Vaswani told to give exit option to retail investers

It also directed Vaswani Industries to issue a public advertisement giving details of the withdrawal option and the bonus shares to be received by investors in case of their not opting for withdrawal.

“The public advertisement shall be made in consultation with Sebi and Bombay Stock Exchange… within seven working days of this order,” SAT said.

Vaswani Industries had moved SAT stating that Sebi’s order of July 11,directing the company to give withdrawal option to NIIs and retail subscribers to its IPO,be vacated immediately as it violates the provisions of the Companies Act.

Sebi had directed stock exchanges on May 19 to withhold the company’s listing,following complaints of irregularities in subscription,especially huge withdrawals and rejections after IPO closure.

The company had offered one crore shares in the price band of Rs 45-49 and the issue was subscribed 4.16 times.

Qualified Institutional Buyers (QIBs) subscribed to just 0.16 per cent of their allotted 50 per cent portion,whereas non- institutional investors (NIIs) portion was oversubscribed 11.29 times and retail investors oversubscribed 6.83 times.

In its order,SAT said that for the purpose of the withdrawal of offers and other related issues,Vaswani Industries will have to follow procedures laid down in the Sebi order of July 11.

“After completion of the withdrawal of offers by RIIs and placement of those shares with either the Sole Syndicate Member cum Book Running Lead Managers i.e. Ashika Capital Ltd or investors identified by Ashika Capital Ltd,and subject to the receipt of minimum subscription and any other compliance,the stock exchanges shall grant listing permission for the shares,” SAT said.

Upon listing of the shares,Vaswani Industries has been directed to take steps to make a bonus issue of shares to the investors in the IPO in the ratio of one share for every four shares held.

“The promoters and the promoter group entities of the Appellant have provided a written undertaking that they will not receive such bonus shares in the said bonus issue. The Appellant hereby undertakes that it will not issue such bonus shares to any of the promoters or the promoter group entities,” the order said.

Trading in the shares of Vaswani Industries on the stock exchanges shall be permitted only after the bonus issue of shares and their listing is completed in all respects.

“The entire process regarding the withdrawal of offers and the bonus issue shall be completed within sixty days of this order,” SAT said.

SAT,however,said the order disposing of the appeals is not to be taken as an expression of its opinion on the merits of issues involved in any of the cases related to Vaswani Industries.

“It is further clarified that ongoing investigations shall not be affected in any manner and SEBI shall be free to take such action as it deems fit against any person found to have acted in contravention of law,” it said.

Vaswani makes sponge iron,steel billets and ingots. The proceeds of IPO would be utilised for pre-payment of term loan and to meet working capital requirements among others.