JSW Cement Ltd’s Rs 4,000-crore initial public offering (IPO) has encountered a significant hurdle as the Securities and Exchange Board of India (SEBI) has paused the approval process. The delay stems from an ongoing investigation into an alleged regulatory violation involving Sajjan Jindal, the controlling figure behind JSW Cement, and his siblings.
SEBI is scrutinizing an inter-se transfer of investments held by Hexa Securities and Finance Co., a firm where several Jindal family members, including JSW Group chairman Sajjan Jindal, held directorial positions. The IPO may remain on hold until a settlement application filed by Jindal and other family members in response to SEBI’s show cause notice is resolved, according to sources familiar with the matter.
The company had the option to wait for a resolution before filing the IPO documents or proceed with both simultaneously. JSW Cement chose the latter, potentially prolonging the approval process.
SEBI normally keeps IPO approvals in cold storage if there are pending proceedings against a company or its promoters. The regulatory problem came to the fore when Hexa Securities’ parent, Hexa Tradex Ltd (HTL), filed for voluntary delisting. Shareholders wrote to SEBI complaining about the terms of delisting.
The draft offer document of JSW Cement said a show-cause notice with a date of issue of March 18, 2024, was issued to Hexa Tradex, its directors, including Sajjan Jindal, along with other members of the Jindal family. This was in respect of certain transactions that comprised investment transferred by Hexa Securities to certain promoter group entities for internal reorganization. The member notice accused these Jindal family members of aiding and abetting such transaction, which is in violation of the SEBI regulations.
In response, Sajjan Jindal and other promoter group members have filed responses before SEBI on June 24 contesting such allegations. They have also filed settlement applications to expedite the matter. However, the same remains undecided and any adverse decision may haunt JSW Cement’s image and its future capability of going ahead with the capital market transactions.
Another show cause notice was issued on October 17, 2023, over alleged violations of delisting norms while going through the voluntary de-listing procedure of HTL. It said that the promoter group entities made incorrect disclosures and passed an incorrect board resolution which further muddled the approval process for the IPO.
Till now, JSW Cement and SEBI have not officially commented on the issue. The outcome of these regulatory proceedings will be crucial, which could set a timeline for the IPO of JSW Cement.
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Source: Moneycontrol
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