February 27: The current week has brokered a new era in listing on BSE. A dual listing has been granted for the first time by BSE to an OTCEI-listed company. Aryan Pesticides Ltd (APL), listed on the OTCEI since February 1996, got parallelly listed on the BSE on February 24, 1998.Thus far, companies listed on the OTCEI could not aspire to seek parallel listing on the other stock exchanges. In admitting the APL scrip, BSE has broken fresh ground and set a new precedent, which other exchanges in the country may seek to emulate. However, considering that there are more than five thousand dormant scrips listed on the BSE, it is debatable whether an OTCEI-listed company's shareholders would derive any additional benefit by such dual listing.
On the contrary, unscrupulous promoters might be tempted to use major stock exchanges as a hub for their manipulative machinations, which may be difficult to enact on the smaller OTCEI as they will get noticed. At the time of its listing on OTCEI, the company had anequity base of Rs 2.51 crore. As a prelude to the listing on the BSE, the company made a 1:1 bonus issue in April 1997, thereby taking the equity to Rs 5.02 crore. The heavy trade volumes and over sold positions during the entire 18 month period of market-making suggests that SISL as market makers tried varying tricks, in an attempt to attract investor attention, apparently to get rid of their holding. For example, on December 30, 1996 alone, a total of 2.35 lakh shares, or 37.5 per cent of the share capital divested by the offerors, were traded on the OTCEI at an average price of Rs 87.71 per share. Thus, it was not abnormal for the scrip to witness sudden bouts of activity with huge volumes on certain days, interspersed with frugal trading on other days. The shares of APL were transacted for 67 days in 1997. However, only for 25 days the daily volume exceeded 1,000 shares on the buy or sell side. The scrip was last traded on the OTCEI at Rs 53.50 on 11 December 1997. Ever since, there have been noquotations available on OTCEI. From the trade statistics, it is clear that the scrip was traded for 249 days in the 18-month period when the mandatory market making mechanism was in place. Thereafter, it was sparsely traded only on 11 occasions in the next seven month period.
As against its last reported quote of Rs 53.50 on OTCEI, the scrip attracted a maiden quote of Rs 72 on BSE on February 24, 1998. On the next day, it promptly moved up to end the day at Rs 83.20 a piece. That this upward movement of 55 per cent has been achieved on a cumulative volume of merely 800 shares is probably an indication of the shape of things to come in the near future. The wafer-thin shareholder base of APL certainly does not warrant a listing on BSE. Perhaps, the listing can help only the large shareholders who are still saddled with unsold APL wares!
State Bank of Travancore listed but not traded
On its part, the last major bank to hit the capital market in the current fiscal, State Bank of Travancore (SBT),has completed all formalities connected with listing its shares on the bourses. On their parts, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have also admitted the eagerly awaited SBT scrip for trading on February 20 and February 23 1998 respectively. While the existing shares of the bank are already listed on Chennai and Cochin Stock Exchanges, the newly issued shares have also been listed on these bourses on February 20 and February 23 respectively.
But, there is no trading till date on any of the exchanges! In fact, till Tuesday, March 3, the scrip may not be traded on BSE whose spokesperson attributed the delay to the system-failure at BSE. But why is there a delay on other exchanges? An NSE official clarifies that the delay is due to the non-receipt of the confirmation letter from Cochin Stock Exchange,the regional exchange for SBT! It may be recalled that in December 1997, SBT made a public issue of 11.54 lakh Rs 100 paid-up shares at a premium of Rs 500 per share. The issueclosed for public subscription on December 15 1997 and the basis of allotment was finalised on January 15, 1998 after a gap of 30 days.
However, SBT has taken additional 36 days for listing the new shares. Could this inordinate delay after allotment by SBT to list the shares be due to the poor market sentiments encountered by the newly listed shares of State Bank of Bikaner and Jaipur (SBBJ) on BSE? It is anyone's guess. Meanwhile, marketmen have started working out the comparative merits of SBT against SBBJ which is also a fellow-subsidiary of State Bank of India. In the market, they are not too optimistic that the SBT scrip would open for trading above the offer price of Rs 600 per share. They aver that though SBT is perceived to have a better image than SBBJ, the loss of more than 15 per cent in SBBJ scrip over its offer price in the last one month is both too steep and too recent to be completely ignored.
(Arranged by Investar -- The Aarthik News & Research Syndicate)
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
