SEBI Bans Former Owners of Chandamama Comic from Markets for a Year

The Market regulator SEBI has banned the promoters and some of former top executives of iconic indian comic magazine Chandamama from the securities market for a year for for siphoning off $125 million raised through foreign currency convertible bonds (FCCBs).

Chandamama was once a popular children’s monthly magazine, which told stories of moral values and mythologies.

It may now tell a different story about how to make $125 million disappear.

Chandamama India Ltd was one of Geodesic Ltd’s five subsidiaries, and the publishing firm was put up for sale by the Bombay High Court when it ordered Geodesic Ltd’s liquidation roughly 10 years ago.

Sebi banned Kiran Kulkarni, Geodesic’s former managing director, Pankaj Kumar, the company’s former chairman, and Prashant Mulekar, an ex-director and compliance officer, for their roles in failing to refund $125 million raised through foreign currency convertible bonds (FCCBs) in 2008. Geodesic paid Rs 10 crore in 2007 to acquire a 94% share in the company that owned Chandamama comics and is listed as one of Geodesic’s subsidiaries.

A forensic audit commissioned by Sebi discovered that the top executives at Geodesic skimmed off the whole sum generated through FCCBs using numerous shell companies, fake bills, and inter-corporate loans that were never repaid. Part of the funds were also lent to Jajodia, which breached RBI regulations. While taking the money out of the country, the corporation also breached several other RBI regulations.

It all started with the FCCB fundraising in 2008. The bonds were due for redemption on January 18, 2013. However, when the redemption deadline approached, the company failed to redeem the bonds, and the High Court ordered its liquidation, putting the beloved magazine on the market as well.

According to the Sebi order, $93.9 million of the $125 million was stated to have been invested in the company’s subsidiaries Geodesic Holdings Limited (GHL) and $26.8 million in GTSL, with the remaining $3.52 million going towards FCCB expenditures. However, as whole-time member SK Mohanty noted in the order, the noticees provided broad details about the money that went into GHL while providing “conspicuously lacking” facts regarding the money that went into GTSL.

The order also called into question a $64.8 million loan made by GHL to a firm called Zomo Technologies, which placed the money in a fund called Absolute Diversified Fund (ADF), which then invested the money in two companies that were later liquidated. Jajodia served as a director of one of the two liquidated corporations, Eland Crown.

“Under the circumstances, the Company’s investment in ADF through Zomo looks to be a dubious mode of operation used by the Noticees to syphon off Company funds rather than a simple investment as the Noticees are projecting,” said the Sebi order.

The order prohibits “Notice nos. 1 (Pankaj Kumar, Chairman and Director of Geodesic Limited), 2 (Prashant Mulekar, Director and Compliance Officer of Geodesic Limited), and 3 (Kiran Kulkarni, Managing Director of Geodesic Limited) from accessing the securities market and further prohibits them from buying, selling, or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any way for one (01) year from the date of this order.”

To Read Official Order Download PDF Given Below: