But, now, for the first time it has been admitted for trading by the country's premier stock exchange. The bank's Rs 100 paid-up share has recorded a maiden quote of Rs 375 on June 4 which discounts the bank's fiscal 1998 earnings about 2.7 times as compared with other SBI associate banks like State Bank of Travancore and State Bank of Bikaner whose current P/E multiples are 4 and 2.6 respectively. In fact, on its regional stock exchange at Bangalore, SBM was last traded at only Rs 300 on May 27, which was lower than even its rights price of Rs 350 offered in February 1996, and on Chennai, it has not found any buyer for quite some time.

The poor sentiment towards SBM's scrip, despite the bank's uninterrupted record of profitability anddividend payments for more than three decades, is not far to seek. The SBI (Subsidiary Banks) Act of 1959 prevents a single individual from holding more than 200 shares. As per the Act, such individuals with excess holding will have to forego the rights or dividend over and above 200 shares each. So much so that during the last rights issue in February 1996, SBM had to appeal to more than 200 shareholders to renounce their rights! Some of these shareholders still applied for their full rights which were rejected by the bank. This resulted in an under subscription of the rights issue and SBI had to pump in additional money for about 1.3 lakh shares.

Today, as much as 90 per cent of the bank's equity of Rs 36 crore is held by SBI. The poor liquidity coupled with the meaningless restriction on holding more than 200 shares have obviously curtailed the prospects of the scrip on the trading floor. It is high time the bank, instead of seeking newer listing pastures like the one on the premier stock exchangeto popularise its scrip, takes effective steps to remove the outdated investor unfriendly regulations.

Commitment on Calcutta takes 250 days

During fiscal 1998 about 60 equity public issues hit the Indian capital market, of which 49 had been listed until last week on one stock exchange or the other. Of the balance that were yet to be traced on in any of the stock exchanges, Commitment Finance Ltd (CFL) has been spotted on the Calcutta Stock Exchange this week, exactly 250 days after its issue-closing! This Calcutta-based finance company came out with a small public issue of Rs 1 crore at par on September 16, 1997 and the issue was reportedly closed on September 25. CFL's shares were proposed to be listed on the Calcutta and Guwahati stock exchanges.

Post-issue, for more than eight months, CFL was in the `missing list' without any trace of the scrip either on CSE or on Guwahati.

But, on June 2, CFL surfaced on the CSE with a maiden quote of Rs 9.70, and closed at a higher rate of Rs 10.50. Thescrip drew blank the next day. On June 4, it has once again re-surfaced on the CSE with two-way quotes of Rs 10.50 and Rs 10. With a small capital base of Rs 3.5 crore, CFL is quite unlikely to put up any great show as the City of Joy already has quite a few small sized finance companies struggling to survive in a highly competitive environment. Whether CFL's sudden appearance in the official quotation list after so many months, sans any tangible financial performance, benefits the investing public or not, it can certainly help the promoters to use it as an exit route! It is worth noting here that of the promoters' post-issue stake of over 71 per cent, only 25 per cent is under lock-in.

Further, the company's pre-issue promoters' equity of Rs 1.88 crore, of which just Rs 28 lakh was locked-in, was held by as many as 64 parties of which 39 were private companies!

(Arranged by Investar -- The Aarthik News & Research Syndicate)