Action time

Institutional shareholders of the Stock Holding Corporation of India (SHCIL), which include SUTI, LIC, IDBI, IFCI and GIC (who together hold over 51 per cent of its equity), have finally bestirred themselves to ask a few questions about the many subsidiaries it has spawned and their quiet subsequent privatisation. According to an institutional source, “at SHCIL’s 18th Annual General Meeting on 31st August, 2005, it was permitted to pump up to Rs 50 crore in SCHIL Service Ltd (SSL), so why the dilution without informing institutional shareholders?” The source says that shareholders are finally beginning to work out the value of their shareholding in SHCIL. For instance, they want a watch on SHCIL’s holding in the National Stock Exchange (NSE), which is now valued at around Rs 1000 crore. They are worried about the implications of SHCIL’s many quiet moves without informing its shareholders and the presence of charge-sheeted employees among top executives. A few BSE brokers are also questioning the large allocation of space in the BSE towers to SSL, based on the assumption that it is an institutional member. As we have revealed recently, 76 per cent of its equity is held by private entities. There is also growing speculation about the reason for the regulator’s curious silence over developments at SHCIL inspite of the sensitivity of its market operations.

Active surveillance

With stock prices looking wobbly, the promoters and large shareholders of certain companies are apparently getting ready to dump their stocks and book a profit. The two depositories have suddenly started receiving orders for dematerialisation of a large number of physical shares. Following a discussion with the regulator, the depositories have been asked to keep stock exchanges informed so that they can keep a watch on the price and volume movement of such companies. All this is part of the decision to launch ‘active surveillance cells” at both depositories following the demat scam, which is still in the process of being implemented. Ironically, nearly six months after Sebi inspections revealed that some investors have been dematerialising and rematerialising the same set of shares several times over, and paying up the costs involved in the process, the regulator is yet to get to the bottom of this issue too.

... contd.