Financial Daily from THE HINDU group of publications
Friday, Oct 15, 2004
Financial Daily from THE HINDU group of publications Friday, Oct 15, 2004 |
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Stocks Markets - Stock Markets Info-Tech - IT Training SSI Ltd loses 70 pc in single day of trading Virendra Verma
Mumbai , Oct. 14 THE Chennai-based SSI Ltd saw a steep erosion of 70 per cent value in a single day of trading today. According to brokers, investors lost around Rs 8.5 crore based on the trading volume on Tuesday. The sorry pass came about with stock exchanges removing the circuit filter in SSI shares today, which normally should have happened on Tuesday, the brokers said. The two-day lapse led to the SSI scrip closing at Rs 48.70 on the BSE today against the previous close of Rs 166.75 on Tuesday, there having been no trading on Wednesday. The stock had hit the lower circuit of 10 per cent on Tuesday. Earlier, SSI had gone for a demerger of its business and as per the scheme, the main business of IT services was hived off and merged with Scandent Network Pvt Ltd while the relatively smaller training business remained with the company. As a result, SSI shareholders are to receive shares of the new company on a 1:1 basis. The BSE and the NSE had fixed October 20 as the record date for eligibility of shares and further fixed no-delivery period during October 12-19. This means that the investors who purchased the SSI shares during this period will not get the shares of the new IT company. In other words, those investors who bought SSI shares at Rs 166.75 on Tuesday will not be getting shares of the new company. According to brokers who bought SSI shares on Tuesday, stock exchanges either should have suspended the trading in scrip for an interim period or removed circuit filter limits on Tuesday, the first day of the book closure. The brokers alleged that this was a clear case of negligence on part of the BSE and the NSE. "On October 12, the exchanges had not suspended the trading of the company and permitted trading with 10 per cent circuit limits. This could have led the investors at large to believe that they were buying the shares of the new company and not the old company that had only negligible value after the demerger. Otherwise, the exchanges ought not to have put the circuit limit on Tuesday," said a broker. Defending the exchange decision, an NSE source said that suspension of trading in a scrip happens when there is change in ISIN number of the security. In the SSI case, there was no change in ISIN number and hence, no suspension in trading. The ISIN number is mandatory for securities being traded in dematerialised form and each company security has a distinct number. In this case, the problem occurred as the circuit filter came into place on the first day of a company getting demerged. That is why the circuit filters were removed on Thursday in consultation with the BSE and the SEBI, he said. Details of the demerger, book closure and ex-date for availing shares of the new company were made available to the stock market in advance. BSE officials were not available for comment.
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