Primary Market Intermediaries Division

M/s. Mehar Dairy Industries Limited (MDIL), formerly M/s. Thapar Milk Products Limited, came out with a public issue of 6,97,500 secured redeemable partly convertible debentures of Rs. 200/- each for cash at par aggregating Rs.1395 lacs which opened for subscription on March 15, 1994. 

The redemption of non-convertible portion of the debentures was due on May 23, 1997. However, MDIL convened and held a meeting of the debentureholders on September 22, 1997 and passed a resolution extending the date of redemption of non-convertible portion of the debentures upto May 22, 2000. Extension of date of redemption (roll-over) by MDIL was done without taking positive consent from the investors and without obtaining a fresh credit rating which was in violation of clauses ( i ) and ( j ) of the Main guidelines given in Section F of the Board’s Disclosure and Investor Protection (DIP) Guidelines dated June 11, 1992. Further, MDIL violated clause (i) of Clarification III dated August 13, 1992 of the Board’s Disclosure and Investor Protection guidelines by not submitting option letter for roll-over to the Board for vetting. 

Clause (e) of the Main Guidelines given in Section N of the Board’s DIP Guidelines was also violated by MDIL since it failed to :

1. Create security within six months from the date of issuance of the debentures.

2. To make payment of 2% penal interest after having failed to create security within 12 months.

3. Create security within 18 months, having failed to call a meeting of the debentureholders within 21 days to explain the reasons for non-creation of security and to indicate the date by which the security was to be created. 

Also, MDIL violated clause (d) of the Main guidelines given in Section F of the Board’s DIP Guidelines by failing to execute the trust deed within 6 months of the closure of the issue.
 
It is considered desirable by the Board that suitable directions under section 11B of the SEBI Act be issued for the blatant violations of SEBI’s guidelines mentioned above to prevent such practices in future which are detrimental to the interest of investors and if not curbed by way of issuance of appropriate directions, may send wrong signals in the market. Opportunities for personal hearing were offered to the company before passing of this order which were not availed by the company. 

In exercise of the powers conferred upon the Board by sub section (3) of section 4 read with Section 11B of the SEBI Act, the Board has directed vide order dated May 19, 1999 that M/s. Mehar Dairy Industries Limited, formerly M/s. Thapar Milk Products Limited and its promoters, group companies and any other companies wherein any officer in default of the said company in whatsoever capacity is associated, be debarred from accessing the capital market for a period of 5 years.