Some merchant bankers are also under the scanner of the Securities and Exchange Board of India (Sebi) for possible collusion with promoters of these companies, which came out with initial public offers (IPOs) in the past three years, sources said.
    
While the promoters and bankers may face strong penal action, they will also be asked to ensure the diverted money is returned to the company to safeguard the interests of minority shareholders, sources added.
    
Most of these IPOs came out in 2011, while a few were made later, they said, without disclosing names. Companies raised over Rs 6,000 crore through as many as 37 IPOs in 2011.
    
Sebi had initially launched a probe into various IPOs of 2011 for suspected rigging of listing day share prices and later expanded the scope of investigation to deployment of funds to check for possible deviation from IPO objectives.
    
The funds were raised with stated objectives such as business expansion, payments to service providers and product suppliers, debt reduction and 'general corporate purposes.'
    
Sebi started its probe into the deployment of IPO proceeds after it suspected that money was being fraudulently diverted to 'shell' companies created for cornering of money by promoters and their associates for personal gains.
    
Subsequently, Sebi decided to consult the balance sheets and other regulatory filings of those companies, as also of entities to which payments were made, with the Registrar of Companies, stock exchanges and other agencies.
    
Besides, Sebi reviewed their income tax returns and bank statements and conducted on-site visits to check the veracity of the entities to which funds were transferred.
    
In many cases, it was found that the companies receiving payments did not have basic infrastructure and required manpower, giving rise to suspicion that 'shell' companies were created to corner money raised from the public.
     
A portion of the IPO money was also deployed for inter-corporate deposits (ICD), which were later diverted to some entities that were asked to fund the purchase of shares on listing day so as to keep the stock price higher.
    
Most of these IPOs had got low ratings, showing weak fundamentals of their businesses, but they still got full or over subscription. It is suspected that a portion of IPO money could have been diverted to the entities that were used to inflate the bidding pattern during book-building exercise.
    
In one case of IPO funds diverted to shell companies, Sebi last week asked financial services firm Onelife Capital Advisors and its chief Pandoo P Naig to refund over Rs 35 crore to the company within six months.

(Agencies)

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