Mumbai, June 29: It's happened again! Out of the 195 companies which were to have gone into compulsory demat from June 26, 51 companies have been found unable to keep to the schedule. The reason being that these companies have been unable to establish connectivity with either of the depositories.The Securities and Exchange Board of India (Sebi) has decided to extend the date now. This is not the first time that Sebi has been forced to extend the scheduled date for dematting scrips.
Last time it happened was before the May 8 deadline when 63 companies requested more time on the well-worn excuse of no-connectivity with the depositories. Many of these companies have now been put on the September list.
Sebi sources said that show cause notices had been issued to the companies asking them to explain: a) why they had not yet got connectivity with the depositories and b) how much time would be required for them to do so. Around 15 days would be given for the companies to reply.
While Sebi is trying everything on its side to convince the companies to sign up with the depositories - "we are also trying coercion" according to an official. Sources indicated that companies are resisting the move to dematerialise their shares as long as they can, which would be upto March 31, 2001.
Beyond March 2001, trading in physical securities would not be allowed. While Sebi has indicated a suspension of trading as a extreme penalty for non-compliance with the demat schedule, it has left it to the stock exchanges to actually effect it.
Some of the excuses trotted out by the companies for not dematerialising their shares are - they do not have VSAT connectivity, they are not making sufficient profits to set up the necessary infrastructure and they are not getting registrars to sign up with.
It may be recalled that Sebi had announced the schedule and the list for dematerialisation as far back as in February 28 this year. This should have given enough time to the companies to take suitable steps to sign agreements with National Securities Depository Ltd and Central Depository Services Ltd.Last week Sebi had called around 20 of the companies with respect to delay in dematting.
It has been decided that the effective date for compulsory trading by institutional investors and OCBs in dematerialised form for these 51 scrips therefore stands postponed and the revised date would be announced later.
Some of the companies that failed to make it include Alpic Finance, Bajaj Tempo, Bharati Telecom, Godfrey Phillips, Goodyear India, Kitply Industries, Mafatlal Industries, Swaraj Mazda among others.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.