GHCL’s Dalmia hits back at major shareholder

May 1st, 2009 - 7:06 pm ICT by IANS  

New Delhi, May 1 (IANS) Gujarat Heavy Chemicals (GHCL) promoter and chairman Sanjay Dalmia Friday hit back at a prominent shareholder over allegations of fudging accounts, among other things, saying the person himself was involved in profiting from insider trading activities.
GHCL has been mired in controversy after a Securities and Exchange Board of India (SEBI) order barred Dalmia, managing director Ravi Shanker Jalan and company secretary Bhuwneshwar Mishra from trading at Indian equities markets on charges of inflating promoters’ shareholding in quarterly filings to exchanges.

Soon after the SEBI order, Pramod Jain, reportedly the single largest individual shareholder with a six percent stake, accused the promoters and top management of indulging in “dubious” overseas acquisitions and “cooking the books”.

Jain, who also called for an enquiry by the Company Law Board (CLB) and the ministry of corporate affairs, told IANS: “The company will take a hit of about Rs.1,147 crore on its books due to dubious deals by promoters.”

GHCL officials have, however, scoffed at the claim, saying, “If we had that kind of money, we would have bought our shares from the market and raised our stake in the company.”

At a press conference Friday, GHCL’s head of international business and strategy Nikhil Sen said the company had documents to prove that between Arpil 17-24, Jain bought more than 12 lakh GHCL shares.

“He has done this without informing the board and without intimating the stock exchanges. This is insider trading. We will bring this to the attention of the authorities soon,” Sen added.

At the same conference, Dalmia said the shareholding declaration was done as per legal advice.

“We had pledged our shares and these might have been sold by the lenders. We haven’t sold any shares,” said Dalmia.

“The declaration was done according to legal advice as we had only pledged our shares and not sold them. When it was brought to notice, we changed it, in fact, we changed it before the SEBI notice.”

Earlier, Jain had also raised suspicions about the company’s overseas acquisitions.

“GHCL’s promoters acquired foreign companies for Rs.119 crore, which were unrelated to the business. They further gave them a loan of Rs.222 crore. What is surprising is that these companies filed for bankruptcy about six months later,” said Jain.

But Dalmia said the acquisitions were in line with the company’s long-term plans to strengthen its soda ash and home textile businesses, and also to boost its retail venture through acquisition of British retail chain Rosebys.

“Rosebys filed Chapter 11 (bankruptcy process) at a time when a lot of retail chains were facing the pressure of the slowdown. Roseby, however has been relaunched as a separate entity and we will open around 500 stores by the end of this year,” said Dalmia.

GHCL officials said they have replied to the SEBI order and were awaiting response from the regulator.

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