The Hindu Business Line : ONGC allotment: Human error or tampering?

EVEN as the Government and its associates in the sale of ONGC shares continue to grapple with wrongly credited allotments to investors, doubts have begun to surface whether the mess-up was just a "human error."

A reliable source told Business Line that it may not have been merely a case of wrongly recorded data considering the complexity of the errors. Some investors have even been allotted more shares than they had applied for.

Several retail investors, who were supposed to get as much as they applied for because of under-subscription in that category, have been given fewer shares.

According to the source, the issue has not been resolved despite several officials of the Ministries of Disinvestment and Finance, SEBI, lead managers, and specialists from Karvy Consultants working overtime for nearly five days with the issue registrar MCS Ltd.

While MCS appears to have become the "fall guy" in the muddle, merchant banking sources said the lead managers should be held equally responsible as they are supposed to ratify the final allocation data. "Some blame should also be placed at SEBI's door.

In spite of the importance of the ONGC issue, they appear to have been lax in supervision," a regulatory source admitted.

However, conspiracy theorists have begun to attribute more sinister motives.

One source said some "disgruntled employees" introduced mistakes while entering data. Another source said it was an "error caused by sheer exhaustion of the employees."

While data-entry errors and mismatch of records are not uncommon, the magnitude of the glitch makes it a clear case of tamper, said a source.

"Even if the persons responsible for this were identified, their names cannot be disclosed at this stage as investigations are on," he said.

In a book-building process, applications are accepted by the book-running lead managers.

The forms and cheques are forwarded to the bankers after the lead managers collect the details. After the bidding process is completed, the lead mangers pass the data in electronic form to the registrar which then reconciles it with that in the physical forms.

The basis of allotment is decided by the company, lead managers, and registrar together, and communicated to the stock exchanges where the shares are due to be listed.

The allotment is entered against each applicant in batches in each category after the exchanges clear the allotment proposal.

MCS is one of the oldest registrars in the country (around since 1985) and has demonstrated its capability to handle large issues.

The Mangalore Refinery and Petrochemical Ltd issue, one of the biggest issues till date in terms of number of applications (over 40 lakh) was successfully handled by MCS. It also successfully handled the GAIL public offer, which had over 8 lakh applicants.

But it appears ONGC, with only six lakh applications, has turned out to be a different ball game altogether for MCS.

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ONGC allotment: Human error or tampering?