sebi:WTM/GM/CFD/49/2020-21

SEBI · SEBI · 2019-12-31 · G. Mahalingam, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Rejected

Regulations

• Reg. 11
• Reg. 16
• Reg. 10
• Reg. 17
• Reg. 19
• Reg. 20
• Reg. 8
• Reg. 17(1)
• Reg. 20(1)
• Reg. 38
• Reg. 19(1)
• Reg. 25A
• Reg. 19(2)(b)
• Reg. 5A

Holding

SEBI rejected the application by Sindhu Trade Links Limited for relaxation from Regulations 11, 17(1), 19(1) and 20 of the Delisting Regulations and disposed of the application dated February 04, 2020 accordingly.

Full text

Order in the matter of Sindhu Trade Links Limited Page 2 of 17 a. The application for exemption is made in the interest of minority shareholders and if the exemption / relaxation as sought, is not granted, it would be harsh and prejudical to the Company, promoters and public shareholders. b. The Company is in the business of transportation, media, investment and finance, petrol pump operations, power distribution and engineering projects and overseas mining and trading of coal. c. As on date of application, the authorized share capital of the Company is Rs.52,00,00,000 and the paid-up share capital of the Company is Rs.51,39,76,260 divided into 5,13,97,626 equity shares of Rs.10/- each. d. The shareholding pattern of the Company as on December 31, 2019 is as under: Category of shareholder No. of shareholders No. of equity shares held Percentage of shareholding Promoters and Promoter Group 35 3,85,32,196 74.97% Public 623 1,28,65,430 25.03% Total 658 5,13,97,626 100%

Order in the matter of Sindhu Trade Links Limited Page 3 of 17 f. As per the details available on BSE website as on January 27, 2020, the closing price of the share was Rs.60 and 52 weeks high and low prices were Rs.139.90 and Rs.57. The Company had an EPS of Rs.11.19. g. The Company and promoters have been exploring opportunities to expand operations and enter into new streams of business with the help of venture funding, FPIs, Family Offices, Institutions as well. However, they were concerned about the valuation of the Company, which is not getting reflected in the present stock price of the Company as compared to the turnover, business lines, promoter and director expertise due to foul play in the stock prices of the Company. h. Wide fluctuations were observed in share price of the Company in the past when the shares traded on the stock exchange platform were extremely minuscule. The Board and Promoters of the Company observed manipulation in share prices of the Company done by some public shareholders by creating fake demand and supply of a minuscule volume of 1 share. From February 16, 2017 to June 12, 2018, there had been repetitive trading of 1 share per day, which led to a constant increase in the share price of the Company. The total change in the price of the Company’s share was Rs. 54.10, from Rs.16.10 in February 2017 to Rs.70.20 in June 2018. As soon as the price touched the figure of Rs. 72, the volume of the shares of the Company that were being traded sky-rock

Order in the matter of Sindhu Trade Links Limited Page 4 of 17 volatility is the shareholder’s primary concern, and the Company has been losing reputation in the market even after having attained EPSs of Rs.11.81 and Rs.13.64 for FY17-18 and FY18-19, respectively. j. While the Applicant Company was earning profits and performing well, its shares did not reflect a positive outlook. Due to this reason, the Company failed to exploit its true potential. As a result, the public shareholders wanted a stop to these inconsistencies, as it was harming them financially. k. Due to unwarranted activities on the part of few stakeholders from outside the Company, the Company is unable to bring private equity partners for undertaking projects due to such unwarranted activities, which do not reflect the true value of the Company, and it is causing loss to innocent public shareholders. l. In the AGM held in September 2018, the shareholders suggested that the Company raise funds from the market, given the Company’s above average/commendable performance during the past few years in spite of economic slowdown and downturn as well. m. The Company also held meetings with a few Private Equity investors to discuss expansion related aspects, but all those investors were not comfortable with investing in a Company that depicted such a risky share price history and lack of liquidity in stock and return on investment in future as well thereby prejudicing public shareholders of the Company to a large ext

Source: SecMarx — sebi:WTM/GM/CFD/49/2020-21. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.