Sebi seeks time on Bharti delisting

Healthcare arm's delisting violates Sebi Act, says Jindal Securities.

The Securities and Exchange Board of India (Sebi) has sought more time to file its reply to a petition filed by Jindal Securities Pvt Ltd challenging the delisting of Sunil Mittal-promoted Bharti Healthcare Ltd (BHC) from the Bombay Stock Exchange.

The creditor had moved the Delhi High Court alleging that the delisting of BHC from the BSE was done in gross violation of the Sebi Act, 1992.

Earlier, Justice Vikramajit Sen had issued notices to the respondents "" Sebi, DSP Merrill Lynch, Bharti Healthcare, Bharti Overseas Trading company (BOTC), BSE, Capsugel Incorporation and Foreign Investment Promotion Board.

Jindal Securities has sought restraint on the transfer of BHL shares to its promoter shareholder BOTC on the ground that the delisting through buying back of shares (reverse book building method) was done with an intention to commit fraud on shareholders and in contravention of provisions of the Sebi Act, 1992, and its various regulations.

According to the petition filed through counsel Kamal Mehta, the exit price offered and arrived at was manipulated to lower levels by rigging and insider trading, which was evident from the fact that the exit price of Rs 83 and the minimum reserve price of Rs 82.60 was more or less the same, it alleged.

The promoters forcefully delisted the shares without paying the total control premium to its minority shareholders, thus earning crores of rupees at the expense of small shareholders, the petition said, adding "this is unprecedented in the history of stock delisting, more particularly of a stock belonging to one of the leading industrial groups of the country."

According to the petition, BHL and its promoters had concealed certain facts from its shareholders and given misleading and contrary statements to the government that said the delisting was done to consolidate its current shareholding to 100 per cent. BOTC on December 20 last year had announced the sale of BHL to Capsugel, a division of Pfizer.

Jindal Securities stated that the delisting was done in connivance with BSE officials without giving an open offer to minority shareholders, as the company's fraudulent intention was to sell it to a foreign MNC, Capsugel Incorporation, which didn't want to be regulated by an Indian regulator (Sebi).

The petition also alleged that another promoter, Bharti Enterprise, had sold 7.15 per cent of BHL's share capital and no such information was available on the BSE website, which was in violation of Sebi regulations.

According to the shareholder, the promoter shareholding at the end of all the quarters for which information was available (from June 01 to December 2004) was either equal to or above 90 per cent of the paid-up capital of the company.

Besides, the promoter shareholding was 83,56,715 shares, constituting 90 per cent of the paid-up capital of the company, for the quarter ending December 2004.

"It is only during the quarter ending March 2005 that the promoters sold 7,49,326 shares constituting 8.07 per cent paid-up capital of the company and the market place and the shareholders were kept in dark about this," it stated.