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Brokers move BSE to stop Amara Raja pref shares listing

BS Markets Bureau

The Bombay Stock Exchange (BSE) may not give the nod for listing of 1.14 million preferential shares issued by Amara Raja Batteries Ltd (ARBL) to a foreign collaborator. A batch of brokers involved in the ARBL investigation have moved BSE to stop the listing of the preferential shares, citing the probe against the company by Securities and Exchange Board of India (Sebi).

ARBL had issued 1.14 million equity shares to its foreign collaborators on a preferential basis at a premium of Rs 90.

The major area of concern for the brokers is that ARBL is already under Sebi investigation for price manipulation and circular trading in the last one year and therefore the scrip must not be listed till the exchange is able to ascertain the status of these shares.

Of the total paid-up capital of Rs 100 million, only about 28 per cent is in demat form, and about 22 per cent is floating stock.

Both BSE and National Stock Exchange (NSE) have withheld the payout of a few stock brokers, aggregating about Rs 400 million, for sale transactions in the scrip. The payout has been withheld as a result of investigations conducted by the two stock exchanges into the alleged price manipulation of the ARBL scrip in March this year. The buying brokers have appealed for annulment of trades.

The two exchanges had launched investigations following directive from Sebi, subsequent to complaints from about 15 brokers who had bought over 1.5 million ARBL shares, now known to be a common set of clients.

In their complaint for annulment of trades alleged to be "circular, fraudulent and accommodative," the brokers have brought out how the share price of ARBL rose from Rs 65 to Rs 320 in six months and subsequently fell 72 per cent to Rs 90 in six trading days. Exchange sources said that the amount involved in NSE settlement No 10 was about Rs 250 million, and in settlement No 50/51 on the BSE was about Rs 15 million.

The NSE brokers, whose payouts in ARBL are withheld, include Navratan Capital & Securities (related to former BSE president Anand Rathi), Shriyam Securities (Devesh Chaturvedi), Nirpan Securities (D A Shah), Four Dimensional Securities, Bajaj Shares and Ganesh Finstock.

The six stock brokers had collectively sold over 800,000 ARBL shares on NSE. BSE members, who had collectively sold about 400,000 shares, include Prabhudas Lilladher, HSBC Securities, SSKI and Welworth Stockbroking.

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