The Hindu Business Line : Slump in stock prices prompts promoters to pick up shares

THE recent fall in stock prices may have kept a large number of investors away from the market, but promoters and directors of several companies are using the slump to acquire their company's shares from the open market.

In the last couple of weeks, promoters and directors of companies such as Bajaj Auto, SRF Ltd, Marico Industries and others have been purchasing shares of their companies from the open market.

Other companies in which promoters have been purchasing shares include Pritish Nandy Communication, Asian Electronics and Chambal Fertlisers.

As per the SEBI takeover regulations, promoters can purchase shares of their companies from the open market through creeping acquisition route.

Under this, they can purchase up to 5 per cent stake in the company in a single financial year.

Mr Ambarish Baliga, Vice-President, Karvy Stock Broking, said, "Promoters and directors of companies are increasing their holdings when their companies are doing well".

A top official of a leading broking firm said, "This shows that the promoters feel that the stock price of their companies is lower than the true value".

The Marico Industries Chairman and Managing Director, Mr Harsh C. Mariwala, acquired 1,17312 shares between May 17 and June 7 from the open market.

Similarly, various investment companies of K.K. Birla group, promoters of Chambal Fertiliser, have been buying the shares from the open market. Some of the promoter group companies include Uttam Commercial and Ronson Traders.

Last week, Mr Arun Bharat Ram, Chairman and Managing Director of SRF, acquired 40,000 shares of the company through market purchase.

Similarly, Ms Usha S. Shah, one of the promoters of Asian Electronics, acquired 2,92,633 shares amounting to 3.44 per cent the company's stake.

Mr Pritish Nandy, promoter of Pritish Nandy Communication, along with some corporate entities too has bought shares from the open market after the crash of May 17.

The Bajaj Auto Directors, Mr Rahul Bajaj and Mr Madhur Bajaj, are also purchasing shares of the company.

Mr Rahul Bajaj bought 14,000 shares of the company on June 7 while Mr Madhur Bajaj bought 16,000 shares on May 29.

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