SEBI realises too late that the company scammed its shareholders, a year after Moneylife published the story on Jay Energy and S Energies
Last year, Moneylife had written a piece on the alleged fraud in Jay Energy and S Energies (Jay Energy), where its shareholders were being ripped apart by the promoters. Well, it seems our prognosis was right all along, and the Securities Exchange Board of India (SEBI), has decided to take action, albeit too late, on Jay Energy. Last year’s piece can be accessed here: Retail investors in Jay Energy suffer loss due to continuing demat delay. It was alleged that the company and registrars repeatedly put off dematerialising shares on excuse of faulty master data, and not addressing investors’ concerns and complaints.
SEBI vide its adjudication order number as/ao-01/2012 said, “Jay Energy and S Energies failed to redress investor grievances within the time specified and failed to provide Action Taken Report (ATR) in the format specified within the specified time. Considering the same along with the facts and circumstances of the case as well as the violation committed by the noticee, I am of the view that imposing a combined penalty of Rs45 lakh on Jay Energy and S. Energies.” Only that the order came too late, exactly a year after we published our story.
The reason for the fine was because Jay Energy had failed to resolve investor complaints, mostly related to share transfer. According to the order, 146 investor complaints were received, with 145 relating to share transfer.
The order recounted the saga (as we did a year ago) citing, “Immediately after revocation of suspension the scrip opened at Rs48 and reached a high point of Rs203.45 on 5 January 2011. Thereafter, the notice stock was split from face value of Rs10 to Rs2 per share with effect from 15 February 2011. It is also noted that the share price continued to decline thereafter to Rs5.48 (face value Rs2) on 10 March 2011. Taking the above into account, it is observed that investors have suffered a notional loss of around Rs87 lakh due to delay and non-resolution of investor complaints.” Despite investors suffering a “notional loss” of Rs87 lakh, SEBI fined the company only Rs45 lakh.
Most pertinent was the manner at which SEBI has handled this whole affair. It practically waited one year to take action against the company. The order said, “Perusal of the reply reveals that though the complaints of the investors were received from as far back as December 2010, no action was taken to resolve the complaints till April 2011. Further, a sample survey has revealed that several complainants have not yet had their complaints resolved even by November 2011 even though the company has claimed that all pending investor grievances have been resolved in the personal hearing granted on 21 June 2011.” Clearly, the company has been putting off resolving complaints. But what was SEBI doing all this while?
Further, SEBI said in its order, “Though, it is observed that the noticee (Jay Energy) has redressed some investor grievances, even though delayed, accordingly I feel it fit that this may be taken as an ameliorating factor to be considered for imposition of penalty upon the noticee and thus the present facts and circumstances would not merit imposition of the maximum penalty permissible by law.”
A total of 32 investors grievances have yet to be resolved. What are these investors going to do now? The fact that there are some grievances yet to be resolved shows SEBI’s leniency towards companies like Jay Energy.
High interest rates and lower economic growth has impacted the repayment capacities of borrowers, pushing up the NPAs of banks to Rs1.27 lakh crore in the first nine months of 2011-12 fiscal
With bad loans of banks touching Rs1.27 lakh crore during April-December 2011, the government said it is monitoring the efforts for recovery of the non-performing assets (NPAs) by the lenders.
“(We are) aggressively looking at efforts to recover NPAs,” financial services secretary D K Mittal told reporters here.
High interest rates and lower economic growth has impacted the repayment capacities of borrowers, pushing up the NPAs of banks to Rs1.27 lakh crore in the first nine months of 2011-12 fiscal.
Banks' bad loans stood at Rs94,084 crore in 2010-11, Rs81,813 crore in 2009-10 and Rs68,220 crore in 2008-09.
Mittal further said that "some more capital" would be infused in the country's largest public sector lender State Bank of India (SBI) in the current fiscal.
Also, the government “will ensure 11% Tier I capital (equity) for SBI in the next two years,” he added.
Currently, tier-I capital of SBI is around 9%. On 30 March 2012, SBI's executive committee had approved issuance of 3.65 crore equity shares at Rs2,191.69 a piece through preferential allotment to the government to raise about Rs7,900 crore.
The government has recapitalised public sector banks over a period to enable them to maintain Tier-I CRAR (capital to risk assets ratio) at 8%, and also to increase its holding in them to 58%.
On 12th March, the Directorate-General of Foreign Trade notified partial lifting of the...