Indiabulls group company stocks took a beating on the bourses in early trade on Wednesday after a Veritas report questioned its governance practices.
The shares of Indiabulls Financial Services fell about 11 per cent; Indiabulls Real Estate dropped by over 12 per cent; Indiabulls Power slipped over 11.8 per cent and Indiabulls Securities fell by about five per cent during intra-day trade. But most of the stocks recovered sharply after the group came out with clarification.
The Indiabulls group hit back with a strong response which said that the “allegations made are factually incorrect and have ignored disclosures in public domain made through the Annual Reports of FY-2011 and FY-2012, which have also been circulated to all shareholders.” A detailed explanation was circulated by the company.
The Canadian research firm’s report titled, ‘Bilking India’, said that the financial disclosures of Indiabulls Real Estate (IBREL) and Indiabulls Power are ‘unreliable’. The sole purpose of IBREL is to bilk institutional and retail investors for the benefit of select insiders, observed Veritas.
Veritas has advised its clients to ‘Sell’ Indiabulls group stocks as ‘corporate governance had been sacrificed to enrich the controlling stakeholders’.
The report concluded with Veritas taking a strong stance against Indiabulls. Veritas said ‘”it wouldn’t buy IBREL and other related group entities at any price — unless a new management is put in charge and the financials cleansed of malfeasance.”
Indiabulls said the allegations made “demonstrate the malafide intentions and could attract criminal actions under Indian Penal Code.” Indiabulls went on to say that the deductions of the report “are not an oversight but an intentional act for profiteering.”
Indiabulls has not been the only one to have been attacked by Veritas.
Over the last year, Reliance Industries, Reliance Communications, Kingfisher Airlines and DLF have also been attacked by Neeraj Monga and his team (from Veritas). Many of these companies have provided clarifications to the allegations made by Veritas.