In their vigil against any share price manoeuvring, stock exchanges have served notices on more than 50 companies so far this year, seeking clarification on various price-sensitive rumours and speculative reports.
Interestingly, the firms mostly term these speculations, including those about merger and acquisition deals or contracts, as baseless in their replies to the bourses, but a majority of these have eventually turned out to be true.
Such notices include one on a media report about possible merger of Tech Mahindra and Satyam early this year — just a day before the IT firm’s founder and the then chairman, Ramalinga Raju, admitted to a massive fraud at the company. At that time, the two companies told the bourses that the report had “no truth” and was “speculative in nature”, but a few months later Satyam was acquired by Tech Mahindra.
Two other companies — Fortis Healthcare and Wockhardt — were issued notices by the NSE and the BSE at least twice during the year about speculation that Fortis was to acquire Wockhardt Hospitals.
While the two companies continued to deny any such move for months, eventually Fortis announced acquiring 10 hospitals of Wockhardt for Rs 909 crore earlier this month.
| UNDER SCANNER Some of the major companies that were issued notices: |
| * Fortis healthcare |
| * Wockhardt |
| * Indiabulls Real Estate |
| * DLF |
| * PVR |
| * RIL and Reliance Industrial Infrastructure |
In a very few cases, the companies have replied in the affirmative to such notices from the bourses. Earlier this month, NSE asked Indiabulls Real Estate about reports of it winning an auction to redevelop Mumbai Mantralaya. The company replied that its financial bid was declared the highest by officials, but it was awaiting the confirmation letter in this regard from the state government.
According to the exchange officials, such notices are issued to verify the accuracy of the reports and to inform the market place so that investor interest is safeguarded.
An official said the quantum of such notices has spurted in the recent years and more than 100 such notices are being issued a year.
The replies are, however, mostly vague and the companies mostly term the reports as speculative, untrue, baseless and premature. In some cases, the companies reply to reports of some possible deals in words that they were always on lookout for potential business transactions but there was nothing concrete or finalised at that stage.
There have been at least three such notices related to realty major DLF, including one to multiplex chain PVR, on reports that it was looking to acquire DT Cinemas, a wholly owned subsidiary of DLF Group.
PVR, however, replied that the report was baseless.
To another notice about DLF looking to surrender five of its nine IT-ITES Special Economic Zones, DLF said it had requested the government for de-notification of four SEZs.
Notices were issued to RIL and Reliance Industrial Infrastructure (RIIL) about reports of a merger between the two Mukesh Ambani group firms. However, RIIL termed them as speculative reports as also “baseless and false.”
