The Hindu Business Line : Glitches in ONGC allotment; depository freezes process

THE Government's sale of ONGC shares today ran into an unseemly mess after its issue registrar MCS Ltd apparently goofed up in allotting shares to winning bidders.

The National Securities Depository Ltd froze allotment of ONGC shares to successful bidders at about 11.30 a.m. when MCS Ltd informed it that there was a mistake in allotment of new shares.

According to NSDL officials, certain high net worth individuals were given full credit of shares in their demat account when they were allotted less than what they had applied for.

The Disinvestment Minister, Mr Arun Shourie, described the glitch as a "human error". Mr Shourie told newspersons here that the exact extent of the damage was yet to be ascertained fully. "We will be able to put a number to it after our experts assess (the damage)," he said.

Several investors, who took the first opportunity to sell their new shares that were credited to their depository accounts in the morning, had to square off the trades at a loss after the NSDL freeze caught them unawares. The price of ONGC shares fell on the exchanges after many investors sold from their allotments.

It fell to a low of Rs 730 on the NSE but came back sharply after many investors had to square their sales later. It closed the day flat at Rs 844 per share.

The capital markets regulator Securities and Exchange Board of India has assured investors that the problem will be sorted out by Tuesday and the entries reversed.

"This is possibly a simple human error. Credits were given in excess of what was due to investors by way of proportionate allotment. Fortunately, the error was discovered early and we are in the process of reversing these," Mr A.K. Batra, Member, SEBI Board, told newspersons here.

Officials of SEBI, NSE and Disinvestment Ministry were working late into the night to fix the glitch. Five officials of Hyderabad-based Karvy Consultants Ltd were specially flown down to help the officials with the trouble-shooting.

Even though some marketmen expressed concern that there could have been some foul-play, both Mr Batra as well as Mr Shourie were keen to emphasise that it was a genuine error and there was no other "intent". However, some analysts did express surprise that MCS, which has long experience as a share registry, committed such a mistake in such an important issue. MCS officials were not available for comment.

Will be sorted out soon: Shourie

"There was an error in the process of allotments of ONGC shares by MCS, a registry to the issue. Some investors were allotted more shares than were due to them.

"We are flying down five people from Karvy Securities, Hyderabad, to solve the glitch, along with officials from NSE, SEBI and Disinvestment Ministry. The matter would be sorted out as soon as possible and the necessary rectifications made. We are also in the process of satisfying ourselves that there was no "intent" and this was a genuine error. We are yet to quantify the extent of the damage. We would be able to put a number to it post this exercise between the various experts. The issue would be settled soon." - Arun Shourie, Disinvestment Minister.

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Glitches in ONGC allotment; depository freezes process