Ministry examining ways to prevent IPO fund misuse: Khurshid

Ministry examining ways to prevent IPO fund misuse: Khurshid

Khurshid also said his ministry is examining the report of the expert group to suggest steps for monitoring the end use of IPO funds. "The report of the expert group has been submitted. We will certainly read the report carefully. But we can only tell you the finding after we finish reading it," Khurshid said. Set up in August 2008, the expert group was to analyse the loopholes in the mechanism used to scrutinise how money raised through IPOs is utilised. The group comprised ministry officials and representatives from Sebi and BSE and NSE.

The expert group was also to suggest steps to prevent price manipulation by promoters, besides also recommending measures related to various investor complaints. Initial public offers, however, the minister added, are primary responsibility of the Sebi and the government would coordinate whenever necessary. "Whenever issue arises we have to taken decision. We coordinate closely with them...but essentially IPOs are with the Sebi," he said.

The MCA has reportedly asked Sebi to devise ways of monitoring the end use of money collected through IPOs to keep a check on vanishing companies. At present, the ministry through technical scrutiny of balancesheets, keeps a check if companies are using IPO proceedings as promised in the prospectus.

India Inc has raised Rs 46,778 crore through the IPOs in the current fiscal, 23 times higher than Rs 2,034 crore mopped up in the last fiscal, according to a study by Prime Database. A host of companies have already filed papers with Sebi for approval for raising a combined around Rs 22,000 crore through public offers and are awaiting permission.

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