Mumbai, May 31: For a sleepy and placid scrip like Elgi Equipments, which has hardly seen daily volumes in excess of 200 shares for the last two years, a sudden jump in volumes to over a lakh shares barely a week before the company announced its 1:1 bonus and a share split to Re 1 paid-up cannot but escape the watchful eyes of the exchange surveillance officials.Market intelligence suggests that the 147,100 shares traded on May 17, 2000 could have been a negotiated deal between a leading FII and a big Mumbai-based investment banker believed to be extremely bullish on auto ancillary scrips.
Interestingly, the board of Elgi Equipments met on Thursday May 25 to make the twin announcements of a 1:1 bonus and a share split from Rs 10 paid-up to Re 1 paid-up. It has convened an extraordinary general meeting of shareholders for seeking their approval on June 26.
Volumes again returned to normal levels till the official announcement on May 25. Since then, volumes picked up slightly on heightened investor interest and the scrip rose from Rs 200 level when the negotiated deal was struck to Rs 329 on May 30. Average daily volumes during the period rose to around 2,000 shares. Stock exchange authorities, when contacted, admitted that the volumes in the scrip did merit further investigation into the deal to ascertain whether it was tantamount to insider trading.
The company, incidentally, had made a rights issue of non-convertible debentures five years back with two detachable warrants entitling the holder to apply for one equity share against a payment of Rs 300 per share. Post-bonus and share split, each warrant can be converted into 20 shares by paying Rs 15 per share.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.