Sebi bans Pyramid Saimira chief for 10 years

The Securities and Exchange Board of India on Thursday banned P S Saminathan, the promoter of Pyramid Saimira, from dealing in securities or holding a directorship for 10 years and asked him to buy back shares of the company from the public within three months.

Valuations for the public offer would be determined by a valuer as per Sebi regulations, the regulator said in its order.

It also directed the Bombay Stock Exchange to compulsorily delist the company if its shareholding falls below the mandatory minimum 25% public shareholding limit following the purchase.

Notably, the Pyramid Saimira stock was suspended by the National Stock Exchange in June for non-compliance with listing norms. On the Bombay Stock Exchange, it closed Thursday at Rs6.31 per share, down from a high of Rs531.70 per share seen on December 28, 2007.

Sebi also banned Saminathan’s wife, Uma Saminathan, from the securities market or holding a directorship for a period of five years.

The order follows an investigation of charges that the company inflated its profits and revenue through fictitious entries in its accounts during 2007-08.
The company had disclosed to exchanges on January 30, 2009 that it had entered into agreement with 802 theatres as on June 30, 2008. Of these, only 257 original agreements were shown to Sebi officials.

This leads to an inevitable conclusion that the balance 545 agreements never existed, the regulator said.

“The fictitious entries in the books of accounts with a view to paint a rosy picture about the financial health of the company, disclosure of the inflated financial position and false corporate announcements mislead the investing public and constitute worst kind of fraud on the part of the company, management and promoters,” the Sebi order stated.

Additionally, the company allotted convertible warrants to P S Saminathan without receiving the required payment for the same.

“The issue of share warrants to promoters without receiving the consideration constitutes worst kind of breach of trust of the investors,” said the market regulator.

This is not the first Sebi order against the company. In November 2009, the regulator had investigated and penalised it over fraudulent allotment of its employee quota during the initial public offer. At the time, it had banned the company from tapping the capital market for a period of seven years.

Earlier, entities connected to Pyramid Saimira had been banned from the market after a fake letter from the company was used to manipulate its stock price.

According to media reports, a provisional liquidator is set to take over the companies assets after a winding up petition was filed by one of its creditors.