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Non-listing of two de-merged entities of erstwhile Varun Shipping has left retail investors in the lurch.
The Joint Lenders Forum (JLF) for the restructuring of the debt of Varun Shipping was entered into on September 5, 2014, according to the 2014-15 annual report of Varun Resources (VRL) and Varun Global (VGL) dated March 31, 2015, but was disclosed to the public only on December 8, 2015.
VGL was not part of the JLF but the promoters sought to make it appear that VGL was also part of the JLF and issued themselves shares in VGL as well.
Following persistent complaints, more than 13 months after complaints were filed, SEBI asked the company to issue further shares to public shareholders on the same terms and conditions as the promoters in January 2017.
But this was protested by the retail shareholders. “We told SEBI it was incorrect since investment decisions had been made on the basis of the disclosed information when the company was listed. This information could not be changed arbitrarily after delisting,” a Chennai-based retail shareholder told BusinessLine . It was also unjust and unfair in every possible way, he said.
“Since the entire fraud, and non-disclosures were deliberate and that the market had been completely distorted due to the non-disclosures, how can SEBI even think of a solution which now after two years requires us to put in more funds simply to regain some lost shareholdings? The percentage loss in our shareholdings is entirely due to the promoters deliberate non-disclosures,” a Mumbai-based shareholder said.
No trading window
Varun Shipping has remained delisted for two years and eight months, thereby denying retail shareholders the opportunity to trade or exit, he said. In fact, for almost two years, the company remained delisted before insolvency proceedings began on June 14, 2017. With the imminent liquidation of Varun Resources, retail shareholders are being hurt for no fault of theirs. “We have been completely devastated and wiped out,” he said.
Retail investors are seeking compensation from SEBI/exchange reserves/investor protection fund saying that the slackness of SEBI in taking prompt, legal and correct action based on their complaints has resulted in the mess. The compensation is being sought as the listing exercise has become meaningless after Varun Resources was recommended for liquidation by the CoC.
“How do we invest our life savings and hard-earned money if we can be swindled so easily and SEBI is then so slack in following up complaints?” a Chennai-based shareholder asked. Many retail shareholders from across India spoke to BusinessLine and expressed their anguish after the paper reported that Varun Resources was headed for liquidation.
Yudhishthir Khatau, CMD, Varun Resources, did not respond to an email sent on Monday seeking comments. SEBI too did not respond to an email sent on Monday.
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