Retail investors in Jay Energy suffer loss due to continuing demat delay
Sharad Matade 31 March 2011

The company relisted in September last year, but registrars repeatedly put off dematerialising shares on excuse of faulty master data. Investors demand investigation into alleged manipulation

Many small retail investors of Jay Energy & S Energies Ltd are struggling to dematerialise their physical shares, because, according to the company's registrar transfer agents (RTAs) the master data of shares is not in order. And those retail investors, who have managed to dematerialise their physical shares after a long struggle, have already missed the opportunity to sell the shares at higher prices.

Jay Energy & S Energies tied up with the National Securities Depository Ltd (NSDL) and re-listed the stock after 13 years on the Bombay Stock Exchange (BSE) on 29th September 2010, but the move appears suspicious. On 30th September, the company informed the BSE about the shareholding declaration, saying that the company had dematerialised 42.82% of the total 6,797,700 shares. The company dematerialised 48.86% shares of promoters, who own 2,250,000 shares, while 39.83% of the holding of non-promoters, who have 4,547,700 shares.

But retail investors were not informed about the relisting and the shareholding declaration. After seeing the notice of shareholding declaration on the BSE and noting that 39.83% of the non-promoter shareholding had been dematerialised by 30th September 2010, the retail investors started sending physical shares for demat.

However, the company's RTA-Purva Sharegistry (India) Pvt Ltd-did not accept any applications of retail investors to demat their shares, as Jay Energy & S Energies had instructed it not to process any transfers or demat requests as the company was in the process of changing the registrar.

"Yes, we asked Purva not to process any demat or transfer requests as we were in the process of appointing our new registrar, because Purva did not complete the given work on time," Mihir Parikh, director, Jay Energy & S Energies told Moneylife.

However, according to SEBI guidelines an existing RTA can continue to process requests for demat/share transfer until a new RTA is appointed.

Meanwhile, Jay Energy & S Energies appointed Cameo Corporate Services (CCS) as the new RTA. CCS delayed processing requests by retail investors to demat their shares, for two months, saying it had not established 'connectivity' for the scrip and had not received records from the company.

The struggle of shareholders did not end here. After connectivity was established in early December, CCS informed investors that "the master data of shares is not in order and the certificate numbers and distinctive numbers are not tallying with the master data of shares."

"We will complete the dematerialisation process within the next one week," said Mr Parikh. However, he declined any further comment.

This is strange, for when the company got re-listed, 39.83% of non-promoters' shares were converted into demat with the same master data of shares. Why didn't the registrar raise the same problem then, ask investors.

Was the master data of shares made an excuse to create an artificial scarcity and influence the share price? Or was the data bad even before 30th September 2010 and were procedures violated at the previous registrar to allow over 39% of shares to be dematerialised without a problem?

The capital market regulator must find out who the "favoured" people/entities were who managed to get their shares dematerialised quickly and just in time on the resumption of trading in the scrip from 29th September 2010, and without facing the issue of incorrect master data.

Many shareholders have raised these issues with the Securities and Exchange Board of India (SEBI), the National Securities Depository Ltd (NSDL) and the Ministry of Corporate Affairs, but they have not received any response so far.

Dematerialised shareholding increased to 55.19%-- made up of 48.86% of the total promoters' share holding and 58.33% of the total non-promoter holding--by 30th December 2010. However, NSDL statistics for 31st December 2010 showed that 292 demat requests of the company were pending for more than 21 days.

Finally, some retail shareholders started getting dematerialised shares back in January this year. However, some are still waiting for their shares to be demated.

Jay Energy & S Energies announced that it had fixed 15th February 2011 as the record date for the purpose of change in face value of the equity shares from Rs10 to Rs2 per share.

However, retail investors have not benefited from this as share prices fell dramatically from a peak of Rs203.45 on 5th January 2011 to Rs66.70 on 11th February (before the share split). Today, the stock trades at Rs6.15 (about Rs30 pre-split), a whopping 85% down in just three months.  

It seems that the non-promoters, whose shares were dematerialised before 30th September 2010, earned mammoth profit and on the fear of a share split, the big non-promoters sold their shares and that this led to a fall in share prices.

1 decade ago
The criteria to start investigations in the scrip of a company is stipulated
under section 11(C)(1)(a) and (b) of the SEBI Act, 1992 which says:
“11C. (1) Where the Board has reasonable ground to believe that –
(a) the transactions in securities are being dealt with in a manner detrimental to the investors or the securities
market; or
(b) any intermediary or any person associated with the securities market has violated any of the provisions of
this Act or the rules or the regulations made or directions issued by the Board thereunder”
In the Jay Energy case, while investors shares were stuck in demat/transfer for months, the stock price went places (High was RS 203). By the time investors started receiving their shares, the stock went into a tailspin.
The Director of the company has openly admitted asking the old RTA Purva Sharegistry (India) Pvt Ltd to stop processing demat & share transfer requests at the beginning of Oct 2010, much before the new RTA could be appointed and begin work, thus leaving shareholders with no recourse to get shares transferred / dematted .
New RTA claimed that sharemaster data given to them was in shambles, hence further delay.
So if this saga is not deemed "detrimental to the interest of the investors", and a fit case for a SEBI investigation , i wonder what is ?
1 decade ago
Stock has halved even from the low rate of 3 months ago.
I hope some well-heeled shareholder takes the company and it's old & new RTA's (who collectively held up shares in demat for months on end while the stock reached fancy levels) to court & asks for compensation for all shareholders whose shares were held up beyond the permitted time frame.
1 decade ago
complaints are already there but no action from exchanges as company is taking care in all respects of regualatories so nothing can be done you have loose your money.
Replied to adaljaarun comment 1 decade ago
Suggest you to inform MoneyLife about this, after you get your shares & are able to exit the stock.
Replied to Bosco comment 1 decade ago
I think all complaints shows Dust Bin......No Complaints...........No Action........
1 decade ago
In my personal opinion, between the following 3 parties, shareholders have been terribly shortchanged & there is a case for them to seek compensation for the lost opportunity to sell the share at high rates while their shares were stuck for 5-6 months in demat / share transfer :
1. Jay Energy & S. Energies Ltd – for asking the old RTA Purva Sharegistry (India) Pvt Ltd to stop processing demat & share transfer requests at the beginning of Oct 2010, much before the new RTA could be appointed and begin work, thus leaving shareholders with no recourse to get shares transferred / dematted . Same has been openly admitted by Mr. Mihir Parikh, director of Jay Energy & S Energies Ltd to MoneyLife
2. Purva Sharegistry (India) Pvt Ltd – for agreeing to this highly suspect request despite knowing that as per procedure they were duty bound to continue to handle demat requests & share transfer requests till the new RTA established connectivity with NSDL/CDSL. The form to be filled up by outgoing RTA specifically has this clause mentioned . You can view & download the same here :
3. Cameo Corporate Services Ltd – for delay in dematerializing the shares from the time connectivity was established in Dec 2010. Cameo claims the share master data given to them was in very bad shape – this in turn points to Jay Energy’s culpability – but was it really so ? And if it was, how come Purva dematted huge number of shares before 30th Sept 2010 ? Did Purva do so to favour certain people ?
Only a full fledged SEBI investigation can give justice to aggrieved shareholders.
Replied to Bosco comment 1 decade ago
Dear Bosco.......I agree with you sir and SEBI must investigate the matter without further delay.
1 decade ago
i have submit my physical shares for transfer at dated 26/10/2010 of jay energy at registered office but i have not received my transfer share till today. my folio number is 7144 for 200 shares and folio no. 7739 for 200 shares total 400 shares i have submit for transfer but company cannot reply me so please legal action against company can proceed.
with regards,
nayna bharat bhavsar
(m) 09327071694
vijay oswal
1 decade ago
Dear Sir,
SEBI must punished promoters of companies like JAY ENERGY who have only vested interest in PRICE RIGGING and not in Company. SEBI must give order to promoters to compensate losses to small shareholders which are ORIGINAL shareholders since public issue of company and kept faith in company for more than 15 years.
vijay oswal
1 decade ago
Dear Sir,
Thanking you very much for disclosing MODUS OPERANDI of promoters of JAY ENERGY. I am still awaiting to get my shares transferred in my name which were sent in 1996 for transfer,which clearly suggests manipulation happened in price rigging.
arun adalja
1 decade ago
their contact no given on bse site is changed and it is 07930221822 and registrars no not given on bse site and no 02652341105.
arun adalja
1 decade ago
yes i also faced this problem and i sent by courier and i had acknowledge but still company says they have not recd courier and price dropped to 50% sebi must penalise with heavy penalty.
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