Vedanta delisting: 12 crore shares 'suspected' error entries

More than 12 crore shares that were tendered in Vedanta Ltd delisting offer are under scanner for ‘suspected error entries,’ sources close to the development told Business Line. Most of these "error entries" seem to have happened during the market hours as in the extended deadline between 3.30-7 pm less than 1 crore shares were tendered, the sources said. 

Vedanta, informed the stock exchanges on Saturday evening that the delisting offer had failed. "....the delisting offer is deemed to have failed in terms of Regulation 19(1) of the Delisting Regulations," the company said in its notice.

BusinessLine had reported the failure of the offer soon after it closed at 7.30 pm on Friday. By 7.20 pm, the acquirer had managed to get only 125.47 crore shares against the requirement of 134 crore shares.

"The 12 crore shares that are being shown as unconfirmed bids are likely error entries. Large funds often punch their orders through multiple brokers. When so many shares are to be submitted, it is possible that some brokers could have made punching errors and then they resubmitted their bids. Since there is no option in the stock exchange system to immediately delete the erroneous trades, they remained in the database and kept showing, leading to confusion. But these were genuine errors the likes of which happen in everyday market trading," a source close to the offer managers said. 

The source further said that the stock exchanges will clarify, if asked, that there is no option to delete immediately on the last day of bidding. 
There were rumours in the market that acquirer had received 137 crore shares as such a figure was displayed in the table that showed the bids at every price. But a huge number of shares were being displayed as unconfirmed. Depositories did not give their confirmation for more than 12 crore shares as they could not find a proper owner of these shares in their demat database, the source said.

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What if Vedanta delisting attempt was successful?

Vedanta’s delisting offer was to close at 3.30 pm on Friday but the deadline was extended to 7 pm as it was believed that there was too much load on the systems and not all shareholder bids could be uploaded. While there were talks of tech glitch in the uploading process, regulatory officials say that bids were being continuously accepted and the uploading process was never stopped. Since bids were being received at varied prices for the delisting offer, the 'display' slowed down significantly.  

Data showed that bids were even received for up to Rs 1 lakh per share. More than 24 lakh shares were submitted for delisting at Rs 5555 per share. Vedanta had set a floor price for the delisting offer at Rs 87.25, for which it was severely criticised by market experts and analysts. Their view was that promoters were grossly undervaluing Vedanta.

LIC, which holds more than 23 crore shares, has sought a price of Rs 320 per share from Vedanta to tender their shares. Vedanta will have to return all the shares accepted in the offer in the next 2-3 business days as the delisting has failed. The company will also have to start the process of passing Rs 12 per share dividend to shareholders that it had received from Hindustan Zinc. Vedanta is a large shareholder of Hindustan Zinc, which has huge cash reserves.