Z slot for fundamentally weak scrips

BSE to shift 50 stocks to Z group w.e.f Jan 19

The Bombay Stock Exchange (BSE) has decided to include in the Z group companies which are fundamentally weak in terms of networth, sales, market capitalisation and profitability.

The clause is in addition to the already existing criteria, where scrips, which under concentrated surveillance or have failed to comply with the listing agreement, are put into the Z group.

Based on the new criteria, the exchange is shifting 50 companies into the Z group effective January 19, 2004, the exchange said in a media release.

Originally the creation of Z group was intended to warn small investors "who may get lured into investment of securities of companies, which are primarily non compliant with the listing agreement," the Bombay Stock Exchange said.

Subsequently, the Exchange also started transferring securities into the Z group as a measure of surveillance action.

Later companies, which had not dematerialise their securities by entering into an agreement with either of the depositories, were also shifted to the Z group.

The assessment of weakness of companies based on the listed parmaters will be at the discretion of the exchange.

The exchange said it will periodically review the companies, which are in Z group and shift them in and out of the group.

This will be according to the criteria and change in circumstances of the companies themselves.

Late last year, the exchange created a separate T group, putting in those scrips which showed unusual movements in terms of prices or volumes.

Till then such stocks had been clubbed under the Z category though these companies necessarily were not violating the listing agreement.