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In the matter of Rasoya Protein Ltd. Page 1 of 19

WTM/RKA/ISD/ 113 / 2014

SECURITIES AND EXCHANGE BOARD OF INDIA

AD -INTERIM EX-PARTE ORDER

UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA ACT, 1992 IN THE MATTER OF RASOYA PROTEIN LTD.

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") received a reference
from the Office of Commissioner of Income Tax Nagpur regarding irregularities in the GDRs of
Rasoya Protein Ltd. (hereinafter referred to as "RPL"), a company listed on Bombay Stock
Exchange Limited ("BSE) and National Stock Exchange of India Limited("NSE"). Accordingly,
SEBI conducted preliminary examination with respect to the GDR issue of RPL. The facts and
circumstances observed during the preliminary examination are given in following paragraphs.

2. On August 13, 2010 RPL had informed BSE that its Board of Directors at its meeting held on
August 12, 2010, had approved the raising of funds up to US$ 50 Million by way of issue of
shares through Foreign Currency Convertible Bonds (FCCB)/Global Depository Receipts
(GDRs)/American Depository Receipts (ADRs)/ Secured Premium Notes. As disclosed to BSE
on August 04, 2010 and declared in Board Resolution dated August 12, 2010, such fund raising
was for 'expansion and diversification activities 'of RPL.

3. In the Offer Document RPL disclosed following object/purpose of its GDR issuance :
a) further expansion.
b) diversification projects of the company as well as for the working capital of the existing and
future expansion/diversification projects.
c) foreign acquisition and the establishment of overseas subsidiary.

4. On March 01, 2011, RPL made disclosure to the BSE that its Board of Directors at its meeting
held on March 01, 2011, inter alia, had transacted the business of closure of GDR issue and
allotment of 2,08,91,420 equity shares representing 10,44,571 GDRs. The details of said GDR
issue of RPL is described in the following table:

GDR Completion Date March 01, 2011
No of GDRs Issued 10,44,571
No. of Underlying shares 2,08,91,420
GDR to underlying Shares ratio 1:20
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In the matter of Rasoya Protein Ltd. Page 2 of 19

Capital Raised via GDRs USD 3,19,95,209.73/ ` 145 crore*
Market Cap at the time of GDR Issuance ` 264 crore
Company Equity prior to GDR Issue 2,02,72,970
Ratio of equity issued through GDRs to prior to GDR
issue equity
1.03
GDR Issue Price
USD 30.63 per GDR / ` 69.03 per
share*
Share Price on Issue Date ` 91.85 / USD 2.03*
Lead Manager Pan Asia Advisors Ltd.( Pan Asia).
Foreign Bank account for GDR Subscription Proceeds
Account number 580036 with
European American Investment Bank
AG Austria ( Euram Bank)
Overseas Depository Bank The Bank of New York Melon
Current Market Cap /Share Price ` 2,947 crore / ` 17.40
* USD-INR rate of 45.12 on March 01, 2011

5. Mr. Prashant Duchakke, Executive Director and Mr. Anil Lonkar , Managing Director of RPL
were the authorized signatories of the RPL's bank account number 580036 with Euram Bank.

6. Subsequent to the GDR issuance , the shares of RPL were split from ` 10 to ` 5 on 21
st
June 2011
and then from ` 5 to ` 1 on 21
st
March 2013. On the same date i.e. 21
st
March 2013, RPL had
made bonus issue of 2 shares for its each share ( and consequently a bonus issue of 2 GDRs for
each GDR).The outstanding GDRs are presently represented by 45,67,14,540 underlying shares.
As seen from the shareholding pattern of RPL filed with BSE, for the quarter ended June 30,
2014 , 26.73% of the capital of RPL is lying as outstanding GDRs with entities based outside
India. The market value of outstanding GDRs is ` 810.67 crore based on the closing market price
of the shares of RPL on September 08, 2014 on BSE.

7. RPL has claimed before SEBI and BSE that the following entities were the original subscribers of
its aforesaid GDRs:
a) Beluga Corporation
b) Comet Group Holding Ltd.
c) Coral International Markets Corporation
d) ALTG Holdings Ltd.
e) Calculus Capital Ltd.
f) Kingsly Holdings Ltd.
g) Albarma Ltd.
h) Jasper Holdings Company Ltd.

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In the matter of Rasoya Protein Ltd. Page 3 of 19

8. It was, however, observed that contrary to the submissions of RPL, the entire 10,44,571 GDRs
issued by RPL were subscribed by only one subscriber i.e. a Dubai based entity viz, Vintage FZE
Ltd (now known as the Alta Vista International FZE and hereinafter referred to as "Vintage). As
per the Know Your Customer documents available with Euram Bank for the bank account of
Vintage, Mr.Arun Panchariya is the beneficial owner of the account of Vintage. Mr.Arun
Panchariya and Mr. Mukesh Babulal Chauradiya, Managing Director of Vintage were the
authorized signatories for the account number 540012 of Vintage with Euram Bank.

9. The subscription of the entire GDRs of RPL by Vintage was financed by way of a loan of USD
31,995,209.73 granted by Euram Bank to Vintage in terms of a Loan Agreement bearing reference
no. K140211-005 between Vintage and Euram Bank. Shri Mukesh Chauradiya, Managing Director
of Vintage had signed this Loan Agreement on its behalf. As per clause 6 of this Loan Agreement,
the aforesaid loan was secured by the pledge of the RPL's Account no 580036 with Euram Bank.
The said clause of the Loan Agreement, inter-alia, stated the following:

"6. Security
6.1 In Order to secure all and any of the Bank's claims and entitlements against the Borrower, arising now or in the
future out of or in connection with the Loan or any other Obligation or liability of the Borrower to the Bank,
including without limitation other loans granted in the future, it is hereby irrevocably agreed that the following
securities and any other securities which may be required by the Bank from time to time shall be given to the Bank
as provided herein or in any other form or manner as may be demanded by the Bank:

Pledge of the account no 580036 held with the Bank as set out in a separate pledge agreement which is attached
hereto as Annex 2 and which forms an integral part of this Loan Agreement.

10. On the same day, i.e. on February 15, 2011, when the aforesaid Loan Agreement was executed
between Vintage and Euram Bank, a simultaneous Pledge Agreement was executed between
Euram Bank and RPL. The Pledge Agreement was part of the Loan Agreement and clearly
acknowledged RPL's commitment/obligation to secure the loan of USD 31,995,209.73 granted by
Euram Bank to Vintage for the subscription of GDRs of RPL.

11. The aforesaid loan to Vintage was contingent on RPL charging the GDR subscription proceeds of
the same amount by pledging the RPL's bank account with Euram Bank that contained the GDR
subscription proceeds. It was observed that, on February 28, 2011, USD 31,995,209.73 were
transferred from the loan account of Vintage (account no: 540012 maintained with Euram Bank)
to GDR subscription account of RPL (account no: 580036 maintained with Euram Bank). In
terms of the Loan Agreement and the Pledge Agreement, the said account no: 580036 of RPL
maintained with Euram Bank was simultaneously pledged with Euram Bank as security for the
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In the matter of Rasoya Protein Ltd. Page 5 of 19

14. The above declaration/disclosure by RPL in its Annual Report is apparently false and misleading
since on February 15,2011 RPL had pledged the entire GDR subscription proceeds of USD
31,995,209.73 lying in its account no: 580036 with Euram Bank, and the GDR subscription
proceeds were not available for use towards stated objects of 'future expansion, mordernisation and
acquisition'.

15. By the resolution dated October 04, 2010 the Board of Directors of RPL had authorised the
Euram Bank to use the subscription money in respect of the GDRs as security in connection with
'loans, if any'. This resolution was, however, not disclosed to BSE. Thus, while the Board of
Directors of RPL had decided to use the GDR subscription proceeds as security in connection
with any loan, RPL and persons in charge of its affairs chose not to disclose this information to
BSE as required under clause 22 and 36 of the Listing Agreement. Rather, they chose to make false
and misleading disclosures/representations in the Annual Report of RPL for the year ending
March 31, 2011.

16. In reality, after receipt of the GDR subscription proceeds, RPL was not capable of utilising the
same until the loan was repaid by Vintage. This material information was actively and deliberately
concealed from the investors in shares of RPL and the stock exchange and RPL made aforesaid
false and misleading disclosures to BSE and general investors in its shares. In fact, in the event of
default of Vintage in repayment of loan, the entire GDR subscription proceeds amount lying in the
account of RPL with Euram Bank were to be realized by Euram Bank. Thus, GDRs had been
issued by RPL without any cost to the subscriber and without any consideration received by RPL
at the time of subscription. However, those GDRs were still available to Vintage for further sale
and conversion into underlying shares of RPL. Further, to its investors and the stock exchange,
RPL portrayed a false and misleading picture of availability of the proceeds of its GDR issue at its
disposal for utilisation towards further expansion and diversification of its project. In view of the
above it has been inferred that the GDRs were not created by way of a true capital raising exercise.
RPL, by securing the loan of Vintage by way of pledge of the GDR subscription proceeds, gave
financial assistance for subscription of its entire GDRs and in turn to its 2,08,91,420 underlying
equity shares.

17. It was further observed that from April 27, 2011 till September 29, 2012, Vintage had repaid total
USD 23,960,000 to Euram Bank. Vide its letter dated September 29, 2012, RPL authorised Euram
Bank to appropriate USD 8,035,209.73 from the pledged account of RPL (A/c No: 580036)
towards the outstanding loan of USD 8,035,209.73 in the loan account of Vintage (A/c No:
540012). This act of RPL effectively resulted in financing of issuance of its own shares underlying
GDRs at least to the extent of USD 8,035,209.73.
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In the matter of Rasoya Protein Ltd. Page 6 of 19

18. It was noted that immediately after the GDR issue of RPL, there was spurt both in price and
volume on shares of RPL. The price volume data of the scrip of RPL at the relevant time are
described in the following table:
Date
Open
Price
High
Price
Low
Price
Close Price
Turnover (`) Volume Market Cap (`
crore)
28-Feb-2011 80 87.25 79 87.25 6,63,958 7,706 176.86
1-Mar-2011* 89.5 95.5 85.5 91.85 15,54,848 16,839 378.05
3-Mar-2011 91 96.35 90 94.65 33,57,450 36,085 389.58
4-Mar-2011 96 98.6 92.5 98.35 24,42,418 25,310 404.81
* Date of closure of GDR Issue

19. The month wise data of price and volume of the scrip of RPL during the period January 2011 to
May 2011 is given below:

Month Open High Low Close
Average Daily
Volume
Average Daily
Turnover (` crore)
Jan-11 78.1 81.96 65.2 68.6 7,746 5.67
Feb-11 69.9 87.25 60.85 87.25 8,455 5.92
Mar-11 89.45 105.85 85.55 95.55 19,857 19.34
Apr-11 98.7 165.05 94.8 160.25 84,997 117.15
May-11 161.9 180.95 147.05 148.1 63,310 103.08

20. The above tables show the impact of the issuance of GDRs on the share price of RPL. The price
of the share of RPL increased from ` 78.1 in the month of January, 2011 (two months prior to
GDR issuance) with average daily volume of 7,746 shares to ` 148.1 in the month of May 2011
(two months after GDR issuance) with average daily volume of 63,310 shares. Such increased price
and volume of the shares of RPL was apparently supported by the price sensitive information that
the GDRs were issued by RPL for the purpose of raising fund for expansion and diversification
activities of RPL. The disclosures made by RPL apparently had potential to induce investors to
deal in its shares listed on BSE.

21. It was noted that on April 05, 2011, a news article was published in a daily newspaper on the
positive sentiments prevailing in market about scrip of RPL due to successful completion of its
GDR issue. The said news article, inter-alia , reported the following:

"On Monday April 04, 2011,the stock hit the 5% upper circuit intra-day before ending 4.6% up at.102.3 on the
BSE. According to analysts tracking the company, Rasoya Proteins is looking to expand through organic and
inorganic routes. On the inorganic front, the company is also exploring the possibility to acquire additional units in
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In the matter of Rasoya Protein Ltd. Page 7 of 19

India or abroad. The acquisition will be partly funded from the money it raised through GDR recently. When
contacted, a senior company official said that expansion is on cards but nothing has been finalised as yet. "

22. With regard to the above news article, RPL had informed BSE on April 05, 2011, the following:

With reference to the news item appearing in a leading financial daily titled "Growth Incentive Sends Rasoya
Proteins Soaring 4.6%", Rasoya Proteins Ltd has clarified to BSE that the Company in the Offering Circular for
the GDR Issue had mentioned that the proceeds from the GDR issues would be used, inter-alia, for further
expansion and diversification project.

23. Thus, in all its announcements, declarations and statements to BSE and investors RPL had
portrayed that proceeds from the GDR issue would be used for further expansion and
diversification of project whereas entire GDR subscription proceeds were already pledged with
Euram Bank as security for the loan granted by it to Vintage for subscription money. In fact, RPL
had repaid at least USD 8,035,209.73 out of the proceeds of GDRs to Euram Bank towards the
loan of Vintage and the said amount was not available to it at all for the purpose of utilisation
towards disclosed objects/purpose. This material information was also concealed by RPL from
shareholders/ investors and stock exchange as it was not disclosed in the Annual Report of RPL
for the year ending March 31, 2013. Thus, to its investors and the stock exchange, RPL portrayed a
false and misleading picture of availability of the proceeds of its GDR issue at its disposal for
utilisation towards further expansion and diversification of its project.

24. In addition to the above false and misleading disclosures and active concealments, RPL
represented to SEBI during preliminary examination, that over a period of time, entire GDR
subscription proceeds were transferred to its Sharjah based wholly owned subsidiary namely, RPL
International Trade FZE (hereinafter referred to as "RITF") as a loan in normal course of
business. However, RPL chose not to furnish following information in this regard when asked
during preliminary examination:

a) Bank Account Statements of RITF required for examining utilisation of GDR subscription
proceeds by RITF.
b) Details of nature of business, Books of Account and Annual Report of RITF.
c) Bank account statement of RPL where GDR Proceeds were deposited.

25. The aforesaid representation of RPL is apparently false and it is a misrepresentation of facts since
in reality USD 8,035,209.73 out of GDR subscription proceeds had already been realized by
Euram Bank by invoking the pledge created by RPL.

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In the matter of Rasoya Protein Ltd. Page 8 of 19

26. Further, in response to information requisitioned by SEBI during preliminary examination RPL
vide its reply dated August 23, 2013, had represented that :-
(a) No Loan Agreement had been signed among RPL or its promoters/directors with any
entity with respect to the aforesaid GDR issuance.
(b) RPL or any of its directors/promoters/officers had not executed any agreement with
Euram Bank with regard to its GDR issue.
(c) None of its directors/promoters/officers did not have any dealings with Vintage or Mr.
Arun Panchariya.
(d) None of its directors/promoters/employees have any connection/ linkages with any of the
GDR holders/subscribers.

27. All the above statements/representations by RPL are apparently false as the Pledge Agreement to
secure the loan of Vintage was signed on behalf of RPL by its Executive Director Mr. Prashant
Duchakke and the said Pledge Agreement is an integral part of the Loan Agreement signed
between Vintage and Euram Bank. Further, the realisation of USD 8,035,209.73 out of GDR
subscription proceeds by Euram Bank towards aforesaid loan of Vintage was duly authorised by
RPL vide its letter dated September 29, 2012.

28. As on March 01, 2011, Vintage was allotted 10,44,571 GDRs of RPL Vintage. During the period
March 17, 2011 to May 16, 2011, Vintage sold 1,54,750 GDRs for USD 79,92,501.19 to a sub-
account namely, India Focus Cardinal Fund (hereinafter referred to as "IFCF") entirely owned by
Mr. Arun Panchariya. IFCF, thereafter, during the period April 08, 2011 to September 12, 2011,
converted 1,51,750 GDRs into 30,35,000 shares of RPL and sold them in the Indian market for `
37,10,26,063.60.

29. At relevant time, Mr. Arun Panchariya was Managing director and 100% shareholder of Pan Asia
(now known as the Global Finance and Capital) the Lead Manager to the GDR issue of RPL. Mr.
Arun Panchariya was also beneficial owner and authorised signatory of Vintage which is owned
and controlled by Alkarni Holdings Ltd. Mr. Arun Panchariya and his family members held 100%
shares of Alkarni Holding Ltd. IFCF is also entirely owned by Mr. Arun Panchariya. Thus, Mr.
Arun Panchariya using the entities owned/controlled by him was actively involved in the aforesaid
prima facie fraudulent device/scheme in connection with dealing in securities. Sale of shares
acquired by converting the fraudulently issued GDRs/underlying shares tantamount to
fraudulently dealing in securities by Mr. Arun Panchariya .

30. Therefore, RPL and its directors namely, Mr. Prashant Duchakke, Mr. Anil Lonkar, Mr. Sameer
Damle and Mr. Ajay K. Singh actively devised and employed the above observed prima facie
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In the matter of Rasoya Protein Ltd. Page 9 of 19

fraudulent device/scheme in connection with dealing in securities in connivance/collusion with
and active involvement of Mr. Arun Panchariya, Vintage, Mr. Mukesh Chauradia , Pan Asia and
IFCF. Further, Mr. Arun Panchariya, Mr. Mukesh Chauradia, Vintage, Pan Asia and IFCF also
indulged in employing fraudulent plan/arrangement with regard to the subscription of GDRs and
thereafter monetizing those GDRs through the sale of underlying shares of the GDRs and have
acted in fraudulent and deceptive manner.

31. From the above facts and circumstances revealed during preliminary examination, I note that Pan
Asia, as the Lead Manager to the GDR issue of RPL. had substantial role in the process of
issuance of GDRs with regard to the following:-
(a) Preparing Offer Document.
(b) Conducting due diligence of the company.
(c) Introducing the subscribers to the issuer.
(d) Signing Escrow Agreement with Escrow Agent and the company.
(e) Receiving confirmation from Escrow Agent that investment from subscriber has been
received.
32. The facts and circumstances such as -
(a) Vintage (whose beneficial owner was Mr. Arun Panchariya) being the only subscriber,
(b) Mr. Arun Panchariya having control over Vintage, Pan Asia and IFCF;
(c) Pan Asia having substantial and crucial role in identifying the GDR subscriber and in the
whole process of GDR issue of RPL;
(d) Board of Directors of RPL passing a resolution to use the GDR subscription proceeds for
repayment of loan but actively concealing the same and misrepresenting that the proceeds are
available for utilisation towards disclosed objects;
(e) execution of the Pledge Agreement by RPL (through its Executive Director Mr. Prashant
Duchakke) to secure the loan of Vintage as integral part of Loan Agreement between Vintage
and Euram Bank;
(f) transfer of GDRs to IFCF, an entity owned and controlled by Mr. Arun Panchariya and
exchange thereof into shares and subsequent sale of shares by IFCF;
(g) repayment of the purported loan of Vintage by RPL as stated above;

indicate active role of RPL and its Directors namely, Mr. Prashant Duchakke, Mr. Anil Lonkar,
Mr. Sameer Damle and Mr. Ajay K.Singh, Mr. Arun Panchariya the entities controlled by/
connected to him i.e. Vintage, Mr. Mukesh Babulal Chauradiya. Pan Asia and IFCF, in the
acts/omissions observed during preliminary examination.

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In the matter of Rasoya Protein Ltd. Page 10 of 19

33. I note that the cumulative effect of Loan Agreement and Pledge Agreement was that subscription
of entire GDR by Vintage was secured by the GDR subscription proceeds (USD 31,995,209.73)
itself. In effect, the GDRs were issued without receipt of any subscription amount from Vintage at
the time of their allotment to it. It is worth mentioning here that for issuing GDRs the RPL had
also issued 2,08,91,420 underlying equity shares in Indian securities market. The GDR holder
being the beneficiary of the underlying equity shares is entitled to all corporate benefits attached
with those shares. The GDRs so issued are freely exchangeable for those equity shares which are
listed on the Indian stock exchange. In this case, while acquiring the GDRs from RPL, Vintage did
not pay any consideration as the subscription amount claimed to have been paid by it was pledged
by RPL to secure the loan of Vintage from Euram Bank for subscription of its own GDRs. Still, it
was entitled to all corporate benefits for the underlying shares and could freely exchange its GDRs
into equity shares of RPL without paying any consideration for the same.

34. It is noted that, later, from April 27, 2011 till September 28, 2012, total USD 23,960,000 were paid
to Euram Bank from the account of Vintage and immediately thereafter on September 29,2012 the
remaining loan of USD 8,035,209.73 was paid by RPL on account of appropriation of the said
amount from proceeds of GDRs lying in the account of RPL (A/c No: 580036). At this stage, the
source of funds for payment of the purported loan amount of USD 23,960,000 from the account
of Vintage is not ascertainable. However, the facts and circumstances brought out in the
preliminary examination indicate something amiss in this regard and as such it needs thorough
investigation. Be what it may, GDRs for the value of at least USD 8,035,209.73 had been issued by
RPL without consideration as it had itself paid the subscription amount by using the above
described modus operandi and the equity shares underling the equivalent number of GDRs were also
issued without consideration.

35. I, therefore, prima facie find that RPL and persons in charge of its affairs contravened the
provisions section 77(2) of the Companies Act, 1956 ( as applicable at the relevant time) which
prohibits any public company from giving, directly or indirectly, loan, guarantee, security, etc. for
the purpose of or in connection with purchase or subscription of its shares by any person. The
aforesaid acts of RPL and persons in charge of its affairs acting in collusion/ connivance with Mr.
Arun Panchariya and entities controlled by/ connected to him are also prima facie fraudulent ,
unfair and manipulative in connection with issue and dealing in shares of RPL in Indian securities
market and covered within the definition of ' fraud" and 'fraudulent' under regulation 2(1)(c) of the
SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)
Regulations, 2003 ( PFUTP Regulations) which reads as follows:-


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In the matter of Rasoya Protein Ltd. Page 11 of 19

Definition of fraud Regulation 2(1)(c).
(c)fraud includes any act, expression, omission or concealment committed whether in a deceitful
manner or not by a person or by any other person with his connivance or by his agent while dealing
in securities in order to induce another person or his agent to deal in securities, whether or not there
is any wrongful gain or avoidance of any loss, and shall also include
(1) a knowing misrepresentation of the truth or concealment of material fact in order that
another person may act to his detriment;
(2) a suggestion as to a fact which is not true by one who does not believe it to be true;
(3) an active concealment of a fact by a person having knowledge or belief of the fact;
(4) a promise made without any intention of performing it;
(5) a representation made in a reckless and careless manner whether it be true or false;
(6) any such act or omission as any other law specifically declares to be fraudulent;
(7) deceptive behaviour by a person depriving another of informed consent or full participation;
(8) a false statement made without reasonable ground for believing it to be true;
(9) the act of an issuer of securities giving out misinformation that affects the market price of
the security, resulting in investors being effectively misled even though they did not rely on the
statement itself or anything derived from it other than the market price.
And fraudulent shall be construed accordingly;.

36. Thus, the above acts and omissions are also in contravention of regulation 3 and 4 of the PFUTP
Regulations as reproduced in later paragraphs. In this regard, I note that in the matter of Gammon
India Limited vs. SEBI (Order dated June 20, 2008), the Hon'ble Securities Appellate Tribunal has also
held that providing funds to entities by the company for the purpose of buying its own shares
amounts to violation of the PFUTP Regulations.

37. In the above facts and circumstances, I am of the prima facie view that, in this case, RPL and
persons in charge of its affairs, created a facade of GDR issuance in connivance/collusion with
Mr. Arun Panchariya, Pan Asia, Vintage and Mr. Mukesh Chauradiya wherein GDRs and
underlying equity shares were created without receipt of consideration by RPL. Such facade
apparently enabled them to induce and allure the Indian investors to buy additional equity created
in the form of underlying equity shares. In effect, RPL substantially used the facade of GDR issue
to unload additional equity in the Indian market. For example, during the period March 17, 2011
to May 16, 2011, out of the fraudulently acquired GDRs, Vintage (whose beneficiary is Mr. Arun
Panchariya) transferred 1,54,750 GDRs to another Mr. Arun Panchariya controlled entity , viz;
IFCF for conversion into underlying shares and subsequent sale in Indian market. Out of said
1,54,750 GDRs received from Vintage, IFCF, during the period April 08, 2011 to September 12,
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In the matter of Rasoya Protein Ltd. Page 12 of 19

2011, exchanged 1,51,750 GDRs into 30,35,000 shares of RPL and sold them in the Indian
market for ` 37,10,26,063.60. Thus, such equity shares were off loaded to Indian investors under
the artifice of a GDR issuance. The outstanding GDRs worth `810.67 crore are still available for
conversion into underlying equity shares and sale to the gullible investors in Indian securities
market. Thus, they indulged in employing fraudulent plan/arrangement, device, artifice and
contrivance with regard to the subscription of GDRs and creation of underlying shares using the
facade of GDR issue, monetizing those GDRs through the sale of underlying shares of the GDRs
and inducing and alluring Indian investors to deal in shares of RPL.

38. I further note that RPL made several false and misleading disclosures and also made
misrepresentation of facts to the stock exchange and investors in its shares. It portrayed that GDR
subscription proceeds were available with it for utilisation for disclosed objects of GDR issue
whereas it had already pledged the said proceeds with Euram Bank to secure the repayment of
purported loan of Vintage for subscription of GDRs. It had actively concealed material
information with regard to pledge of entire GDR subscription amount. Such suggestion of false
facts, suppression of material facts, misrepresentations and active concealments observed during
preliminary examination are inter alia as follows:

a) Entire GDR subscription proceeds of USD 31,995,209.73 was pledged by RPL by
executing the Pledge Agreement on February 15,2011 even before receiving the GDR
subscription amount from the account of Vintage. Thus, in the event of non repayment of
loan by Vintage, RPL was not be in a position to use the GDR subscription proceeds
received on March 01, 2011. However, RPL made false and misleading disclosures in its
Offer Document, Annual Report and announcements, declarations and disclosures to BSE
and SEBI repeatedly portraying and influencing Indian investors to believe that it had
entire GDR subscription proceeds of USD 31,995,209.73 lying in the overseas account,
which it could utilise for objects disclosed in the Offer Document.

b) On October 04, 2010 the Board of Directors of RPL had decided to open a bank account
with Euram Bank for the purpose of receiving subscription money in respect of the GDR
issue of RPL. By this resolution, the Euram Bank was authorised to use the subscription
money in respect of the GDRs as security in connection with 'loans, if any'. The said
resolution also authorised Shri Anil Lonkar, Managing Director or Shri Prashant
Duchakke, Executive Director of RPL to sign, execute, any application agreement,
document, etc. They were also 'severally' authorised to draw cheques, etc. and to give
necessary instructions to Euram Bank. The resolution was signed by the Executive
Directors of RPL viz. Mr. Sameer Damle and Shri Ajay Singh. Thus, it can be inferred that
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In the matter of Rasoya Protein Ltd. Page 13 of 19

the RPL and the persons in charge of its affairs had a pre-meditated plan to provide
financial assistance by means of pledge of entire GDR subscription proceeds for the
purpose of ensuring the issuance and subscription of its GDRs and in turn the underlying
equity shares without receiving any consideration at the time of GDR issue.

c) While above false / misleading announcements, declarations and disclosures had repeatedly
been made by RPL since August 2010, the decision taken by its Board of Directors in the
meeting held on October 04,2010 to use the proceeds of GDR for repayment of 'any loan'
as against the disclosed object/purpose of GDR issue was not disclosed to BSE at all. It is
curious note that this plan/arrangement decided by Board of Directors of RPL on October
04,2010 was even concealed in the Annual Report of RPL for the year ending March
31,2011. This act/omission apart from being in contravention of provisions of clauses 22
and 36 of the Listing Agreement between RPL and BSE was also prima facie a device and
artifice to actively and deliberately conceal the true and material fact and suggest false and
misleading facts in connection with dealing in shares of RPL.

d) Even subsequent purported repayment of loan of USD 23,960,000 to Euram Bank by
Vintage and appropriation of USD 8,035,209.73 from GDR subscription proceeds by
Euram Bank as authorised by the Board of Directors of RPL towards the remaining loan
of Vintage in clandestine manner was also not disclosed to the stock exchange at all. In
fact, said amount was not available to RPL at all for the purpose of utilisation towards
disclosed objects/purpose. However, it concealed this material information from its
shareholders/ investors and stock exchange by not disclosing the same as per Listing
Agreement and concealing the same from its Annual Report for the year ending March 31,
2013.

e) During the preliminary examination, RPL made misrepresentation that over a period of
time, entire GDR subscription proceeds were transferred to RITF as a loan in normal
course of business whereas USD 8,035,209.73 out of GDR subscription proceeds had
already been appropriated by Euram Bank by invoking the pledge created by RPL.

39. In my view, the deliberate false/misleading statements, misrepresentations of the material facts
and active suppression and concealment of material facts as prima facie found in this case amount
to 'suppressio veri and suggestio falsi' which a facet of 'fraud' as defined in regulation 2(1)(c) of the
PFUTP Regulations. In the facts and circumstances of the case as observed in the preliminary
examination, I note that the information and perception of the genuine investors in shares of RPL
was totally different from the actual position about GDR subscription proceeds. It is trite to say
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In the matter of Rasoya Protein Ltd. Page 14 of 19

that the information regarding a GDR issuance is a price sensitive information and GDR issue by
any listed company has direct bearing on the trading and prices of shares of the said company in
Indian stock exchanges. In this case, as brought out during preliminary examination, immediately
after the GDR issue of RPL, there was spurt both in price and traded volume in its shares on the
stock exchange. The disclosure of information with regard to GDR issue of RPL, thus, had
apparently influenced trading behavior of investors in shares of RPL and induced them to deal in
the shares of RPL.

40. The aforesaid false/ misleading disclosures, misrepresentations and active concealments apart
from themselves being fraudulent , deceptive , unfair and manipulative they corroborate the prima
facie finding that RPL and persons in charge of its affairs acting in collusion with Mr. Arun
Panchariya and entities controlled by /connected to him employed fraudulent, unfair and
manipulative device, artifice and contrivance in connection with dealing in securities of RPL and
induced Indian investors to deal in its securities. I further note that during preliminary
examination, RPL gave false information to SEBI with regard to the number of subscribers, did
not furnish information with regard to veracity of its claim about transfer of GDR subscription
proceeds to its subsidiary RITF and did not cooperate with inquiry. Furnishing false information
during inquiry was prima facie to mislead the inquiry and deliberate failure to furnish relevant
information leads to inference that RPL did not transfer entire GDR subscription proceeds to
RITF as claimed by it. Such acts, omission and conduct of RPL also indicate mala-fide intention of
RPL and persons in charge of its affairs.

41. In the facts and circumstances brought out during the preliminary examination and discussed
hereinabove, I am of the prima facie view that the plan/arrangement /device/artifice employed by
RPL, persons in charge of its affairs in connivance/collusion with Mr. Arun Panchariya and
entities controlled and/or connected by/with him and their acts/ omissions as discussed
hereinabove, apart from being in contravention of provisions of the then applicable section 77(2)
of Companies Act , 1956, are also in contravention of provisions of section 12A(a),(b) and(c) of
the SEBI Act, 1992 read with regulation 3 (b), 3(c), 3(d) and, regulation 4(2)(c),(e),(f),(k),(r) of the
PFUTP Regulations. These provisions are reproduced hereunder:

Section 12A of the SEBI Act-
"Prohibition of manipulative and deceptive devices, insider trading and substantial
acquisition of securities or control.
12A. No person shall directly or indirectly
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In the matter of Rasoya Protein Ltd. Page 15 of 19

(a) use or employ, in connection with issue, purchase or sale of any securities listed or proposed to be listed on a
recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of
this Act or the rules or the regulations made there under;
(b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are
listed or proposed to be listed on a recognised stock exchange;
(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any
person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised
stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;

Regulation 3 of the PFUTP Regulations -
3. Prohibition of certain dealings in securities
No person shall directly or indirectly
(b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be
listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in
contravention of the provisions of the Act or the rules or the regulations made there under;
(c)employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities
which are listed or proposed to be listed on a recognized stock exchange;
(d) engage in any act, practice, course of business which operates or would operate as fraud or deceit
upon any person in connection with any dealing in or issue of securities which are listed or proposed to
be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and
the regulations made there under.

4. Prohibition of manipulative, fraudulent and unfair trade practices
(1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an
unfair trade practice in securities.
(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves
fraud and may include all or any of the following, namely:-
............................................................................................
(c) advancing or agreeing to advance any money to any person thereby inducing any other person to
offer to buy any security in any issue only with the intention of securing the minimum subscription to
such issue;
..................................................................................
(e) any act or omission amounting to manipulation of the price of a security.
(f) publishing or causing to publish or reporting or causing to report by a person dealing in securities
any information which is not true or which he does not believe to be true prior to or in the course of
dealing in securities;
.................................................................................................
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In the matter of Rasoya Protein Ltd. Page 16 of 19

(k) an advertisement that is misleading or that contains information in a distorted manner and
which may influence the decision of the investors;
............................................................................................................
(r) planting false or misleading news which may induce sale or purchase of securities."

42. In the facts and circumstances this case, I prima facie find that :-

(a) RPL and persons in charge of its affairs, created a facade of GDR issuance in
connivance/collusion with Mr. Arun Panchariya, Pan Asia, Vintage and Mr. Mukesh
Chauradiya wherein GDRs and underlying equity shares were created without receipt of
consideration by RPL. Such facade apparently enabled them to, at least partly, induce and
allure the Indian investors to buy additional equity created in the form of underlying equity
shares. Thus, they indulged in employing fraudulent plan/arrangement, device, artifice and
contrivance with regard to the subscription of GDRs and creation of underlying shares
using the facade of GDR issue ,monetizing those GDRs through the sale of underlying
shares of the GDRs and inducing and alluring Indian investors to deal in shares of RPL.
( as discussed above particularly in Para 37).

(b) RPL and persons in charge of its affairs made false/ misleading disclosures,
misrepresentations and active concealments, which apart from themselves being
fraudulent, deceptive , unfair and manipulative corroborate the aforesaid prima facie
findings. They also did not cooperate with inquiry during the preliminary examination and
furnished false information to SEBI/BSE to mislead the inquiry and deliberately avoided
furnishing relevant information which indicate their mala-fide intention. (as discussed above
particularly in Paras 38,39 and 40).

(c) Thus, RPL and its Directors namely, Mr. Prashant Duchakke, Mr. Anil Lonkar, Mr.
Sameer Damle and Mr. Ajay K.Singh have violated provisions of clauses 22 and 36 of the
Listing Agreement and the provisions of section 12A(a), (b) and (c) of the SEBI Act read
with regulations 3(b), (c) and(d), regulations 4(2)(c),(f),(k)and(r)of the PFUTP Regulations,
and have acted in a manner which is fraudulent and deceptive and to the detriment of the
interest of investors in the Indian securities market, and

(d) Mr. Arun Panchariya, Pan Asia, Vintage, IFCF and Mr. Mukesh Chauradiya have violated
the provisions of section 12A(a), (b) and (c) of the SEBI Act read with regulations 3(b), (c)
and(d), regulations 4(1), 4(2) (c), (e) and (f) of the PFUTP Regulations, and have acted in a
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In the matter of Rasoya Protein Ltd. Page 17 of 19

manner which is fraudulent and deceptive and to the detriment of the interest of investors
in the Indian securities market.

43. The pre-determined fraudulent and manipulative acts of a few entities damage the integrity of the
market. Further, the genuine investors are put at risk because of the fraudulent artifice employed
by the entities as observed in this case. In my view, allowing the entities that are prima facie found to
be involved in such fraudulent, unfair and manipulative transactions to continue to operate in the
market is fraught with danger of immense mischief and incalculable damage to the securities
market besides undermining the confidence of the investors in the fairness and integrity of the
market. If such devious practices, as found in this case, are left unchecked and are not stopped
through an immediate action they could become pervasive. I am convinced that this is a fit case
where, pending investigation, effective and expeditious action is required to be taken to prevent
any further harm to investors, to protect their interests and to preserve the safety and integrity of
the securities market. I, therefore, find a prima facie a case for SEBI to intervene by way of ad interim
ex -parte order in this case.

44. I note that vide order dated June 20, 2013 Mr. Arun Panchariya and Pan Asia have been debarred
from rendering services in connection with instruments that are defined as securities (in section
2(h) of SCRA) in the Indian market or in any way dealing with them, directly or indirectly and also
from accessing the capital market, directly or indirectly, for a period of 10 years. In that order they
have been found to be indulging in fraudulent activities in the securities market with regard to the
subscription of GDRs and thereafter monetizing those GDRs through the sale of underlying
shares of the GDRs issued by six other companies during the year 2009. Vide Order dated
September 21, 2011, India Focus Cardinal Fund has been debarred from dealing in securities or
instrument with Indian securities as underlying, in any manner whatsoever, until further orders. I
prima facie find that Mr. Arun Panchariya and entities connected with him have been repeatedly
indulging in fraudulent activities in connection with the securities market in India. In this case, I
note that, at this stage, it is not ascertainable as to whether actually Vintage or any entity connected
/ related with it or RPL had repaid USD 23,960,000 as part of the loan taken by it from Euram
Bank towards subscription of the GDRs or the said amount was paid by RPL or any other entity
connected/related with it and whether the said amount was paid out of the disclosed sources. This
aspect needs thorough investigation. However, at this stage it has been revealed that atleast the
GDRs equivalent to amount of USD 8,035,209.73 have been acquired by Vintage without
consideration. Further, the outstanding GDRs worth `810.67 crore are still available for
conversion into underlying equity shares and sale to the gullible investors in Indian securities
market. It is also noted that Mr. Arun Panchariya through Vintage and IFCF have already
exchanged 1,51,750 GDRs into 30,35,000 shares of RPL and sold them in the Indian market for `
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In the matter of Rasoya Protein Ltd. Page 18 of 19

37,10,26,063.60 and are still holding GDRs of RPL. Unless restrained, Mr. Arun Panchariya,
Vintage and IFCF may make further attempts to convert their GDRs into equity shares of RPL
and sell them in Indian securities market. I, therefore, deem it necessary to restrain them by way of
this ad-interim ex-parte order from buying, selling or dealing in securities or any instrument
exchangeable or convertible into securities till further directions.

45. Considering the above, I, in order to protect the interest of the investors and the integrity of the
securities market, in exercise of the powers conferred upon me in terms of section 19 read with
section 11(1), section 11 (4) (b) and section 11B of the SEBI Act, 1992 and section 12A of the
SCRA, pending investigation in the matter, by way of this ad-interim ex-parte order issue following
directions:

a) The following entities are restrained from accessing the securities market and further
prohibited from buying, selling or dealing in securities or any instrument exchangeable or
convertible into securities, directly or indirectly, in any manner whatsoever, till further
directions.

Sl. No. Name of the entity PAN
1 Rasoya Protein Ltd AABCM1757C
2 Shri Anil Lonkar, Managing Director of RPL AAHPL2701Q
3 Shri Prashant Duchakke, Executive Director of RPL AEGPD0977B
4 Shri Sameer Damle, Executive Director of RPL AFKPD2850C
5 Shri Ajay Singh, Executive Director of RPL AMOPS6983Q
6. Mr. Arun Panchariya AEVPP6125N
7. India Focus Cardinal Fund AABCI9518D
8. Pan Asia Advisors Ltd (now known as the Global
Finance and Capital Limited)
Not Available
9. Vintage FZE (now known as the Alta Vista
International FZE)
Not Available
10. Shri Mukesh Chauradiya, Managing Director of
Vintage (Passport No: Z2034007)
Not Available

46. The above directions are independent of the earlier directions issued against some of the entities as
mentioned hereinabove. I further note that during preliminary examination the role of only four
directors of RPL in the aforesaid acts and omissions have been observed at this stage. However,
SEBI reserves right to proceed against its other directors at any stage of the investigation or
thereafter.
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In the matter of Rasoya Protein Ltd. Page 19 of 19


47. This order shall come into force with immediate effect. The persons/entities against whom this
order is passed may file their replies, if any, to SEBI within 21 days from the date of receipt of this
order, if they so desire, avail an opportunity of personal hearing on a date, place and time fixed in
that regard by Securities and Exchange Board of India.

48. A copy of this the order shall also be forwarded to the stock exchanges, depositories, Enforcement
Directorate, Income Tax Department and Reserve Bank of India for information and necessary
action, if any, at their end.


Sd/-

DATE : September 24
th
, 2014 RAJEEV KUMAR AGARWAL
PLACE : MUMBAI WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA



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