A day after Securities and Exchange Board of India (Sebi) urged action against 331 listed firms suspected to be shell companies, a few of them like J Kumar Infraprojects, Parsvnath Developers and Prakash Industries have moved the Securities and Appellate Tribunal (SAT) against the regulator's circular. A few other companies may also follow suit and take a similar course seeking to get the restrictions on their trading lifted.
Sebi had sent a circular to stock exchanges late on Tuesday, urging them to take action against the 331 listed firms. The circular was based on a list sent by the ministry of corporate affairs. Trading in these firms has since been restricted to just once a month (first Monday of every month). Any upward price movement would not be permitted beyond the last traded price while additional surveillance deposit of 200 per cent of trade value would be collected from the buyers.
Apart from penny stocks, many of those named in the Sebi list also included mid-size profitable companies, in which many domestic and foreign institutions have investments. These companies had cried foul on Tuesday of them being suspected as shell companies.
SAT has reportedly asked Sebi if it had done an independent investigation on the companies named in the circular.
Companies like J Kumar Infraproects, Parsvnath Developers and Prakash Industries issued statements highlighting their financial performance and had urged Sebi and exchanges to lift trading restrictions on them.
J Kumar Infraprojects, which is executing several infrastructure projects across the country, including parts of the Mumbai Metro and Delhi Metro, said it is mulling legal recourse.
“J Kumar Infraprojects is not a shell company and the suspension of the regulator is uncalled for. We are seeking legal advice in the matter and we are approaching the regulator requesting it to recall its direction,” the company said.
Prakash Industries also said, “we are not a company which by any stretch of imagination be termed as such and we are healthy profit making company having an annual turnover of Rs 2,400 crore and profit of Rs 78 crore during financial year 2016-17.”
Experts feel that these companies should have been given time to respond and defend their case, before directly restricting their trading on bourses.
Sebi has asked stock exchanges to seek documents from the companies and verify their credentials and fundamentals.
National Stock Exchange says only 48 of the companies named in the circular are listed on NSE and of those 10 had already been suspended before Sebi issued the directive.
"The exchange has already commenced the process of collecting information, as advised by Sebi and will be reporting to Sebi after completing the exercise," it said in a statement.
