June 13, 2013
PR No. 057/2013

Order in the matter of dealing in the shares of Zylog Systems Ltd. (ZSL)

Shri Rajeev Kumar Agarwal, Whole Time Member, SEBI, passed an ad interim ex -parte order dated June 13, 2013 prohibiting the following persons from buying, selling or dealing in securities in any manner whatsoever, till further directions in the matter:

Serial No. Name Designation
1 Sthithi Insurance Services Private Limited Promoter
2 Sudarshan Venkatraman Promoter, Chairman and Chief Executive Officer of ZSL
3 Ramanujam Sesharathnam, Promoter, Managing Director and Chief Operating Officer of ZSL
4 Parthasarathy Srikanth Whole Time Director of ZSL
5 Srikanth Sripriya Wife of Parthasarathy Srikanth
6 S.P. Srihari Chief Financial Officer of ZSL

SEBI had, suo moto, carried out an examination in the scrip of ZSL in view of surveillance alerts regarding variation in price.

During examination of the said scrip, it was prima-facie observed that;

  1. ZSL provided misleading information to the stock exchanges wherein it stated that it promoters have been buying and increasing their stake while actually the promoters were net sellers and their shareholding declined due to invocation of pledge by financiers. Similar misleading clarification was also given by the promoter of ZSL, Mr. Sudarshan, to the media.
  2. ZSL disclosed incorrect and false information in the quarterly shareholding pattern for the four quarters in the year 2012 to the stock exchanges by overstating the holding of the promoters and understating the quantum of shares pledged by the promoters.
  3. Various instances of non-adherences to accounting standards and listing agreement in the annual report by ZSL have also been observed.
  4. There have been repeated instances of false , incorrect and misleading disclosures and concealment of material information by the ZSL and its promoters/directorsto the stock exchanges with respect to their on-market and off- market transactions in the scrip and their pledge related transactions.
  5. ZSL has provided funds on several occasions to the promoter entity Sthithi and one Srikanth Sripriya for dealing in shares of ZSL.
  6. The promoters of ZSL along with Srikanth Sripriya, actingin concert have acquired shares in ZSL beyond the threshold stipulated under regulation 3(2) of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations without complying with the obligation of making open offer.

The above examination, prima facie, shows that the conduct of the promoters/directors and ZSL is, prima facie, mala fide and that the above activities are in violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003, SEBI (Prohibition of Insider Trading) Regulations, 1992, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the Companies Act, 1956 and the Listing Agreement.


June 13, 2013

For full copy of order against PARTHASARATHY SRIKANTH, click here.

For full copy of order against RAMANUJAM SHESHARATHNAM, click here.

For full copy of order against S.P.SRIHARI, click here.

For full copy of order against SRIKANTH SRIPRIYA, click here.

For full copy of order against STHITHI INSURANCE SERVICES PVT.LTD., click here.

For full copy of order against SUDARSHAN VENKATRAMAN, click here.