Nevertheless, these `premier' listing guidelines lose their shine and become listless in the hands of those promoters who have the knack to juggle around the letter and have the connections to circumvent the spirit of the guidelines. Instead of enhancing the liquidity in favour of the public, the listing jugglery boosts the trading acrobatism of the promoter on BSE.

Believe it or not, a new issue of 1996 vintage, whose public offer was only Rs 1.25 crore, out of its then equity of Rs 5 crore, has got its shares listed on BSE this month! How was this possible? The listing department ofBSE in its official reply has clarified that since the company's present "issued, subscribed and paid-up" capital stood at Rs 15.49 crore, it was eligible for listing on BSE, having passed the second condition.

However, a close look at the financials of this mysterious new listing on BSE, Bhagwati Cottons Ltd (BCL), reveals that the stock exchange authorities don't even bother about the well-recognised purpose of listing of a company's equity!

The Mumbai-based promoters of the above mentioned company are no strangers to investors. In September 1993, the promoters, who called themselves "Bansal Group", floated their maiden public issue under the banner Yangir Synthetics Ltd (YSL), a 100 per cent export oriented texturising unit. YSL, which offered Rs 1.80 crore to public out of its equity of Rs 3 crore was proposed to be listed on the Mumbai and Ahmedabad stock exchanges. Around that time, BSE did not have the Rs 10 crore of equity as the floor limit. Four years after its listing, the scrip was lasttraded at Rs 3.50 in February 1997 on BSE. But, it is yet to be traced on ASE!

The same promoters floated yet another company public in January 1996. This time, they made an "offer for sale" of Rs 80 lakh at par under the banner Kathayee Cotton Mills Ltd (KCML). This Alwaye (Kerala)-registered company's Rs 3.09 crore equity was proposed to be listed on the Kochi and Ahmedabad stock exchanges. Nearly two and a half years have passed since the offer for sale but, the share is yet to find a quote in any of these two stock exchanges. Barely five months after KCML's public offer, the promoters brought out in May 1996 yet another "cotton offer" to public. And that was Bhagwati Cottons (BCL), the subject of this article.

This Mumbai-registered trader of cotton and cotton yarn had an equity of Rs 5 crore of which only 25 per cent (Rs 1.25 crore) was floated public through "an offer for sale" by the two promoter-directors. As per BCL's offer document, its shares were to be listed only on the Pune and Ahmedabadbourses as its tiny public offer could not comply with the BSE's then listing guidelines. The public offer of BCL shares closed on May 31, 1996 and the share was listed in a record period of 32 days on the PSE and 33 days on the ASE.

Nonetheless, in the last two years, the scrip couldn't get a quote even once in any of these two exchanges despite a turnover and profit of Rs 25.25 crore and Rs 1.56 crore respectively for fiscal 1996, and Rs 97.54 crore and Rs 4.70 crore respectively for fiscal 1997.

Come 1998. The scrip suddenly appears on the screen of BSE on May 22 with an opening quote of Rs 11 and a closing price of Rs 12. The share attracted two trades with a volume of 400 shares on the first day of its trading on BSE. However, since then the scrip has completely disappeared from the scene. How did BCL with a public float of just Rs 1.25 crore get its equity listed on BSE?

According to the company sources with effect from April 1996, BCL amalgamated with itself a group company, GPB Fibres Ltd(GFL) which had an equity base of Rs 10.49 crore. As the exchange of shares for the amalgamating companies was in the ratio of 1:1 after the amalgamation, BCL's paid up equity automatically shot up to Rs 15.50 crore which made the company eligible for the BSE listing!

What's intriguing is why should the promoters amalgamate a closely-held company (GFL) with the public company? Why couldn't they also amalgamate the other two listed companies of the group, YSL and KCML, which are now into oblivion?

Interestingly, when BCL went public in May 1996, GFL's equity and reserves were put at Rs 6 crore and Rs 2.94 crore respectively which actually pertained to fiscal 1995. BCL's offer document attributed the delay of fiscal 1996 working results to a fire which broke out at the registered office of the group! The company sources now reveal that GFL issued a bonus in fiscal 1996 which enhanced its equity to Rs 10 crore just before the amalgamation. The public offer of BCL was made towards the end of May 1996and the allotment was completed in June 1996.

A critical question that arises here is, if GFL were to be amalgamated with BCL with effect from April 1996, how come this was not disclosed to the prospective investors of BCL in May 1996? BSE justifies its permission to BCL's listing on the country's premier stock exchange citing that the company is eligible for listing as its present issued capital is "more than the threshold limit of Rs 10 crore". But, who is going to benefit from BCL's listing on BSE?

The stock exchange authorities may not look at all these but, the fact is BCL originally had a shareholder base of just about 300 and now after the amalgamation it has gone up to around 400. In other words, of BCL's present equity of Rs 15.50 crore, more than 90 per cent is held by the promoters themselves! Is BSE concerned about the small public investors, or is it paving the way for the promoters to get a market value for their "private"equity?

(Arranged by Investar -- The Aarthik News & ResearchSyndicate)