Sebi bars 331 ‘shell’ cos from trading after govt list

MUMBAI: Market regulator Sebi has banned 331 companies for trading on the stock exchanges after the government named them on the list of mischievous companies suspected of being involved in money laundering and tax evasion.

The list was drawn up by the Ministry of Corporate Affairs and transmitted to the regulator for future action.

At least four of these companies with established business history, reacted strongly to Sebi’s decision Monday night.

J Kumar Infraprojects, SQS India BFSI, Pincon Spirits and Prakash Industries said the suspension was without due process.

Through strongly written letter, these companies have also stressed that Sebi’s decision was detrimental to the interests of its shareholders and called for the withdrawal of the suspension.

They added that they were removed from the list of fictitious companies and indicated that they require a legal opinion on the issue.

Of the four, J Kumar Infraprojects, with a market capitalization of Rs 150 crore of Rs 2 is known for its work in the fields of engineering, design and construction.

He is involved in several high-priced projects, including the Mumbai Metro, New Bombay and Delhi, several major sailing and highways in India.

The company, which has been blocked by the BMC for repairing poor roads, said the decision will have no impact on its ongoing projects.

Prakash Industries, whose billionaire Rakesh Jhunjhunwala, one of its top 1% investors, had a market capitalization of 2.08 billion rupees.

The market value of India SQS BFSI was Rs 536 crore while Pincon Spirits was Rs 316 crore.

Estimated before the suspension, the total market cap of these 331 entities was approximately Rs 1.67 lakh crore.

Monday night, Sebi had sent instructions to the scholarships to suspend the trade of 331 control companies.

According to the regulatory directive, BSE and NSE have suspended these companies for their platform Tuesday.

Under the Sebi rules, these actions can only be redeemed once a month.

Although most companies mentioned in the trade somewhat or very rarely, some are traded regularly and have foreign and domestic institutional investors as well as individual investors recognized.

The abrupt suspension of these securities has affected the investor sentiment and also put some derivative traders in the back.

Under current rules, investors are allowed to hold shares as collateral (margin) with the stock exchanges when trading segment derivatives.

There are 331 units of these companies that form part of the total margin currently presented to stock exchanges.

Since these shares can not be traded during the day, these shares are no longer worth anything and will not be considered for the margins of derivative transactions.

“This will now push derivatives traders to reduce their positions in the segment, organize another type of collateral as margin or even reduce their share in the cash segment to offset the margin deficit,” the official said a securities house .