Bourses pull up over 50 companies over speculative reports

Bourses pull up over 50 companies over speculative reports

New Delhi: In their vigil against any share price manoeuvring, stock exchanges have served notices to more than 50 companies so far this year, seeking clarification on various price-sensitive rumours and speculative reports.

Interestingly, the firms mostly term these speculations, which includes those about merger and acquisition deals or contracts, as baseless in their replies to the bourses, but a majority of them have eventually turned out to be true.

Such notices include one on a media report about possible merger of Tech Mahindra and Satyam early this year—ust a day before the IT firm’s founder and the then Chairman Ramalinga Raju admitted to a massive fraud at the company.

At that time, the two companies told the bourses that the report had “no truth" and was “speculative in nature", but a few months later Satyam was acquired by Tech Mahindra.

Two other companies—Fortis Healthcare and Wockhardt—were issued notices by the National Stock Exchange and the Bombay Stock Exchange at least twice during the year about speculations that Fortis was to acquire Wockhardt Hospitals.

While the two companies continued to deny any such move for months, eventually Fortis announced acquiring ten hospitals of Wockhardt for Rs909 crore earlier this month.

In very few cases, the companies have replied in affirmative to such notices from the bourses. Earlier this month, NSE asked Indiabulls Real Estate about reports of it winning an auction to redevelop Mumbai Mantralaya. The company replied that its financial bid was declared the highest by the officials, but it was awaiting the confirmation letter in this regard from the state government.

According to the exchange officials, such notices are issued to verify the accuracy of the reports and to inform the market place so that investor interest was safeguarded.

An official said that the quantum of such notices has spurted in the recent years and more than 100 such notices are being issued a year.

The replies are, however, mostly vague and the companies mostly term as the reports as speculative, untrue, baseless and premature. In some cases, the companies reply to reports of some possible deals in words that they were always on lookout for potential business transactions but there was nothing concrete or finalised at that stage.

There have been at least three such notices related to realty major DLF, including one to multiplex chain PVR on reports that it was looking to acquire DT Cinemas, a wholly owned subsidiary of DLF Group. PVR, however, replied that the report was baseless.

To another notice about DLF looking to surrendering five of its nine IT-ITES Special Economic Zones, DLF said that it had requested the government for de-notification of four SEZs.

Prior to this, NSE asked DLF about reports that it might buy out its real-estate investment trust DLF Asset and merge it with itself. To this, DLF had said that it “has been looking at various options from time to time, however no definite option has been presented to the board so far for its consideration."

Later, promoters of DLF sold part of their stake in the company to raise funds to finance buying back private equity firm D E Shaw’s stake in DLF Asset.

Notices were issued to RIL and Reliance Industrial Infrastructure Ltd about reports of a merger between the two Mukesh Ambani group firms. However, RIIL termed them as speculative reports as also “baseless and false."

Similarly, asked about reports that the London Stock Exchange might buy stake in Financial Tech’s arm MCX-SX, the company denied “such stake sale to LSE at this moment."

A notice was also issued to Vijay Mallya-led Kingfisher Airlines about reports that it might sell 25% stake for Rs2,000 crore. To this, the company replied that it was “making efforts to raise equity and has been approached by potential investors. As soon as any discussion reaches a mature stage, the stock exchanges will be notified."

To another notice about reports that Diageo might pick up a minority stake in Mallya-led United Spirits, the company had said that there were discussions in this regard, but “the matter has not reached a stage of finality." Earlier this month, the talks for such a deal ended unsuccessfully.

Those having received notices from the bourses this year also include Religare, Hindustan Zinc, IVRCL Infra, Jubilant Organosys, ING Vysya Bank, Panoramic Universal, Dolphin Offshore, Essel Propack, Amtek Auto, GMR Industries, HFCL, Videocon, Suzlon Energy, MTNL, Jai Corp, Piramal Healthcare, Oracle Financial Services Software, Balrampur Chini Mills, Idea Cellular and Spice Communications.