The networking, software, e-business services company was recently penalised by SEBI for making favourable statements to influence its stock price

Helios and Matheson Technology (H&M), the controversial company which was recently slapped with a fine of Rs50 lakh by the Securities and Exchange Board of India (SEBI) in a share price rigging case, is now planning to raise Rs500 crore.

In a filing to the National Stock Exchange (NSE) on 23 March 2011, giving details of its recently held annual general meeting, the company said that it is constantly looking for growth opportunities to become globally competitive and it considers it necessary at this time to raise some of the funds it requires through an issue of securities.

On 31 January 2011, SEBI imposed a penalty on H&M over some fake and favourable announcements that the company had passed on to the stock exchange in order to influence the movement of the stock price. In its show-cause notice to the company, SEBI said, "H&M had made various favourable corporate announcements during the investigation period, that is about the issue of bonus shares, dividend, and declared favourable unaudited quarterly results, etc, besides the announcement of acquiring three entities of vMoksha Technologies Pvt Ltd."

SEBI had also charged the company with not disclosing the status of the profitability of vMoksha companies that it allegedly acquired. The SEBI order said that H&M "failed to make announcements/disclosures with regard to price-sensitive information" and "had not informed the stock exchange about the interim developments such as (the fact that) its attempt to acquire three vMoksha companies had not materialised in the stipulated time period, i.e. within 120 days as specified in the SPA (share purchase agreement) and the judicial/arbitration proceedings which started in relation to the same."

Last week, H&M informed the NSE that it "has been examining various growth opportunities from time to time, in line with its objective of becoming globally competitive. While it is envisaged … thought prudent at this stage for the company to raise a part of this fund requirement through the issue of securities in the domestic/international market…"

It further stated that it is therefore, "proposed to issue appropriate securities for an amount not exceeding Rs500 crore in one or more tranches in such form on such terms…the number of equity shares and or fully/partly convertible or non/convertible debentures…provided the issue price of equity shares to be issued on conversion of debentures or upon exercising the rights of entitlement…determined by the board."

Moneylife has earlier reported about financial irregularities in the acquisition of vMoksha by H&M. The battle started in 2005, when H&M announced a $19 million buyout of vMoksha, co-founded by Rajeev Sawhney and Pawan Kumar (former CEO of the controversial DSQ Software). Mr Sawhney put in the money and Mr Kumar managed the operations. (Read, Helios & Matheson under the scanner, )