Transgene Biotek insiders are again playing the game of price manipulation, while market regulator SEBI had no time to either watch unusual price changes or deal with investor complaints
Transgene Biotek Ltd, the company that is been in the news over alleged misuse of global depository receipts (GDRs) and ignoring investor complaints, made a new record on Tuesday. During the first two hours of trading on the BSE, the Hyderabad-based company shares breached its both, lower and upper circuit. This not only shows extreme volatility but also a possible price manipulation.
Transgene Biotek opened Tuesday at Rs3.82, which was its lower circuit. It remained at this level till 9.25am. After that it started to move up. At 9.27am, Transgene was trading at Rs3.85 with a volume of 2,500 shares. Suddenly, at 9.37am, it jumped to Rs4.17 with a volume of 1,000 shares. The same price remained for next 11 minutes. Between 9.48am to 10am, Transgene saw volumes of 7,000 shares, but it also took its price down to Rs3.85 (Was somebody dumping the shares?). After 10am, there was again a surge in Transgene price. By 10.06am, the shares were trading at Rs4.14 with a volume of just 11 shares! By 10.40am, Transgene inched by three paise at Rs4.17 per share with a volume of 600 shares. Suddenly, at 10.42am, the volume surged to 5,000 with Transgene breaching its upper circuit. The next one minute again saw volumes of 4,403 shares at Rs4.22 per share.
As reported by Moneylife
, several shareholders of the Hyderabad-based company are crying foul
over the alleged misuse of global depository receipts (GDRs)—a financial instrument used to raise capital overseas, and several “well-timed” announcements by the company. However, market regulator Securities and Exchange Board of India (SEBI) is to yet even acknowledge several complaints filed by these shareholders.
The shareholding pattern of Transgene between June 2012 and September 2012 quarters reveal ‘precise’ share transactions between ‘related parties’. During these two quarters, custodian shareholding decreased to 39% from 73.44%, a difference of 34.44%. However, during the same period, public shareholding, including foreign institutional investors (FIIs), domestic institutional investors (DIIs) and non-institutions, increased significantly to 51.22% from 16.78% in June 2012, again a difference of 34.44%. So while custodian stakeholders were selling Transgene shares, the ‘public’ was buying exactly the same quantity.
Move forward to December 2013, and one can see the exit of FII and substantial stake sell by custodians. At the same time, public shareholding or stake hold by non-institutional investors increased to 70.04% at the end of December 2013 quarter, as per the data from BSE. Even, promoters seem to have increased their stake to 21.68% during the December 2013 quarter from less than 10% in September 2012.
As of March 2014, promoter and promoter group held 21.68% stake in Transgene Biotek. Public shareholders, including minority shareholders hold 70.04% stake, while institutions and custodians own 5.03% and 8.28% shares in Transgene Biotek.
Another interesting part is promoter or promoter group held 9.8% stake during September 2012 and yet citing lower share price tried to delist Transgene Biotek from stock exchanges. On 4 September 2012, Transgene board announced its decision to delist its shares. Three days later, it announced delisting price of over Rs25 per share as against the prevailing price of only Rs10.36 per share.
Shareholders allege that the company had deliberately announced its delisting at a price 2.5 times more than its prevailing share prices for manipulation. The company apparently sent postal ballots for getting approval from shareholders for delisting. However, there was no response from shareholders, the company said. The question here is after all, why will shareholders disapprove such a “generous” proposal? According to shareholders, either they received the postal ballots just one day prior to the deadline or never received any such thing.
One such shareholder in his complaint to SEBI has asked many questions on Transgene’s GDR issue as well as its price manipulative intentions behind delisting announcement. The shareholder in his complaint said, “We (shareholders) believe that the promoters did not have any intention of de-listing the company in which they only hold 9.8% shares. If they were serious about their holding in the company, they would have increased their stake through creeping acquisition. If their co-investors were serious about taking a strategic stake in the company, they would have bought out the GDRs outstanding or made an open offer to buy out from public without the ‘delisting’ clause. The structured GDR is normally used as an end game by promoters, who hardly have any holding in the listed entity and are looking forward to milk whatever remains of their company and their reputation in the market place. The modus operandi is similar and operations are through a small clutch of entities which your intelligence wing can find out just by going through the bulk deals done in the small/ mid cap companies with low promoter holding which have also issued a GDR despite their poor financial performance.”
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