Videocon, Saurashtra under SEBI scrutiny

MUMBAI, April 16: The Securities and Exchange Board of India SEBI has decided to have thorough look at the public offer of Videocon Intern...

MUMBAI, April 16: The Securities and Exchange Board of India SEBI has decided to have thorough look at the public offer of Videocon International and the preferential issue of Saurashtra Cements. The market regulator has decided to examine the unusual share price movement in Videocon and the lack of transparency in the preferential issue of Saurashtra.

8220;Prima facie the open offer made by Videocon does not seem to have violated any laws. However, we8217;re looking into the unusual trading volume and the price movement in the scrip,8221; said a SEBI official.

The Videocon share, which has been going abegging, suddenly spurted inexplicably in February-end, with the price climbing from Rs 24 to around Rs 70 at the time the announcement was made. There was also a corresponding surge in volumes, which made the scrip among the highest traded in the B2 segment of the Bombay Stock Exchange.

In a letter to the SEBI chairman, the Dhoots promoters of Videocon who have now planned to hike their stake in the company bytwo per cent through an open offer have said the open offer has been made quot;in view of the unusual and inexplicably high trading volumes witnessed in the scrip in recent weeksquot;.

SEBI officials said the regulator is examining the manner in which Saurahstra Cement which is facing a takeover threat from the Autoriders group made the preferential issue. However, the important issue was that of non-disclosure of the board meeting at which the decision of expanding the equity base was approved by the board. SEBI has found a quot;prima faciequot; lack of transparency in the manner in which Saurashtra has made the preferential allotment to the promoters.

The company8217;s promoters hiked the company8217;s issued capital from Rs 12.15 crore to Rs 47.15 crore. As a result, the bulk of the shares went to the promoters strengthening their control. It issued a 5 per cent plus stake each on preferential basis to FL Smidth and Industrialisation Fund for Developing Countries, an offshore fund. The two have been issued 19,05,300 shareseach.

The fresh issue of shares was made after the company8217;s board of directors cleared the preferential allotment on March 11, just a week before the Autoriders group formally made an open offer for a 20 per cent stake in Saurashtra Cements at Rs 70 per share.

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