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The finance ministry has sought comments from Life Insurance Corporation of India (LIC) with respect to its investment in Gitanjali Gems. The ministry was responding to a complaint received on the sharp fall in the stock price of Gitanjali Gems and the decision of LIC to stay invested.
A senior finance ministry official said, "We had received a complaint about the sharp fall in the company's stock and LIC's decision to invest. Hence, as a procedural requirement, we have asked them for their comments on the same."
LIC, the biggest institutional investor in the stock market, held 4.36% stake in Gitanjali Gems during the January-March quarter, which has now gone up to 4.89 % as of June 30, 2013. In the quarter ended September 30, 2012, LIC had 1.95% stake in the company.
On a one year basis, the share price of Gitanjali Gems has seen more a drop of more than 70%. According to data from Bombay Stock Exchange, Gitanjali Gems closed at Rs 324 on July 26, 2012.
A senior LIC official said that they have increased their stake over one year and that this decision was taken based on the good fundamentals of the company.
"The company has one of the highest turnover in the gems and jewellery sector. LIC always takes calculated risks, since we are growth oriented," the official said.
LIC did not respond to a query sent by Business Standard.
Last week, the Securities and Exchange Board of India (Sebi) and the National Stock Exchange barred 26 entities from the stock market in connection with a case involving unusual trades handled by Prime Broking in Gitanjali Gems shares.
The banned entities include Prime Securities as well as Mehul Choksi, managing director (MD) and promoter of Gitanjali Gems, according to a notice put on the exchange’s website on Thursday.
According to the circular, the investigation into Prime Broking and the trading activity in Gitanjali is still ongoing. The ban would remain for six months or till the investigation is complete, whichever is earlier, said the circular.
Choksi denied any involvement with Prime Securities. “I am very surprised... I have nothing to do with Prime. I shall review my options,” he had then said.
At the end of today's trading session, Gitanjali Gems shares closed at Rs 85.10, down by 4.97% from previous day's close on the Bombay Stock Exchange (BSE).
| LIC stake in Gitanjali Gems | ||
| As on | Number of shares | % of holding |
| 30/09/2012 | 1799784 | 1.95 |
| 31/12/2012 | 2699784 | 2.93 |
| 31/03/2013 | 4015842 | 4.36 |
| 30/06/2013 | 4499784 | 4.89 |
| Source: Capitaline | ||
| Compiled by BS Research Bureau | ||
