments Hon’ble
Supreme Court and SAT.
l) The proceeds of the IPO have been utilized as per the Prospectus. This has
been verified by inspection carried by SEBI as well as independent valuer
appointed by SICOM. In fact, upon satisfaction of the work undertaken at the
plant of ASL, SICOM sanctioned and dispersed a total loan of approximately
Rs.70 crore. SICOM was also involved in the capital infusion to the tune of
Rs.10 crore.
m) The SCN purports to conclude that the IPO proceeds were not utilized towards
the objects in the Prospectus only on the basis of the fund flow from ASL to
the vendors and then allegedly back to ASL. This is an entirely fallacious
approach, given that the physical verification by the third-party valuer
(appointed by SICOM) has concluded that the items mentioned in the
Prospectus has actually been erected/ put up at the site. For ease of
reference, he had mapped out how items in the objects (plant and machinery)
of the Prospectus were verified by the third-party valuer to be existing at the
site. The items mentioned in the Prospectus were physically present at the
site. As is evident from the contents of the valuation report, the total capital
investment from the IPO proceeds was only allocated to development of the
plant at the site. In terms of the valuation report, the total value of the land and
factory premises is as under:-
Name of Item Value (INR)
Land 2,95,20,000
Factory Shed (For three 6,61,34,000
Furnaces)
Office/ Lab Building 2,50,000
RCC Storage Tank 50,00,000
RCC Roads/ Paving 50,00,000
Machinery/ Furnaces 94,54,50,000
Total 105,13,54,000
Page 47 of 91
n) The valuer thereafter concluded that the fair market value of the above to be
Rs.105,13,54,000.
o) In respect of the allegation of there being only a few invoices for partial
amounts and no invoices for the remaining sums paid to the vendors, he
submitted that the sales invoices are in the possession of the Sales Tax
Department or in custody of SICOM. Noticee 2 have finally managed to
get each and every invoice raised by the vendor against which a payment
was made and have submitted the ledger account as well as invoices of
Neptune, Chamunda Enterprise Orbit Corporation, Shukan Enterprise,
Karan Enterprise, Shreeji Machine Tools, Shree Ganesh Engineering
Corporation and Krish Corporation.
p) ASL chose the vendors for purchase of goods required for the plant based on
availability in the market. It is a common practice to buy goods depending on
the availability. Purchase of these goods do not require an elaborate due
diligence given that the same is in ordinary course of business. There were a
more than dozen manufacturers in Gujarat and equally more agents in
Ahmedabad dealing in refractories and steel. It is a general open market and
people or Sodium Silicate manufacturer generally lift from agents as they keep
stock, if you give order to a manufacture it takes fresh lot to manufacture and
delivery to you from three to six months, which was difficult for ASL during this
time. Thus, ASL had to take material from ready stocks available in market for
different items. In any event, the plant expansion was not dependent on the
IPO. The same had started much before the IPO went through. Thus, the
invoices were already raised by vendors before the IPO. ASL purchased
different types of refractories and shapes and different Steel sections like
angels, girder, plates etc. for building as well as for civil work and plant
from these vendors.
q) ASL had received products from more than 100 entities for the purpose
of putting together the factory as per the prospectus. ASL enquired the
availability of goods by researching in the market. ASL has not dealt with
a lot of entities including the other noticee vendors in the past. There is
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no connection between Noticee 2 and other noticee vendors. In fact, the
SCN also does not bring forth any evidence (direct/ indirect/
circumstantial) which shows a connection between the Noticee 2 and
other vendor noticees.
r) Ambica Ceramics, on behalf of ASL, extended the partial funds to the
vendors, as a bridge loan to ASL. Upon receipt of IPO proceeds, the
accounts between ASL and Ambica were settled. With respect to funds
forwarded by Ambica to ASL, the same were part of a different purchase-
sale transaction of Soda Ash and Sodium Silicate, which had nothing to
do with the IPO proceeds and the expansion of the unit.
s) There was no misuse of funds or siphoning of funds as alleged in the
SCN. If the money was routed back to ASL, there wouldn't have been
capital assets worth of Rs.105,13,54,000 at the unit. The allegation in the
SCN further goes on to show that ASL and the Noticee 2 acted in concert
with the remaining noticees to SCN, to divert the funds received from the
IPO. This allegation is entirely on the premise that there are no sales
invoices to demonstrate that the fund transfers to the remaining noticees
were legitimate. Thus, the SCN concluded that a sum amounting to Rs.
35.44 crore was returned to ASL and, therefore, not utilized towards the
objects of the prospectus. To end this, the Noticee 2 reiterates that there
are invoices in place and the same were earlier removed from ASL's
possession by the sales department. The sales department had
impounded all the documents for the following reason:
i. If natural gas is treated as raw material in the process then
one can claim the entire VAT (Sales Tax inward) credit, but if
it is fuel like other industries then it is under restricted items
and one can claim only 4% set off out of 12% charged only
the bill.
ii. In ASL's manufacturing process it is an exothermic oxidation
reaction at high temperature 1350° C and gas as a raw
material cost is also above 20%. The bifurcation of the usage
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of the three raw materials is Soda Ash (50% - 60 %), natural
gas (20% - 25%) and Silica Sand (3% - 5%).
iii. With this background, ASL claimed a total set off of 12% of
VAT (Sales Tax). The sales tax department gave a notice of
demand of Rs.7 crore (plus Rs.4 crore interest and penalty).
ASL had initially obtained stay from the court, however, the
order was not continued. At such time the documents were
impounded. ESSAR Ltd., had contested similar issue in the
Hon'ble Supreme Court and succeeded. On this basis, the
claim on ASL was withdrawn. However, the documents were
still impounded.
t) Noticee 2 has now been able to retrieve the invoices viz, enclosed at
Annexure to this reply. Additionally, the fact of there being the plant and
machinery in place, goes on to show that there was no misuse of IPO
proceeds.
u) The plant and machinery in terms of the prospectus were in place at the
factory site and there are invoices which show the purchase of the items
required to make the factory. Thus, the entire allegation of ASL having
diverted the IPO proceeds amounting to Rs.35.44 crore falls apart.
v) Another important aspect which has been overlooked in the SCN is that
there is no finding of diverting the funds received from the IPO proceeds
into the accounts of Noticee 2. In fact, the SEBI has taken all bank
account statements of Noticee 2 and yet have not found any fund
movement.
w) Accordingly, there is no violation of PFUTP Regulations and, in fact, his
conduct has always been in compliance with all relevant laws and
regulations.
x) The SCN merely states that the connection of Noticees 5 to 14 with ASL
and/or Noticee 2 or Noticee 3, is due to the fact that Noticees 5 to 14
opened accounts with Co-operative Banks at Ashram Road, Ahmedabad
during July- August 2010. Further, it is alleged that the bank accounts
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either closed or became nonoperational after the IPO. It is also alleged
that the venders had common introducers for opening of the bank
accounts. In this regard, he submitted that there is not an iota of evidence
of linkage between Noticees 5 to 14 with ASL and/ or Noticee 2 and/ or
Noticee 3 or that these entities are fronts of ASL. There is no material
evidence to prove the linkage. In other words, the SCN levels a serious
charge of fraud on the basis of mere suspicion, in complete igno rance of
the time-tested judicial precedents including rulings of the Hon'ble SAT
which cautions against suspicion, conjecture and surmise being passed
off as proof especially where fraud is alleged. The SCN purports to treat
suspicion and evidence as one and the same, and ignores foundational
principles of the law of evidence that that the standard of proof for a
charge of fraud to be established must be sufficient to overcome the
ordinary presumption of honesty and good faith in dealings.
y) The allegations of fraud cannot be based on wild allegations without any
convincing evidence. Charges of fraud are of serious in nature and should
not be made casually by regulators. The judicial precedents indisputably
hold that fraud is a serious offence and, therefore, the standard of proof
must be of a higher degree and mere conjectures and surmises will not
be sufficient to hold a person liable for fraud. In this regard, Noticee 2
relied upon several judgments of Hon’ble Supreme Court and SAT.
z) With respect to the alleged violation of the ICDR Regulations, he
submitted that it has to be seen in totality of the events. At no point has
SCN alleged malice on the part of Noticee 2. Even assuming there was
non-compliance of ICDR Regulations, the same was merely a technical
breach. There is not a single investor complaint on record which has
raised this as an issue. The entire allegation in the SCN is misplaced and,
therefore should be discharged vis-à-vis Noticee 2.
aa) the requirement of 'intention' is a prerequisite to prove 'fraud' for
violation of PFUTP Regulations. The offences alleged under the PFUTP
Regulations in the present case are serious offences which require
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evidence of 'fraud or deceit' and are not just ordinary civil defaults. It is a
settled principle recognized by SEBI that "the necessity of 'intent' and the
element of 'fraud' appears to be a pre-requisite in all parts of Regulation
3 and 4 of the PFUTP Regulations".
bb) In view of the foregoing, it is well settled that when SEBI alleges a
person of an offence involving 'fraud' it is essential that the accused had
an 'intent' to commit such violation. In the present case, the object
mentioned in the Prospectus has, in fact, been achieved as is evident
from the valuation report as well as inspection carried out by SEBI at the
site. If the intent was to defraud the market, then ASL would not have
taken steps to erect the unit and expand the plant. The fact that the plant
was in fact expanded belies the point that there was an intent to play
fraud on investor. Therefore, Noticee 2 or ASL have not indulged in any
manipulative, fraudulent or deceptive transaction or scheme as alleged.
cc) In the SCN, SEBI has not demonstrated the exact role or involvement of
Noticee 2 in relation to the alleged violations in the SCN. Thus, it appears
that SEBI has proceeded against Noticee 2 only on account of him being
the Managing Director of ASL at the relevant time under the principle of
vicarious liability.
dd) The SCN issued to Noticee 2 is pre-mature, given that allegations
against ASL have not been established so far. It is a settled principle of
law that prior to invoking the principle of vicarious liability against a
director/ officer of a company, the alleged violations of the law by the
company have to be established in the first place. Neither has any alleged
violation of the law by ASL has been established, nor that ASL being
found to be guilty of any offence. In this regard, Noticee 2 relied upon
several judgments of Hon’ble Supreme Court and SAT.
ee) Noticee 2 has neither derived any benefit or any advantage from the
alleged contravention in the SCN. SCN has not been able to determine if
Noticee 2 has had access to any of the IPO proceeds or that he
Page 52 of 91
participated in siphoning of the funds from ASL to Noticee 2 or any other
entity connected or related to Noticee 2.
ff) Any finding by SEBI upholding the allegations made against Noticee 2 in
the present instance would be inconsistent with the relevant provisions of
law and regulations and facts and circumstances of the case. This would
result in irreversible damage to his reputation which he has painstakingly
built over many years. In fact, the issuance of SCN is the first occasion
when Noticee 2 has been questioned by a regulator (including SEBI).
Noticee 2 has so far had an impeccable record, and is a hardworking
entrepreneur.
gg) Another circumstance which SEBI must consider is that the financial
condition of Noticee 2 is in a dire state. It doesn't seem plausible that
Noticee 2 diverted the IPO proceeds to his own accounts or company
accounts. If such was the case, ASL would have survived financially and
not been liquidated. Also, Noticee 2 would not have to vacate its
residential premises and lose the company it owned at one point. It is not
in dispute that the plant and machinery is in place. The same has been
confirmed by an independent valuer by way of its report. Noticee 1 has
been able to adduce all the invoices it had received from the vendors. In
these circumstances, it is clear that there was no fraudulent conduct by
ASL or Noticee 2. Any adverse findings will have severe impact on
Noticee 2. Noticee 2 has been very ill for the last two years. Noticee 2
has suffered with the severe bronchial asthma, damage to spine
impacting his movement, the immune system compromised due to high
IgEA count, damage to the joint in the jaw and operation in chest, recent
operation in left leg for lump and septic in thumbs and severe Arthritis
problem.
hh) He has not taken the present regulatory proceedings in a nonchalant
manner. He is not guilty of conduct which is contumacious or dishonest
or acted in conscious disregard of law. He has not acted in defiance of
law.
Page 53 of 91
ii) He has not acted to the detriment of the securities market and have
conducted all their operations with integrity and in the best interest of its
clients.
jj) He has not made any disproportionate gain or gained any unfair
advantage, whether quantifiable or otherwise.
kk) He has not caused any loss to any investor or group of investors as a
result of the default.
ll) He is not a habitual or repetitive defaulters.
mm) He has been suffering from ill health and losses due to the COVID-
19 pandemic and the lockdown and in the present market and the
worldwide COVID-19 pandemic scenario the entire cause of action
leading to penalty will hamper his ability to survive this sudden uncertain
scenario that has engulfed every industry in the entire world into a series
of losses and damages. Thus, for these reasons alone no penalty is
called for.
nn) He submitted that the alleged violation has not resulted in any harm
or loss caused to the securities market. No such allegation sits in the
SCN as well. The Hon'ble Supreme Couret has held that a penalty should
not be imposed for the sake of it and should be utilized to achieve a
specific purpose, rather than as an end in itself.
Noticee 3:
Apart from common submissions made by Noticee 2 as above, Noticee 3

submitted that
a) She was the Whole Time Director of ASL up until February 14, 2017. He
was also the Promoter of ASL from inception of the company up until
SICOM Investments and Finance Limited (SIFL) and SICOM Ltd. (along
with SIFL referred to as ‘SICOM’) acquired 42% equity in ASL in January
2013.
Page 54 of 91
b) She was Whole Time Director of Noticee 1, however, she did not
participate in any activity of ASL. Her connection with ASL was only due
to her husband Mr. Mahesh Maheshwari (Noticee 2). She has/ had no
role to play vis-à-vis ASL or any of the activities of ASL.
c) She was not involved in the day-to-day activities of ASL in any manner
whatsoever. In this regard, she relied upon the decision rendered in the
case of Vijay Remedies Ltd. v. SEBI wherein the Hon'ble SAT had
taken into consideration various factors, in determining whether or not a
director may be held vicariously liable for the acts of a company.
d) She had not participated in any activity of ASL at any point of time. She
was on the board of ASL at the insistence of her husband.
e) In this regard, no action should be taken against her and the SCN should
be entirely discharged. In any event, the SCN has not a whisper of any
wrongdoing attributed to her. In this regard, she relied upon judgment of
Hon'ble Supreme Court, in the case of SMS Pharmaceuticals Ltd. v.
Neeta Bhalla and Anr wherein SC considered the issue of liability of
directors for actions of a company.
Noticee 4:
a) Noticee 4 was set up as sole proprietorship firm of Noticee 3 on advice

from Noticee 2. Noticee 4 was, for all practical purposes, operated by
Noticee 2. Hence, SEBI has erred in joining both Noticee 3 and Noticee
4 as parties in the present proceedings. It is an admitted position that
Noticee 4 is a proprietorship of Noticee 3, it is merely a legal fiction.
Moreover, it is trite law that a proprietorship is not a separate legal
concern and therefore, Noticee 3 and 4 are virtually one and the same
entity. Moreover, the Noticee 4 is non-operational since July 21, 2011.
It has not issued any bills, not filed returns, no goods have been
bought/sold as there is no business. Further, Noticee 4 has no
obligations of creditors or otherwise on Noticee 4. When ASL stopped
Page 55 of 91
buying from Noticee 4, the business closed and there was no
income/revenue. Noticee 4 has infact closed its bank account as on July
21 2011. The same was informed to SEBI vide letter dated May 09,
2018 by Kankaria Maninagar Nagrik Shakari Bank Ltd.
b) Therefore, proceeding against Noticee 4 and 3 which is one and the
same entity, for the same cause of action vide the present SCN, would
amount to double jeopardy and will lead to a financial death of an entity
who has closed its business and has no source of income. The last
transaction of Noticee 4 was on March 31, 2011, since then Noticee 4
has closed down its business.
c) Noticee 4 was mainly engaged in purchasing Sodium Silicate from
market. ASL was engaged in the manufacturing of sodium silicate,
which is used for manufacture of toothpaste. However, ASL had limited
capacity manufacturing of Sodium Silicate and, the demand for Sodium
Silicate from ASL was significant. ASL had to meet the demand for the
said Sodium Silicate. For this purpose, Noticee 4 was set up. Noticee 4
would procure the Sodium Silicate from the market and sell the same to
ASL. ASL, in turn, would resell the Sodium Silicate under the brand of
ASL. Once ASL expanded its manufacturing capacity, ASL stopped
purchasing Sodium Silicate from Noticee 4, from January 30, 2011.
d) Noticee 4, additionally, also use to supply Soda Ash and other related
products. Noticee 4 was also engaged in providing short term loans to
small businesses.
e) At all times, Noticee 4 was shown as a related entity of ASL. Noticee 2
or ASL has not hidden or concealed the nature of relationship between
Noticee 1 and Noticee 4.
f) Once ASL was funded through the IPO, ASL had expanded its plant
and, therefore, did not need Noticee 4 for procuring Sodium Silicate.
Thus, Noticee 2 decided to wind up Noticee 4 in 2012 itself.
g) Noticee 4 has not participated in securities market in any manner
whatsoever. Thus, SEBI Act read with PFUTP Regulations cannot be
Page 56 of 91
invoked against Noticee 4. Noticee 4 has merely engaged in commercial
transactions with ASL and/ or other noticees to the SCN. However,
these transactions have no bearing on the securities market in any
manner whatsoever.
h) The conduct of Noticee 4 cannot in any way infer that Noticee No. 4
induced investors to deal in securities. The SCN makes serious
allegation of Noticee No. 4 defrauding the securities market, however,
such serious allegations are without any basis. The SCN merely refers
to a bundle of legal provisions without even attempting to apply the facts
and circumstances to the ingredients of the SEBI Act and/ or PFUTP
Regulations. This in itself makes the charges vague, ambiguous and
totally unsustainable in law and on facts.
i) It is a settled law that for proving charges of fraud under the SEBI Act
and PFUTP Regulations there must be an action or omission which has
the effect of inducing another person to deal in securities. It is
respectfully submitted that in the present case there is no allegation or
evidence that Noticee 4 induced any person to deal in securities. In
absence thereof, the charge of fraud cannot be upheld.
j) For Regulations 3 and 4 of the PFUTP Regulations to apply, an act
alleged to be fraudulent should have an element of some motive or ill
conceived idea or design. These provisions are not attracted merely
because Noticee 4 has had financial dealings with those entities which
are under scrutiny from SEBI. In any event, Noticee 4 has only engaged
in pure commercial transactions.
k) The allegation in the SCN is based on the premise that ASL has not
utilized the proceeds of the IPO towards the objects set out in the
Prospectus. It is respectfully submitted that Noticee No. 4 is not in any
manner connected with ASL's dealing in the IPO. In any event, Noticee
4 adopts the argument of ASL insofar as the submissions on utilization
of IPO proceeds are concerned.
Page 57 of 91
l) Additionally, it is clarified that Noticee 4 provided funding facility to
various entities. Some of the transactions with other noticees were in
relation to simple loan transactions. These were in nature of bridge
financing. Other transactions were relating to sale of Soda Ash and
Sodium Silicate.
m) With respect to funds forwarded by Noticee 4 to ASL, Noticee 4, on
behalf of ASL, extended the partial funds to the vendors, as a bridge
loan to ASL. Upon receipt of IPO proceeds, the accounts between ASL
and Noticee No.4 were settled. With respect to funds forwarded by
Ambica to ASL, the same were part of a different purchase-sale
transaction of Soda Ash and Sodium Silicate, which had nothing to do
with the IPO proceeds and the expansion of the unit.
n) Given the time elapsed since the transactions, Noticee 4 does not have
invoices in support of its claim. That said, Noticee 4 has closed down
and, therefore, does not have in its possession documents to show its
business dealings.
o) Accordingly, it is submitted that there is no violation of PFUTP
Regulations and, in fact, the conduct of Noticee 4 has always been in
compliance with all relevant laws and regulations.
p) The SCN alleges that Noticee 4 was a related entity of Noticee 1 to 3
and that Noticee 4 along with vendors referred to as Noticees 5 to 11
and conduit entities referred to as Noticees participated in the
manipulative device employed for the diversion of INR 35.44 Crore out
of the IPO proceeds. This allegation is entirely baseless and without any
evidence on record or otherwise. Noticee 4 has no connection with
Noticee Nos. 5 to 14.
q) Noticee 4 purely engaged in commercial transaction with ASL and other
noticees. It is a mere coincidence that these dealings so happens to be
in connection with the IPO. It is, therefore, submitted that Noticee 4 have
not indulged in any manipulative, fraudulent or deceptive transaction or
scheme as alleged.
Page 58 of 91
r) It is respectfully submitted that Noticee 4 have neither derived any
benefit or any advantage from the alleged contravention in the SCN.
SEBI has not been able to determine if Noticee 4 has had access to any
of the IPO proceeds or that it participated in siphoning of the funds from
ASL to itself or any other entity connected or related to Noticee 4.
Additional Submissions by Noticee 2:
a) Noticee 2 submitted that he relied upon various decisions of Hon'ble SAT

(PG Electroplast Ltd. 85 Ors. v. SEBI) which has deemed to not
impose a monetary penalty on parties which are already undergoing
debarment/suspension.
b) The ratio in the above decision of the Hon'ble SAT is clearly applicable
in the present case. As stated above, the Noticee 2 is already facing
debarment of 5 years through the WTM Order. To subject them to a
monetary penalty also will be excessive and unnecessary. It is
respectfully submitted that the Noticee 2 have neither derived any
benefit nor any advantage from the alleged contravention in the SCN. In
fact, as the WTM Order records, there was no prejudice caused to the
securities market as a result of the IPO proceeds. Any finding by SEBI
upholding the allegations made against the Noticee 2 in the present
instance would be inconsistent with the relevant provisions of law and
regulations and facts and circumstances of the case.
c) As stated above, the Noticee 2 have already been subjected to the
proceedings before the Learned Whole Time Member in 2019. At the
said time, when the show cause notice was issued, the SEBI had
granted powers to the Learned Whole Time Member to impose monetary
penalty. Categorically, the SEBI chose to not initiate proceedings under
the adjudication rules for monetary penalty. Thus, having decided to
pursue the matter in a manner to only issue directions under Section
Page 59 of 91
11(1), 11(4) and 11B of the SEBI Act, 1992, the SEBI is now barred
under the principles of res judicata from pursuing the present SCN.
d) Hon'ble SAT in the matter of Vital Communications v. SEB112-1,
wherein it was held as under: "30. From the aforesaid, it is clear that the
Supreme Court held that the doctrine of res judicata is not a technical
doctrine but a fundamental principle which sustains the rule of law in
ensuring finality in litigation. The main object of the doctrine is to promote
a fair administration of justice and to prevent abuse of process of the
court on the issues which have become final between the parties on the
principle that no person should be vexed twice in a litigation for the same
cause of action. In this regard, Explanation IV of Section 11 of the Code
of Civil Procedure is also relevant. The fact that an order of disgorgement
was not passed in the first round of litigation in the order of WTM dated
July 31, 2014 does not entitle the WTM to pass a subsequent order for
disgorgement on the same cause of action. The principle evolved in
Explanation IV of Section 11 of the Code of Civil Procedure is
constructive resjudicata which is fully applicable in the instant case.
In Aditya Birla Money Limited vs National Stock Exchange of India
Limited 86 Ors. (2020 SCC OnLine Mad 1082) a complaint was decided
by the Investor Grievance Redressal Panel. The complainant made
another application to reexamine the complaint which was rejected. The
Madras High Court held that the second application was barred by the
principles of resjudicata. The said decision is fully applicable in the
instant case. In the light of the aforesaid, if SEBI has chosen to deal with
its show cause notice in one particular manner and issue direction under
Section 11 and 11B of the SEBI Act, it cannot thereafter bring the same
transaction as a cause for issuing a fresh show cause notice, on the
same cause of action and, issuing further directions under Section 11
and 11B. In our opinion once an adjudication is concluded it becomes
final not only as to the actual matter determined but as to every other
matter which the SEBI might or ought to have litigated or could have
Page 60 of 91
been decided as incidental to or connected with subject matter and every
other matter coming into the legitimate purview of the original action."
e) Another circumstance which SEBI must consider is that the financial
condition of the Noticee 2 is in a dire state. The Noticee 2’s net worth
statement as on 30th June, 2021 is Rs. 23,69,955 for the immovables
and Rs.1,90,113.84 for the moveable's also the ITR FY 2021-22 of the
Noticee is Rs. 3,49,000.
f) The Noticee 2 stated that his wife Mrs. Namrata Maheshwari i.e., Noticee
3 is a housemaker and was never involved in the business activities and
decisions and in his absence she will not be able to pay any monetary
penalty.
g) Further, Noticee 2 makes sustainable earning through non milking cows
and male cows teaching organic farming and saving environment and
facilitate to get carbon credits through GAUMATA.
h) The Noticee 2 has also suffered Cancer but he has been cured for the
same.
63. Submissions of Noticee 15:
“During the due diligence, we noticed that there were unsecured loans taken by
the Company. As per the ledger accounts provided to us and available with us
(duly annexed as Annexure 1), the balance of unsecured loans as reflected in
the unsecured loan account were from the following parties as on May 21, 2010:
Sr. No Name of the Party Amount (In Rs.)

1. AB & Co Op Services Limited 16,71,250
2. Benchmark Buildcon Private Limited 1,15,00,000
3. Hanurana Vinimay Private Limited 35,00,000
4. Kiranshankar Roy 2,40,00,000
5. Luniar Finstock Private Limited 16,15,38,083
6. Mahesh A Maheshwari 1,03,466
7. Namrata M Maheshwari 1,92,071
Total 20,61,04,870
Page 61 of 91
The amounts of unsecured loans taken from the Promoters, Mahesh and
Namrata Maheshwari were not repaid from the IPO proceeds. Similarly,
unsecured loans availed from parties mentioned in sr. no. 1, 3 and 4 seem to
have been taken in the normal course of business and do not find mention that
they were repaid from the IPO proceeds. Now for the balance of amounts taken
as unsecured loans from parties mentioned in the table above (other than those
utilized towards IPO project), we were given to understand that the same were
taken as a contingency in the eventuality of any delay in the IPO and in case the
IPO went ahead as planned, the same would be repaid immediately, without any
need to touch the IPO proceeds. In case there was any delay in the IPO, the
statement of deployment of funds (dated May 28, 2010) obviously would have to
be updated as it cannot be more than two months prior to the date of registering
the offer document.
We would now proceed to clarify why the above list of unsecured loans is at a
variance from the list as per Table 8 of the SCN, and reasons/comments on each
of them is as mentioned below:
Sr. Name of the Unsecured Amount (Rs.) Our Comments

No Lender and Period
during which loan was
availed
1. Lunia Finlease Private 17,00,00,000 It may be assumed that Lunia Finlease Private
Limited Limited is the same as Luniar Finstock Private
Limited (since the amounts are more or less the
April 17, 2010 – June 14, same), the loan taken as on May 28, 2010 was
2010 Rs. 16.51 cr as per the ledger statement
attached as Annexure I. It can therefore be
surmised that the balance amount of Rs. 49
lacs would have been either availed by the
Company after May 28, 2010 or it may be
towards the interest component on the
unsecured loan.
It may be noted that the amount taken as

unsecured loan would be different from the
amount deployed towards the IPO project. Of
the amount of Rs. 16.51 cr, an amount of Rs.
Page 62 of 91
8.83 cr was deployed towards the IPO project,
which is disclosed in the RHP and Prospectus.
As on the date of the deployment certificate of

May 28, 2010, the balance amount was held by
the Company and not utilized for any objects of
the IPO.
This is also disclosed as a Risk Factor* in the

RHP which is reproduced below this table for
ease of reference.
2. Flyhigh Exports Private 5,00,00,000 This obviously will not appear in Annexure I,
Limited since the same is availed by the Company after
May 28, 2010; i.e. after the date of issuance of
June 09 – 18, 2010 deployment of funds certificate by the statutory
auditor.
3. Baccate Securities and 2,50,00,000 Does not appear in the list as per Annexure I.
Marketing Limited There could have been two possibilities, first,
since the loan was obtained just prior to the
May 12-19, 2010 date of deployment certificate, the Company
might have recorded the same in its books
subsequent to May 28, 2010.
Another possibility is that the Company may

have wrongly accounted the amount under a
different head and subsequent to May 28,
2010, corrected the same in the records
provided to you.
4. JNB Sidhu Finance 2,50,00,000 This obviously will not appear in Annexure I,
June 2010 deployment of funds certificate by the statutory
auditor.
5. Benchmark Buildcon 1,15,00,000 The unsecured loan appears in the ledger

Private Limited account balance attached as Annexure I.
However the amount was not utilized for
May 10-11, 2010 deployment towards the IPO project and hence
not disclosed in the deployment certificate.
6. Savasthi Investments 50,00,000 This obviously will not appear in Annexure I,

since the same is availed by the Company after
June 2010 May 28, 2010; i.e. after the date of issuance of
deployment of funds certificate by the statutory
auditor.
Page 63 of 91
7. Ramdev Marketing Private 1,50,00,00 This obviously will not appear in Annexure I,
July 2010 deployment of funds certificate by the statutory
auditor.
*Risk Factor reproduced - Our Company has availed unsecured loans, which are
repayable on demand. Any demand from lenders for repayment of such
unsecured loans, may adversely affect our business operations and financial
condition.
As per our financial statements, as on March 31, 2010, we have unsecured loan
of Rs. 177.05 Lacs which is repayable on demand. Out of this outstanding
unsecured loan Rs. 5.45 is from promoters and Rs. 168.60 Lacs is from others.
For further details of these unsecured loans, please refer to Auditors’ Report
beginning on page 116 of the Red Herring Prospectus. Further, our Company
has availed 714.96 Lacs in the current financial year (2010-2011) as unsecured
loans for ongoing deployment towards objects of the issue. For further details of
these unsecured loans, please refer to section titled “Objects of the Issue”
beginning on page 55 of the Red Herring Prospectus. Any demand from lenders
for repayment of such unsecured loans, the consequential cash outgo may
adversely affect our business operations.
With regard to the deployment of funds pending the completion of the IPO, we
had obtained the statement of deployment of funds as on May 21, 2010 provided
by the statutory auditor of the Company, M/s. H.B. Patel & Associates, Chartered
Accountants, represented by its proprietor, Mr. Harikrishna Patel. That the
statutory auditor took his time to verify the statements appearing as on May 21,
2010 and issue the certificate of deployment of funds only on May 28, 2010, we
can safely assume that the statement is given by the statutory auditor only after
verifying the bank accounts and the inflow of the funds and the classification of
the same under the appropriate heads is done by the auditor in accordance with
Page 64 of 91
the applicable Accounting Standards. The sole authority for certifying the
statement of deployment of funds vests with the statutory auditor, as stipulated
by SEBI, and the certificate appears to be in order.
The SEBI ICDR provides that the deployment certificate has to be not more than
two months old from the date of registering the offer document (Part A, Para (VII)
(F) (1) of the SEBI ICDR Regulations), and in this case the deployment certificate
was dated May 28, 2010, while the RHP was dated June 10, 2010 and the IPO
opened for subscription on June 24, 2010, subsequent to which the Prospectus
was dated June 30, 2010, which is hardly a month or so and well within the
stipulated timelines of two months.
Similarly, in terms of the SEBI ICDR Regulations, the financial information

presented in the Offer Document should be within six months of the IPO opening
date and accordingly, the financials presented were for March 31, 2010 while the
IPO opened for subscription on June 24, 2010. The financials are barely three
months old and well within the stipulated timeline of six months.
Therefore the details are at variance clearly due to the fact that while the
deployment certificate and schedule of unsecured funds is as on May 21 and
May 28, 2010 respectively, the annexure provided in the SCN pertains to a wider
period upto July 2010.
We would once again like to reiterate that the SEBI ICDR Regulations provides
for that the financials not to be more than six months old and deployment
schedule not more than two months old is clearly a recognition of the fact that
due diligence in this area is not expected to be real time and online or concurrent.
The cut off dates taken by us have been much more conservative than what are
provided in the SEBI ICDR Regulations.
Page 65 of 91
Moreover the matter needs to be examined in the context that the diligence
period was a decade ago in 2010 and not in current times. It is as a result of the
necessity to disclose all loans taken by the Company that the practice of issuing
an Indebtedness certificate as close as possible to the Offer Document and
incorporating the same as a section named “Indebtedness” was introduced as a
market practice and is now insisted upon by SEBI, although there is no formal
regulation in this regard till date. This practice started almost four to five years
after 2010.
As per standard due diligence procedure, the Company has provided us with
undertaking dated June 30, 2010 (dated same as the Prospectus date) provided
by the Company, duly signed and stamped by the Promoter that the Prospectus
does not contain any untrue statement of a material fact. The same is reproduced
for ease of reference:
Hence we believe and reiterate that the disclosures made in the RHP/Prospectus
are in order and in line with the SEBI ICDR Regulations.
Para 2, point n, we submit as under:
That there were loans taken from SICOM and SIDBI is a matter of fact and they
were lenders to the Company, who had duly consented for the IPO, and whose
consent letters were part of the material contract and documents for inspection.
(Enclosed as Annexure 2) It is also a fact that loans taken from SIDBI and
SICOM were secured term loans and not working capital loans, and therefore
Page 66 of 91
could not have been used for any other purposes / working capital / general
corporate or towards the project specified in the IPO document.
The fact is that the amount of loans availed by the Company (Table 8 of SCN) is
different from the amount utilised towards the IPO project (which is based on the
deployment certificate) and the two are not comparable, except that the
deployment certificate has to be by and large a part of the unsecured loans
availed by the Company.
For deployment in the IPO proceeds, loans availed by the Company as

unsecured loans, duly certified by the statutory auditor have been considered and
disclosed accordingly. Hence there is no question of non/wrong disclosure.
The cut-off date for the financials in the Prospectus was March 31, 2010 as SEBI
regulations stipulate that the financials disclosed in the Offer Document should
not be more than 6 months old from the Issue Opening date. The same is based
on the annual accounts of the Company and also the restated audit report for the
year ended March 31, 2010.
Hence we believe that there was no non-disclosure and all information within the
timelines as required under the SEBI ICDR Regulations have been complied with
and disclosed in the RHP/Prospectus.
Para 2, point o, we submit as under:
From the submissions made by the Promoter to SEBI, it is clear that the Company
had taken unsecured loans, especially after the certificate of deployment was
issued by the statutory auditor. It is clear from the statement of the Promoter
through his letter dated February 02, 2018, that the Company had taken
unsecured loan for various purposes, capex and working capital, including for
deployment in the IPO project. The competent authority to identify how much of
Page 67 of 91
these unsecured loans have been spent on the IPO objects, after verifying the
books of accounts, is the statutory auditor of the Company. It cannot be
presumed that the entire unsecured loans were taken for deployment in IPO
project, unless certified as such by the statutory auditor. Having said this, the
funds which were deployed for the IPO project and were certified as deployed
towards the IPO project were disclosed in the RHP/Prospectus. This was through
a fund deployment certificate dated May 28, 2010, while the RHP was dated June
10, 2010, which is well within the 2 month timeline as specified under the SEBI
ICDR Regulations.
We have disclosed the unsecured loans availed by the Company basis the
Annual report of the Company for the year ended March 31, 2010 along with
schedules and also basis the restated audit report, both of which are signed by
the Company Promoters and the auditors as provided in the Annual Report /
Restated Accounts.
Sr. No Loans availed from Amount Our Comments

(Rs. Cr)
Allegation of Wrong disclosure
1 Lunia Finlease Private Limited 8.83 It may be assumed that Lunia Finlease
Private Limited is the same as Luniar
Finstock Private Limited (since the amounts
are more or less the same), the loan taken
as on May 28, 2010 was Rs. 16.51 cr as per
the ledger statement attached as Annexure
I. It can therefore be surmised that the
balance amount of Rs. 49 lacs would have
been availed by the Company after May 28,
2010 or it may be towards the interest
component on the unsecured loan.
It may be noted that the amount taken as

unsecured loan would be different from the
amount deployed towards the IPO project.
Of the amount of Rs. 16.51 cr, an amount of
Rs. 8.83 cr was deployed towards the IPO
project, which is disclosed in the RHP and
Prospectus.
Page 68 of 91
As on the date of the deployment certificate
of May 28, 2010, the balance amount was
held by the Company and not utilized for
any objects of the IPO.
Allegation of non-disclosure
2 Lunia Finlease Private Limited 8.17 Our comments on reply to para 2 (points l
and m) may be read
3 Flyhigh Exports Private Limited 5 --;;--
4 Baccate Securities and 2.5 --;;--

Marketing Limited
5 JNB Sidhu Finance Limited 2.5 --;;--
6 Benchmark Buildcon Private 1.15 --;;--

Limited
7 Savasthi Investments 0.5 --;;--
We reiterate that the SEBI ICDR Regulations state that the financial information
presented in the Offer Document should be within six months of the IPO opening
date and accordingly, the financials presented were for March 31, 2010 while the
IPO opened for subscription on June 24, 2010. Most of the unsecured loans
availed by the Company were during the period after May 28, 2010 which were
not required to be disclosed in terms of the SEBI ICDR Regulations, save and
except for any loans (sources of funds) which were deployed towards the IPO
project, which have been duly disclosed in the RHP/Prospectus.
In the scheme of things, we felt that it was only natural that the Promoter would
have availed the unsecured loan and utilised a part thereof towards the IPO
project and balance of the money would have been either utilised towards IPO
objects or repaid after the IPO. In the first case, since it could have been utilised
after the date of utilisation certificate, hence it did not find mention therein. Had
the IPO got delayed, the updated utilisation certificate would have certainly
reflected the same. In the second eventuality of the amount being repaid after
the IPO, it would be incorrect to assume that the IPO proceeds were utilised to
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pay for it since the original loan amount that was still lying unutilised with the
company and the same was used for repayment and therefore cannot be said to
be repaid out of the IPO proceeds. It is just that the timing of the repayment
coincided and indicated that it was repaid out of IPO proceeds. Any other
possibility is not within our understanding, given the limited access to data post
IPO.
Para 2, point p, we submit as under:
The Company had obtained quotations from various parties, including for the
furnace. The quotation for the furnace was from Ambica Ceramics, whose
proprietor is one Mr. Paresh Panchal, who is mentioned as Pareshbhai on the
Purchase Order dated April 03, 2010. From a general search today as well, we
can see that the same person is mentioned on the website:
https://www.hindustanyellowpages.in/Vadodara/Relaince-Steel-Corporation-OR-
Ambica-Ceramics/Wadi/AboutUs (Screenshot attached as Annexure III (1). The
address mentioned is also the same as per the quotation received. (Attaching the
copies of quotation as received from the company and the copy of the order
placed as Annexure III (2)).
We had reviewed the minutes of the Company (shared with you earlier) and there
is no mention of any Ambica Ceramics or Namrata Maheshwari as a proprietor
of Ambica Ceramics. In fact Ambica Ceramics appears as a creditor for asset for
the year 2008-09, with outstanding balance of Rs. 1.64 cr, as it may have
supplied other furnace related materials to the Company as well besides the
furnace for the IPO project. (Annexure III (3))
Additionally, we are also submitting the extract of the factsheet submitted to BSE
(required for their in-principle listing approval), detailing their top customers and
creditors, which also feature Ambica Ceramics, and which also clearly mentions
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that the said customer or creditor does not have any relationship with the
Company/Promoter/Director. (Annexure III (4))
Neither, has the then existing statutory auditor, nor the previous statutory auditor,
who had worked closely with the Company and its Promoters have ever
mentioned about Ambica Ceramics as a related party / under the related party
transactions in the Schedule on Related Party Transactions in the Annual Report.
Now that we understand from SCN that Namrata Maheshwari was a proprietor
of Ambica Ceramics and it comes as a real surprise to us. The following are the
levels of diligence, where this fact would have come to our notice:
i. Earlier transactions with Ambica Ceramics never have found any mention,
neither in the minutes book, nor in the auditor report/Annual report, although
they were related party transactions as per the SCN. It can be surmised
therefrom that both the Board and the statutory auditor were kept in dark
about this fact, obviously, deliberately and with a malafide intention.
ii. The Company also made willful misstatement to BSE as earlier described
through the submission of fact sheet.
iii. Having hoodwinked so many authorities, the Company continued the series
of lies by giving the name of one Mr. Paresh as the proprietor on the
quotation and purchase order. In fact even till date Mr. Paresh appears as
a proprietor of Ambica Ceramics as per the publicly available information.
iv. Even today the publicly available information states that one Mr. Paresh is
the proprietor of Ambica Ceramics and not Namrata Maheshwari.
v. Apart from the above there is no other document that a Merchant Banker
can verify that Namrata Maheshwari was the proprietor of Ambica
Ceramics.
vi. Possibly with a view to camouflage this fact the Company retracted the
amount paid as advance to Ambica Ceramics as mentioned in the SCN.
Hence, we sincerely believe it was beyond any level of due diligence to suspect
that Ambica Ceramics was a related party. There was just no reason to suspect
that there was any connection between Ambica Ceramics and the Promoter of
the Company. Even today we fail to understand the motive or ultimate objective
of camouflaging this relationship / transaction.
Page 71 of 91
Para 3
In addition to reliance on certificate issued by the statutory auditor, who is

considered an expert under the Companies Act, we have relied on the ledger
balance extract as a secondary diligence and also the confirmations/affirmations
by the Company/Promoters. Thirdly we have also scanned the minutes book as
provided by the Company wherever required. As a Merchant Banker, we have
placed reliance on the deployment certificate issued by the statutory auditor of
the Company, who is considered an expert under the Companies Act.
The SEBI ICDR provides that the deployment certificate has to be not more than
two months old from the date of registering the offer document (Part A, Para (VII)
(F) (1) of the SEBI ICDR Regulations), and in this case the deployment certificate
was dated May 28, 2010, while the RHP was dated June 10, 2010 and the IPO
opened for subscription on June 24, 2010, subsequent to which the Prospectus
was dated June 30, 2010, which is well within the stipulated timelines.
Similarly, as per the SEBI ICDR Regulations, the financial information presented
in the Offer Document should be within six months of the IPO opening date and
accordingly, the financials presented were for March 31, 2010 while the IPO
opened for subscription on June 24, 2010.
We in our course of diligence, we do call upon for bank account statements and
had done so calling client ledgers and bank account statements on a sample
basis. Having found no apparent reason to disbelief/doubt the accounts as stated
in the annual accounts and the restated audit report, we have further not asked
such bank statements thereafter. While we were constantly in touch with the
promoter, with him being stationed in Mumbai during the IPO period and
thereafter, there was never ever any communication that the Company has
Page 72 of 91
availed any unsecured loans other than those stated in the deployment certificate
/ DRHP / RHP / Prospectus.
As part of our diligence, we ask the promoters and call for such documents only
when the promoter answers in affirmative of any unusual transaction or loan
availed. Accordingly we had explained to the promoter the reason behind
obtaining affirmations / confirmations dated June 30, 2010, prior to issuance of
the Prospectus. Since there were no such confirmations from the Promoters, we
have not asked for any bank account statements during such period after the
deployment certificate was issued, as the period was within the timelines as
mentioned in the SEBI regulations.
Beyond this, as a Merchant Banker, we always advise our clients / issuer

companies to keep us updated on any critical events. We would also like to bring
to your attention that on page no. 137 of the RHP (which is signed by all the
Directors), there is a specific heading under the chapter “Management’s
Discussion and Analysis of Financial Condition”, which is reproduced for ease of
reference:
“
Significant developments subsequent to the last financial year:
After the date of last financial year i.e. March 31, 2010, the Directors of our
Company confirm that in their opinion, there have not been any significant
material developments.
“
We would also like to rely on SAT Order in the matter of Corporate Strategic
Alliance Vs SEBI passed on 29.03.2019 as per which, “……... The balance sheet
has been duly audited by the Statutory Auditors and accepted by the Income Tax
Authorities. It is not open to the AO to question the entries in the balance sheet.
The AO is not an expert to juggle the accounting figures and hold as to which
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entry should come under "Fixed Assets" or under the "Revenue Expenditure".
The Merchant Banker has only disclosed what the balance sheet was showing
for which purpose the Merchant Banker cannot be found at fault……..”
To summarize, we have checked at six levels of due diligence:

a) Audited Annual Reports of for last 5 years
b) Restated Audit report signed by the statutory auditor
c) Minutes book for last 5 years
d) Ledger Balances where required along with the certificate from statutory
auditor
e) Undertakings/Declarations from the management
f) Information available in the public domain
Another submission we would like to make is that post IPO, the Company has
still not paid part of our fees and the affairs of the Company is currently being
managed by an Insolvency Professional (IP).
Basis the above, the security deposit (1% of the IPO size) with BSE has till date
not been released to the Company. A copy of our communication dated August
01, 2019 with SEBI in this regard is attached as Annexure IV.”
64. Opportunity of hearing was provided to the Noticees through video conferencing.
Mr. Rushin Kapadia and Ms. Rinku V, Authorized Representative (AR) of
Noticees 2, 3 and 4 attended the hearing on June 07, 2022. Mrs. Shailashri
Bhaskar and Mr. K Srinivas, Authorized Representative (AR) of Noticee 15
attended the hearing on May 17, 2022.
65. Vide hearing notices dated April 21 and 22, 2022 an opportunity of personal
hearing through video conferencing was provided to Noticees 1 and Noticees 5
to 14. Hearing Notices were duly served to the Noticees 1, Noticee 5 and
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Noticees 9 to 14 through paper publication. Hearing Notices dated April 21, 2022
sent to Noticees 6 to 8 through speed post returned undelivered.
66. The Noticee 1 and Noticees 5 to 14 did not file any reply to the SCN. I note that
through the SCN and Hearing Notices, they were advised to furnish their reply, if
any, within stipulated time, failing which, it shall be presumed that they have no
reply to submit and the matter will be proceeded with on the basis of the material
available on record.
67. As sufficient opportunity was given to the Noticee 1 and Noticees 5 to 14 to

submit reply and no response was received from them, the adjudication
proceeding against them is undertaken ex-parte on the basis of material available
on record.
68. As the inquiry in the matter has been completed, I now proceed to decide the
case on the basis of SCN issued, replies made by the Noticees 2, 3, 4 and 15
and material available on record.
CONSIDERATION OF ISSUES AND FINDINGS
69. The issues that arise for consideration in the instant matter are:
Issue No. I Whether,
a) Noticees 1, 2 and 3 under section 15HA of the SEBI Act for

alleged violations of sections 12A (a), (b) and (c) of the SEBI
Act read with Regulations 3 (a), (b), (c), (d), 4(1), 4(2)(f), (k)
and (r) of the PFUTP Regulations.
b) Noticees 4 to 14 under section 15HA of the SEBI Act for
alleged violations of sections 12A (a), (b) and (c) of the SEBI
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Act read with Regulations 3 (b), (c), (d) and 4(1) of the PFUTP
Regulations.
c) Noticees 1, 2 and 3 under section 15HB of the SEBI Act for
alleged violations of Regulations 57 (1) and 57 (2)(a) read with
Clause 2(XVI)(B)(2) of part A of Schedule VIII and Regulation
60(7)(a) of the ICDR Regulations.
d) Noticee 1 under section 23E of SCRA for alleged violations of
section 21 of the SCRA read with clauses 43 and 43A of the
Listing Agreement.
e) Noticee 15 under section 15HB of the SEBI Act for alleged
violation of the provisions of Regulations 64(1) of ICDR
Regulations and Regulation 13 read with Clauses 1, 2, 3, 4,
6, 7 and 21 of the Code of Conduct for Merchant Bankers
Issue No. II If yes, whether the failure on the part of the Noticees would attract
monetary penalty under Section 15HA and 15HB of the SEBI Act
and Section 23E of SCRA?
Issue No. III If yes, what would be the monetary penalty that can be imposed
upon the Noticees taking into consideration the factors stipulated
in Section 15J of the SEBI Act and Section 23J of SCRA read with
Rule 5(2) of the Adjudication Rules?
Issue No. I Whether, the Noticees are in violation of aforesaid

Regulations
70. Before going into the merits of the case I note that Noticee 2, 3 and 4 have raised
the contention that the allegations framed in the SCN relate to the IPO, which
was more than nine years ago and the SCN does not provide any explanation to
justify the inordinate and unconscionable delay in initiation of proceedings
against them. In this regard, I note that SEBI initiated the Investigation in the
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instant matter in 2015, which was completed in September 2018. Adjudication
proceedings were approved in September 2018, and SCN in the matter was
issued on July 30, 2020. I further note that no limitation has been prescribed in
SEBI Act for initiating proceedings for violation of securities laws. I take note of
the fact that the IPO in respect of which violations are alleged took place in June
2010.
71. I note from the SCN that Noticee 1 raised an amount of Rs.53.10 crore through
IPO for the disclosed purpose of expansion of manufacturing facilities and certain
other working capital requirements. The IPO proceeds were to be utilized in
following manner as per the objects of the issue:
Object Amount (Rs. in lakhs)
Expansion of manufacturing facilities 4,432.19
Additional Working Capital requirements 750.00
Public Issue Expenses 500.00
Total Cost of the Project 5,682.19
Means of Finance
Description Amount (Rs. in lakhs)
Proceeds from IPO 5,310.00
Internal cash accruals 372.19
Total 5,682.19
72. The main allegation against the Noticees is that out of total IPO proceeds of
Rs.53,10,00,000/-, Rs.35,44,60,045/- was not utilised in accordance with the
objects stated in the IPO and as disclosed in the Prospectus by the Company, as
given below :
Vendor / Amount transferred Amount returned Amount withdrawn as Net amount which can
account to the vendors by back to ASL (directly cash by entities be stated to be not
name ASL (in 𝑹𝒔.) by vendors / by other (directly by vendors / utilised as per objects
entity) – in 𝑹𝒔. by other entity) – in 𝑹𝒔. in prospectus – in 𝑹𝒔.
Neptune 10,00,00,000* 10,00,00,000 NA 10,00,00,000
Chamunda 4,66,23,000 2,20,00,000 2,46,23,000 4,66,23,000
Orbit 4,57,73,000 1,24,14,000 3,33,59,000 4,57,73,000
Shukan 4,05,28,203 1,70,00,000 2,35,00,000 4,05,00,000
Karan 3,30,00,000 1,00,00,000 2,30,00,000 3,30,00,000
Shreeji 2,95,26,000 1,52,00,000 1,23,39,045 2,75,39,045
Shree Ganesh 2,78,25,000 0 2,78,25,000 2,78,25,000
Krish 1,80,00,000 0 1,80,00,000 1,80,00,000
Refund interest 1,52,00,000 NA NA 1,52,00,000
payment
Total 35,64,75,203 17,66,14,000 16,26,46,045 35,44,60,045
Page 77 of 91
73. The aforesaid misutilization is allged to have been carried out through several
sham fund transactions which were carried out by and through Noticees 4 to 14.
There is also allegation of wrong disclosure of information by Noticee 1 in the
prospectus and annual report of FY 2010-11.
Mis-utilization of IPO Proceeds:
74. With regar to Noticee 1, I note that the Company is presently under liquidation
subsequent to proceedings initiated against the company under the Insolvency
and Bankruptcy Code, 2016 in October 2018.
75. In response to the allegation of misutilization of IPO proceeds, Noticee 2, 3 and

4 in their reply have contended that he proceeds of the IPO have been utilized
as per the Prospectus. This has been verified by inspection carried by SEBI as
well as independent valuer appointed by SICOM. Upon satisfaction of the work
undertaken at the plant of ASL, SICOM sanctioned and dispersed a total loan of
approximately Rs.70 crore. SICOM was also involved in the capital infusion to
the tune of Rs.10 crore. Further, in terms of valuation report by valuer appointed
by SICOM, the fair market value of land and factory premises was valued at
Rs.105 crore.
76. I note that from the SCN that of the amount of Rs. 35.44 crore alleged to be
misutilised, the amount of Rs.17.66 crore returned back to Noticee 1 and there
was no explanation from the Noticee 1 for the amount returned back to it. Further,
the amount of Rs. 16.26 crore was withdrawn in cash by the Noticees 5 to 10 and
14 after the amounts were received by them. The SCN records that the Copmany
was unable to provide invoices for the materails stated to have been supplied by
the vendors mentioned in table above. Also, one of the vendors, Neptune, denied
having any relationship with the Company.
Page 78 of 91
77. In respect of the allegation of there being only a few invoices for partial amounts
and no invoices for the remaining sums paid to the vendors, Noticee 2 submitted
that the sales invoices are in the possession of the Sales Tax Department or in
custody of SICOM. Noticee 2 finally managed to get each and every invoice
raised by the vendor against which a payment was made and have submitted the
ledger account as well as invoices of Neptune, Chamunda Enterprise Orbit
Corporation, Shukan Enterprise, Karan Enterprise, Shreeji Machine Tools, Shree
Ganesh Engineering Corporation and Krish Corporation.
78. I have perused the documentary proof submitted by the Noticee 2 and find that,
Noticee has admiteddly obtained invoices later on to substantiate the amounts
paid to the vendors. In view of the submissions made by Neptune denying any
relationship with the Noticee, and the fact that the banks accounts of the vendors
were closed or became non-operational soon after the IPO, I am unable to accept
that the invoices produced by Noticee 2 represent genuine business transactions.
The bank accounts of the vendors to whom the IPO proceeds were transferred
were found to be opened only in July-August, 2010 i.e. immediately after the IPO
issue and they have become non-operative / dormant soon after the receipt of
funds from Noticee 1 and subsequent withdrawal of the same in cash. Noticees
have not made any credible submissions in this regard.
79. I note that Noticee 1 has submitted wrong information with respect to fund
transfers to Neptune Enterprise and Noticee 10. Neptune Enterprise has denied
any kind of transaction of Rs. 10 crore with Noticee 1 and in fact the transfer of
Rs. 10 crore was made to Noticee 4, which was related entity of Noticee 1.
Further, with respect to transfer of Rs.1.80 crore to Noticee 10, I note that an
amount Rs.25 lacs were transferred to Noticee 7 and not to Noticee 10. Noticees
have also not made any submissions in this regard.
80. Noticee 2, 3 and 4 have argued that the company had available assets of land,
factory and office building etc. with market value of Rs. 105 crores as per the
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valuation report dated March 19, 2012 which proved that the IPO proceeds were
utilized for the purpose of the said assets. In this regard, I note that the valuation
certificate indicates assets available with the Noticee 1 as of March 2012, this by
iteslef does not established that these assets were created out of IPO proceeds,
as Noticee 1 had also also availed bank loans of Rs.14 crores, as well as
unsecured loans of Rs.29 crores in 2010, as per Noticees 2’s submissions.
81. Noticee 2 has also made submissions relating to several setbacks face by the
company in running its plant such as non-availability of gas/ fuel, breakdown due
to floods, shortage of Soda Ash which was a key ingredient etc., which eventually
led to losses and shutdown of plant.
82. Having perused the submissions of the Noticees, I find that the Noticees have
been unable to adequately explain the utilization of IPO proceeds on account of
non-availability of proper invoices, as well as unexplained ffund flows as brought
out in the SCN. Of the Rs.35 crore alleged to be misutilized, I note that Rs.17.66
crore came back to the company and Rs.16.26 crore were withdrawn in cash by
the aforesaid vendors (Noticees 5 to 14).
83. I note that Noticees 5 to 14 have assisted Noticee 1 in utilizing funds for purposes
other than as stated in the prospectus as shown below:
Amount
Returned
Sr.
Vendor Name Amount (in Rs.) Fund Movement back to
No.
Noticee 1 (in
Rs.)
Amount actually 10 crore
transferred to Noticee
4 and returned back
1 Neptune Enterprise 10,00,00,000
on same day to
Noticee 1
Rs.2.20 crore 2.2 crore

2 Chamunda Enterprise 4,66,23,000 4 and then returned
back to Noticee 1
Page 80 of 91
Rs.2.46 crore
withdrawn in cash by
Noticee 14
4 and then returned
back to Noticee 1
3 Orbit Corporation 4,57,73,000 Rs.3.33 crore

Noticee 5,
Rs.64 lacs transferred
to Noticee 12 and
back to Noticee 4
4 and then returned
back to Noticee 1
4 Shukan Enterprise 4,05,28,203
Rs.2.35 crore
Noticee 6
Rs.1 crore transferred 1 crore

to Noticee 4 and then
returned back to
Noticee 1
5 Karan Enterprise 3,30,00,000
Rs.2.30 crore
Noticee 7
Shreeji Machine Tools Rs.1.52 crore 1.52 crore

4, 11 and 13 and then
returned back to
2,95,26,000 Noticee 1
6
Rs.1.23 crore
Noticee 8
Shree Ganesh Eng. Co 2,78,25,000 Rs.1.02 crore

13 and then withdrawn
7 in cash
1.75 crore withdrawn
in cash by Noticee 9
Krish Corporation 1,80,00,000

Rs.0.25 crore
8
7 and then withdrawn
in cash
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Rs.1.55 crore
Noticee 10
84. No reply to the SCN have been received from Noticees 5 to 14. From the material
on record and the replies submitted by Noticees 2 – 4, I find that the utilization of
funds to the extent of Rs.16.26 crore is not explained by supporting documents.
Therefore, I find that the IPO funds of Rs. 35.44 crore were not utlised in terms
of objects of IPO by Noticee 1. Noticee 2 and 3, being its Managing Director and
Whole Time Director were in charge of Noticee 1 and hence are liable for the
miutilisation of IPO proceeds of Rs. 35.44 crore. I also fiind that Noticees 4 – 15
assisted Noticees 1-3 in employing a manipulative device by acting as conduits
in diverting the IPO proceeds for other purposes than those disclosed in the
objects of the issue.
85. With regard to extent of misutilisation of IPO proceeds, I note that the while it is
established that the funds were not utlised as per objects of IPO, it is not the case
that the funds were siphoned off or diverted from the company to the Noticees 2
to 14. The funds to the extent of Rs.17.66 crore returned back to the Company.
In respect of remaining funds, I take note of submission of Noticee 2 that there
is no finding of diverting the funds received from the IPO proceeds into the
accounts of Noticee 2. I also take note of the fact thet after carrying out valuation
of company, December 03, 2012 SIFL, extended a loan of Rs.20 crores. This
involved pledge of shares. On December 11, 2012 SICOM (parent company of
SIFL) also gave a loan of Rs.50 crores. This involved pledge of shares as well as
pari passu charge of SIFL. Thus, SIFL and Sicom together had given a total loan
of Rs.70 crores.
86. It is alleged in the SCN that Noticee 1 in its Annual Report for FY 2010-11 made
wrong disclosure that - “the money raised through IPO was utilized for the
purpose for which it was raised”. Further, it is also alleged that since Noticee 1
did not utilize Rs.35,44,60,045/- of the IPO proceeds in accordance with the IPO
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objects as disclosed in the prospectus, therefore, the prospectus provided the
wrong disclosures regarding the IPO objects. In this regard, I note that it is
established that Noticee 1 has misutilized the IPO proceeds, therefore the
disclosure made in Annual Report was incorrect. However, it cannot be held that
the prospectus disclosure was incorrect as that was the proposed utilization of
IPO proceeds.
87. It is alleged in the SCN that Noticee 1 made wrong disclosure in the prospectus
with respect to the loan of Rs.17 crore taken from Lunia Finlease Pvt. Ltd.,
wherein it mentioned that the same was undertaken from Luniar Finstock Pvt.
Ltd. In this regard I note that the difference between Lunia and Luniar is minor
and can be explained as a typo, as submitted by Noticee 2. With regard to
difference in amount, I note that disclosed amount was Rs.8.83 crore whereas
from bank statements, it was noted that loan taken from to Lunia Finlease was
Rs.17 cores. Thus there was non-disclosure of loan taken to the extent of R.8.17
cores. There wa also non-disclosure of certain other loans. No reply is made by
Noticee 1 – 3 on this aspect. Hence, it is established incorrect disclosure was
made in the prospectus with regard to loans taken.
88. It is also alleged that Noticee 1 had stated in Prospectus that none of the machine
suppliers that it intended to purchase machinery from, were related to it or its
promoters. However, it is observed that Ambica Ceramics is connected to
Noticee 1, since Ambica Ceramic’s proprietor Ms. Namrata Maheshwari, Noticee
3 is a director of Noticee 1 and also the wife of Mr. M.A. Maheshwari, Noticee 2,
Managing Director of Noticee 1. In view of same, it was alleged that Noticee 1
made a wrong disclosure in the prospectus regarding having no connection with
one of the proposed vendors. No reply is made by Noticee 1 – 3 on this aspect.
Hence, it is established incorrect disclosure was made in the prospectus in this
regard.
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89. In view of the above, it is established that Noticee 1 to 3 have violated sections
12A (a), (b) and (c) of the SEBI Act read with Regulations 3 (b), (c), (d) and 4(1),
4(2)(f), (k) and (r) of the PFUTP Regulations and Noticees 4 to 14 have violated
sections 12A (a), (b) and (c) of the SEBI Act read with Regulations 3 (b), (c), (d)
and 4(1) of the PFUTP Regulations.
90. From the aforesaid, I also find that the Copmany had wilfully made certain
misstatements in the prospectus. Therefore, the allegation of Regulations 57 (1)
and 57 (2)(a) read with Clause 2(XVI)(B)(2) of part A of Schedule VIII and
Regulation 60(7)(a) of the ICDR Regulations by Noticee 1, 2 and 3 is established.
91. It is alleged in the SCN that as the funds were not utilized as per the objects of
the issue, it was required to disclose the deviation of utilization to the stock
exchanges in tems of Clause 43 and 43(a) of the listing agreement, which
Noticee 1 failed to do. In this regard, no specific submission made by the Noticee
1 except that it denied misutilization of the proceeds. Hence, it is established that
Noticee 1 violated section 21 of the SCRA read with Clause 43 and 43A of the
listing agreement.
92. Noticee 15 was BRLM of the IPO issue of Noticee 1. It is alleged in the SCN that
on account of wrong disclosure in the prospectus Noticee 15 failed to carry out
due diligence with regard to dislcoures made in the prospectus and thereby
violated provisions of Regulations 64(1) of ICDR Regulations and Regulation 13
read with Clauses 1, 2, 3, 4, 6, 7 and 21 of the Code of Conduct for Merchant
Bankers specified in Schedule III of Merchant Bankers Regulations.
93. In this regard, Noticee 15 has submitted that, an amount of Rs. 8.83 cr was
deployed towards the IPO project, which is disclosed in the RHP and Prospectus.
There is also allegation few other loans which were not disclosed in Prospectus.
In this regard, Noticee 15 has submitted that had obtained the statement of
deployment of funds as on May 21, 2010 provided by the statutory auditor of the
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Company, M/s. H.B. Patel & Associates, Chartered Accountants, represented by
its proprietor, Mr. Harikrishna Patel. That the statutory auditor took his time to
verify the statements appearing as on May 21, 2010 and issue the certificate of
deployment of funds only on May 28, 2010, we can safely assume that the
statement is given by the statutory auditor only after verifying the bank accounts
and the inflow of the funds and the classification of the same under the
appropriate heads is done by the auditor in accordance with the applicable
Accounting Standards. The sole authority for certifying the statement of
deployment of funds vests with the statutory auditor, as stipulated by SEBI, and
the certificate appears to be in order. Therefore the details are at variance clearly
due to the fact that while the deployment certificate and schedule of unsecured
funds is as on May 21 and May 28, 2010 respectively, the annexure provided in
the SCN pertains to a wider period upto July 2010.
94. With regar to disclosure of purchases from related parties, Noticee 15 has replied
that the Company had obtained quotations from various parties, including for the
furnace from Ambica Ceramics, whose proprietor is one Mr. Paresh Panchal,
who is mentioned as Pareshbhai on the Purchase Order dated April 03, 2010.
From a general search today as well, it is seen that the same person is mentioned
on the website: https://www.hindustanyellowpages.in/Vadodara/Relaince-Steel-
Corporation-OR-Ambica-Ceramics/Wadi/AboutUs (Screenshot attached as Annexure III
(1). The address mentioned is also the same as per the quotation received.
Neither, has the then existing statutory auditor, nor the previous statutory auditor,
who had worked closely with the Company and its Promoters have ever
mentioned about Ambica Ceramics as a related party / under the related party
transactions in the Schedule on Related Party Transactions in the Annual Report.
Noticee further submitted that beyond any level of due diligence to suspect that
Ambica Ceramics was a related party. There was just no reason to suspect that
there was any connection between Ambica Ceramics and the Promoter of the
Company
Page 85 of 91
95. From the submissions of Noticee 15, I find that it relied on certification by statutory
auditor with regard to aforesaid disclosures. I also take note of reliance placed
by Noticee 15 on SAT Order in the matter of Corporate Strategic Alliance Vs
SEBI passed on 29.03.2019 as per which, “……... The balance sheet has been
duly audited by the Statutory Auditors and accepted by the Income Tax
Authorities. It is not open to the AO to question the entries in the balance sheet.
The AO is not an expert to juggle the accounting figures and hold as to which
entry should come under "Fixed Assets" or under the "Revenue Expenditure".
The Merchant Banker has only disclosed what the balance sheet was showing
for which purpose the Merchant Banker cannot be found at fault……..”
96. Hence I fins that it cannot be held that Merchant Banker has violated the
provisions of Regulations 64(1) of ICDR Regulations and Regulation 13 read with
Clauses 1, 2, 3, 4, 6, 7 and 21 of the Code of Conduct for Merchant Bankers
97. I note from the records that liquidation proceedings have been initiated against
Noticee 1 and the Official Liquidator of the Company has taken charge of the
assets of the Company. The Official Liquidator has initiated the liquidation
process of the Company and as per available records the Official Liquidator has
already auctioned some of the assets of the Company. Thus, in the given
situation, it would not be appropriate to impose any penalty against the Noticee
1.
Issue No. II If yes, whether the failure on the part of the Noticees would
attract monetary penalty under Section 15HA and 15HB of
the SEBI Act and Section 23E of SCRA?
Issue No. III If yes, what would be the monetary penalty that can be
imposed upon the Noticees taking into consideration the
factors stipulated in Section 15J of the SEBI Act and Section
23J of SCRA read with Rule 5(2) of the Adjudication Rules?
Page 86 of 91
98. Since it is established that
a) Noticees 2 and 3 have violated section 12A (a), (b) and (c) of the SEBI
Act read with Regulations 3 (a), (b), (c), (d), 4(1), 4(2)(f), (k) and (r) of
PFUTP Regulations;
b) Noticees 4 to 14 have violated section 12A (a), (b) and (c) of the SEBI
Act read with Regulations 3 (b), (c), (d) and 4(1) of the PFUTP
Regulations Noticees 1 to 6 have violated the provisions of Regulations
30(2) and 30(3) of SAST Regulations 2011;
c) Noticees 2 and 3 have violated Regulations 57 (1) and 57 (2)(a) read
with Clause 2(XVI)(B)(2) of part A of Schedule VIII and Regulation
60(7)(a) of the ICDR Regulations by Noticee 1, 2 and 3 is established.
Therefore, the Noticees 2 to 14 are liable for monetary penalty under Section
15HA and Noticees 2 and 3 are liable for monetary penalty under Section 15HB
of SEBI Act.
SEBI Act:
Penalty for fraudulent and unfair trade practices.
15HA. If any person indulges in fraudulent and unfair trade practices relating to
securities, he shall be liable to a penalty of twenty-five crore rupees or three times
the amount of profits made out of such failure, whichever is higher.
Penalty for contravention where no separate penalty has been provided.

15HB. Whoever fails to comply with any provision of this Act, the rules or the
regulations made or directions issued by the Board thereunder for which no
separate penalty has been provided, shall be liable to a penalty which may
extend to one crore rupees.
Page 87 of 91
99. While determining the quantum of penalty under Section 15A(b) of SEBI Act, the
following factors stipulated in Section 15J of the SEBI Act have to be given due
regard:
Factors to be taken into account by the adjudicating officer
15J.While adjudging quantum of penalty under Section 15-I, the adjudicating
officer shall have due regard to the following factors, namely: -
a) the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a
result of the default;
(c) the repetitive nature of the default.
100. I note that the material on record has not brought out any disproportionate gain
made by the Noticees or loss caused to investors by the Noticees. I also note
that the IPO issue took place in the year 2010 and considerable time has elapsed
since the violations took place. I note that violation of the PFUTP Regulations is
established against Noticees 1 to 14 on account of misutilization of IPO proceeds,
however, there is no allegation of siphoning of funds by them.
101. I further note that vide Order dated April 29, 2022 in the same matter, Hon’ble
WTM of SEBI passed the following directions:
a) Noticees 2 to 14 are restrained from accessing the securities market by

issuing prospectus, offer document or advertisement soliciting money
from the public in any manner for a period of 5 years.
b) Noticees 2 to 14 are restrained and prohibited from buying, selling or
otherwisedealing in the securities market, directly or indirectly in any
manner whatsoever manner, for the period a period of 5 years.
c) Noticees 2 and 3 are restrained from holding post of Director, any
managerial position or associating themselves in any capacity with any
listed public company and any public company which intends to raise
Page 88 of 91
money from the public, or any intermediary registered with SEBI for a
period of 3 years.
102. In view of the above, taking into account the facts and circumstances of this
matter, I find that a penalty of Rs.8,00,000/- (Rupees Eight Lakh only) under
section 15HA of SEBI Act to be paid jointly and severally by Noticees 2 and 3 for
violation of section 12A (a), (b) and (c) of the SEBI Act read with Regulations 3
(a), (b), (c), (d), 4(1), 4(2)(f), (k) and (r) of PFUTP Regulations and Rs. 1,00,000/-
(Rupees One Lakh only) each on Noticees 4 to 14 under section 15HA of SEBI
Act for violation of section 12A (a), (b) and (c) of the SEBI Act read with
Regulations 3 (b), (c), (d) and 4(1) of the PFUTP Regulations and Rs. 2,00,000/-
(Rupees Two Lakh only) under section 15HB of SEBI Act to be paid jointly and
severally by Noticees 2 and 3 for violation of Regulations 57 (1) and 57 (2)(a)
read with Clause 2(XVI)(B)(2) of part A of Schedule VIII and Regulation 60(7)(a)
of the ICDR Regulations will be commensurate with the violations committed by
them.
ORDER
103. Having considered all the facts and circumstances of the case, the material
available on record, the factors mentioned in Section 15J of the SEBI Act and in
exercise of the powers conferred upon me under Section 15-I of the SEBI Act
read with Rule 5 of the SEBI Adjudication Rules, I hereby impose the following
penalty on the Noticees:
Sl. No. Name of the Noticee Penalty

1. Mahesh Maheshwari (Noticee 2) Rs. 8,00,000 (Rupees Eight Lakh
and Namrata Maheshwari only) under Section 15HA of the SEBI
(Noticee 3) Act for violation of section 12A (a), (b)
and (c) of the SEBI Act read with
Regulations 3 (a), (b), (c), (d), 4(1),
Page 89 of 91
4(2)(f), (k) and (r) of PFUTP
Regulations
(payable jointly and severally)
2. M/s Ambica Ceramics (Noticee Rs. 1,00,000 (Rupees One Lakh
4), M/s Orbit Corporation (Noticee only) each under Section 15HA of the
5), M/s Shukan Enterprise SEBI Act for violation of section 12A
(Noticee 6), M/s Karan Enterprise (a), (b) and (c) of the SEBI Act read
(Noticee 7), M/s Shreeji Machine with Regulations 3 (a), (b), (c), (d),
Tools (Noticee 8), M/s Shree 4(1) of PFUTP Regulations
Ganesh Engineering Corporation
(Noticee 9), M/s Krish Corporation
(Noticee 10), M/s Arasuri
Enterprise (Noticee 11), M/s Suraj
Trading Corporation (Noticee 12),
M/s Bhavi Trading Company
(Noticee 13) and M/s Chamunda
Enterprise (Noticee 14)
3. Mahesh Maheshwari (Noticee 2) Rs. 2,00,000 (Rupees Two Lakh
and Namrata Maheshwari only) under Section 15HB of the SEBI
(Noticee 3) Act for violation of Regulations 57 (1)
and 57 (2)(a) read with Clause
2(XVI)(B)(2) of part A of Schedule VIII
and Regulation 60(7)(a) of the ICDR
Regulations
(payable jointly and severally)
TOTAL PENALTY Rs. 21,00,000/- (Rupees Twenty
One Lakh only)
104. The Noticees shall remit / pay the said amount of penalty within 45 days of receipt
of this order either by way of Demand Draft in favour of “SEBI - Penalties
Remittable to Government of India”, payable at Mumbai, OR through online
Page 90 of 91
payment facility available on the SEBI website www.sebi.gov.in on the following
path, by clicking on the payment link
ENFORCEMENT  Orders  Orders of AO  PAY NOW
105. The Noticees shall forward said Demand Draft or the details / confirmation of
penalty so paid to the Enforcement Department – Division of Regulatory Action
– II of SEBI. The Noticees shall provide the following details while forwarding DD/
payment information:
a) Name and PAN of the entity (Noticee)

b) Name of the case / matter
c) Purpose of Payment – Payment of penalty under AO proceedings
d) Bank Name and Account Number
e) Transaction Number
106. Copy of this Adjudication Order is being sent to the Noticees and also to SEBI in
terms of Rule 6 of the Adjudication Rules.
DATE: June 30, 2022 MANINDER CHEEMA

PLACE: MUMBAI ADJUDICATING OFFICER
Page 91 of 91

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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,

In the matter of Aster Silicates Limited

Adjudication Order in the matter of Aster Silicates Limited

2. Adjudication proceedings have been initiated against,

Adjudication Order in the matter of Aster Silicates Limited

APPOINTMENT OF ADJUDICATING OFFICER

3. SEBI appointed Shri Santosh Shukla as Adjudicating Officer under Section15-I

SHOW CAUSE NOTICE, REPLY AND HEARING

4. Show Cause Notice No. EAD-2/AP/AKS/12503/1-14/2020 dated July 30, 2020

Adjudication Order in the matter of Aster Silicates Limited

6. Company presently known as Shri Aster Silicates Ltd. is a delisted company.

Object Amount (Rs. in lakhs)

Adjudication Order in the matter of Aster Silicates Limited

Sr. No. Object Amount (Rs. in lakhs)

Sr. No. Description Amount (Rs. in lakhs)

Adjudication Order in the matter of Aster Silicates Limited

i. Details of the object wise utilisation of the IPO proceeds.

16. Utilisation of IPO proceeds:

Sr.N Particulars upto After Total As per

Adjudication Order in the matter of Aster Silicates Limited

b) On perusal of the list of vendors/suppliers as provided by the Company, it

Sr. Amount (in Percent to total

14 Saffron Global Mkt.P.Ltd. 70,73,936 1.33%

15 Western Press Pvt.Ltd. 50,00,000 0.94%

Adjudication Order in the matter of Aster Silicates Limited

17. Neptune Enterprise (Neptune):

Adjudication Order in the matter of Aster Silicates Limited

1 Land Development and Civil Work - - -

c) From the Company bank statement highlighting the payments made to

Adjudication Order in the matter of Aster Silicates Limited

f) Additionally, certain invoices provided by the Company were sent to Neptune

Adjudication Order in the matter of Aster Silicates Limited

18. Chamunda Enterprise (Noticee 14):

Sr.No. Particulars Upto After Total

All figures in Rs.

1 Land Development and Civil Work - - -

Adjudication Order in the matter of Aster Silicates Limited

c) From the Company bank statement highlighting the payments made to

Adjudication Order in the matter of Aster Silicates Limited

e) During a statement recording of Noticee 2 dated February 08, 2018, he

g) The aforesaid reply by Noticee 4 in this regard was found to be contradictory

19. Orbit Corporation (Noticee 5):

Adjudication Order in the matter of Aster Silicates Limited

e) Since, the aforesaid reply of Noticee 5 was found to be vague and

Adjudication Order in the matter of Aster Silicates Limited

f) As Noticee 5 transferred an amount of Rs. 64,14,000 to its vendor Noticee

g) Noticee 2 on behalf of Noticee 4, submitted reply to the said summons vide

Adjudication Order in the matter of Aster Silicates Limited

20. Shukan Enterprise (Noticee 6):

Sr.No. Particulars Upto After Total

c) From the Company bank statement highlighting the payments made to

Adjudication Order in the matter of Aster Silicates Limited

d) Various summons were issued to Noticee 4 seeking justification for the

Adjudication Order in the matter of Aster Silicates Limited

21. Karan Enterprise (Noticee 7):

c) From the Company bank statement highlighting the payments made to

Adjudication Order in the matter of Aster Silicates Limited