Sebi probe finds Tayals used staff to mask shareholding

HARDLY any among Sanjay Gadade's neighbours at a chawl in central Mumbai's Worli would have known that they had a millionaire in their midst. 

    That is until Friday, when a report by capital market regulator Sebi revealed that Mr Gadade — an employee in the secretarial department of KSL and Industries — was holding Rs 155 crore worth of shares in Jaybharat Textiles & Real Estate (JTREL), both companies being part of the Tayal group, which is facing a probe by both Sebi and the Reserve Bank of India. 
    Mr Gadade is not the only one who was warehousing shares for the promoters of the company which he works for. A Sebi probe into JTREL has indicated that Mr Gadade is only one among several employees of the group, who have been acting as fronts for the promoters, and holding shares on their behalf. In an order issued on Friday evening, the regulator barred JTREL and 30 other entities, including the promoters of the company, from buying or selling shares in the stock market till further notice for under reporting their shareholding in the company. The regulatory move comes just two days after Sebi had barred PK Tayal and his son Saurabh Kumar Tayal, key shareholders in Bank of Rajasthan, for allegedly underreporting their holdings in the private bank. 
    Friday's action caps what appears to be a co-ordinated joint regulatory action on the part of Sebi and RBI. The ball was set rolling by the banking regulator first, when it ordered a special audit into the accounts of Bank of Rajasthan — in which PK Tayal is a dominant shareholder, a few days ago. This was triggered off due to violation of operational norms by the bank. 
    According to the Sebi order, the promoters of JTREL held shares far in excess of what has been declared by them publicly. The promoters of JTREL are Saurabh Kumar Tayal, Nina Tayal, Jyotika Tayal, Bhavana Tayal, Ram Pratap Tayal and Vandana Tayal. 
    "The promoters have been able to disguise the extent of the shareholding in their company in a devious manner through the artifice of holding the shares of their company to their benamis, in most cases their employees or workers," the order said. 
    The promoter holding in the company (according to stock exchange data) was 68.55% from June 2003 to June 2009. No activity in held shares 
AS on December 31, 2009, it reduced marginally to 67.05%. The total public holding displayed on BSE website was 31.44% as on December 31, 2004, which increased to 32.95% for the quarter ended December 2009. 
    According to the Sebi order, the shareholding pattern of JTREL for June and September 2008 revealed that that 20 entities, which appear in the category of individuals holding nominal share capital in excess of Rs 1 lakh, together held around 28.24% of the share capital of the company. The comparable figure, according to the latest shareholding pattern on December 31, 2009, for the same category is 19 entities, with a shareholding of 27.75%. 
    "It is already noted that many of these 19 entities have been holding shares only in physical form (24.6% of capital of JTREL) since the day of their allotment, not dealt in the shares of JTREL and are found to be current or past employees of JTREL or of companies promoted by Tayal, directly or indirectly. Therefore, it appears that very high degree of promoter control has been a persistent feature since the present promoters took over, as is evident from shareholding pattern in JTREL," the Sebi order said.