For full copy of order against M.P.MEHROTRA, click here.

For full copy of order against SOMESH MEHROTRA, click here.

PRESS RELEASE - SEBI
September 30, 2002
PR No. 198/2002

PRIMARY MARKET DEPARTMENT

In the matter of order passed against M/s VLS Finance Ltd. u/s 4(3) of the SEBI Act, 1992, read with Sections 11 and 11B of the said Act. 

M/s. VLS Finance Ltd. (hereinafter referred to as the "company") is a public limited company, listed on the stock exchanges at Mumbai, Delhi, Madras, Ahmedabad, Calcutta and the Uttar Pradesh Stock Exchange at Kanpur 

The Company vide the prospectus dated November 14, 1994, offered by way of a public issue, 36,66,600 equity shares of Rs. 10/- each at a premium of Rs. 390/- per share aggregating to Rs. 146,66,40,000/ which opened for subscription on December 15, 1994. 

The prospectus disclosed that the promoters had been issued 10 lakh optionally convertible non-transferrable warrants (OCNT), each convertible into 10 equity shares at their option which shall be exercised not earlier than 12 months and not later than 60 months from the date of allotment of the warrants. The promoters had given an undertaking to the Company that they shall opt for conversion at Rs. 400/- per share. 

DSE vide their letter dated November 20, 1998 informed SEBI that the promoters of the company did not opt for conversion of the OCNTW in 96-97 and 97-98 and in 1998, the company at their meeting held on May 07, 1998 allotted 1 lac equity shares of Rs 10/- each against 1 lac warrants. The DSE vide its letter dated 20.11.98 stated that it was the contention of the company that as these warrants are optionally convertible, the promoters had the right to opt for conversion of these warrants into equity shares into any number of equity shares between 0 to 10. Accordingly, the company had opted for conversion of each warrant into only one equity share instead of 10 equity shares. The DSE submitted that the stand adopted by the company was at variance with the terms of the prospectus, according to which the conversion ratio was 10 equity shares of Rs. 40 each for each OCNT. It further stated that promoters now opting for one share per warrant is contrary to statements made in prospectus both in letter and spirit. 

The above has been held to be in violation of the terms of the prospectus. The company/directors/promoters were advised to make their submissions in this regard on several occasions. They were also granted a personal hearing with Chairman, SEBI on July 12, 2002. 

Pursuant to the above, SEBI vide order dated September 20, 2002, directed that Mr. M.P. Mehrotra, promoter of the company and Mr Somesh Mehrotra, director of the company, honour their committement relating to the conversion of warrants as undertaken or represented by them in the prospectus dated November 14,1994 within a period of 30 days from the date of this order, failing which Mr. M.P. Mehrotra, Mr Somesh Mehrotra and the other companies, which they have promoted or in which they are holding or controlling a substantial interest, shall hereby be restrained, from accessing the capital market, directly or indirectly for a period of 5 years.