The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are expected to take a view on the controversial Pentamedia Graphics private placement, on Monday. The shares were supposed to be under a lock-in clause till January 2002, but reportedly found their way into the market.
The BSE sought details from Pentamedia after a broker complained to the exchange. Pentamedia had made a preferential allotment early this year of 10 lakh equity shares of Rs 10 each at a premium of Rs 490 per share to Malu Financial Securities for Rs 50 crore. As per the pact, the shares were not supposed to be "sold or hypothecated or transferred till January 30, 2002."
The exchanges, which have been informed that the shares are pledged with Centurion Bank, have sought details of the deal.
In a faxed response to Business Standard, Pentamedia's general manager (finance), and company secretary S Ramaswamy said, "As per the Securities and Exchange Board of India (Sebi) norms with respect to private placement, we have allotted 1 million shares to the allottee Malu and given credit to their safe custodian. It was given as per the allottee's requirement. There was no transfer of shares. The reply was given to Sebi and the stock exchange."
In response to BSE's query, Malu Financial Services confirmed to the exchange on August 30, that, "Based on our instructions, the company has credited the shares in the depository account of Nikko Stock Brokers."
However, Malu had in May this year filed a petition before the Company Law Board alleging that the shares were fraudulently transferred to Nikko and that they had sent no such instructions. In response, Pentamedia insists they had an unsigned fax from Malu instructing them to transfer the shares in the account of Nikko.
Malu wrote to the BSE on August 30 that "we hereby state that we have not been inconvenienced in these transactions and the shares are still held for our benefit and we clarify that the company has carried out our instructions only and not otherwise." Business Standard is in possession of this letter.
Subsequently, Malu withdrew the CLB petition on September 5. The exchanges got to knew of the discrepancy in the transfer of shares when a broker complained. BSE wrote to Pentamedia on August 7, 2001 asking for details about the private placement.
Pentamedia replied on August 27, that "due to frequent and confusing instructions about the client identity, the said shares appear to have been dematerialised in the name of the broker of the company. Apparently, the mistake can only be attributed to the system, over which the company has no control."
But one of the parties in the transaction pledged the shares with Centurion Bank, for an undisclosed sum. Centurion Bank on its part is clear that the shares were pledged with it as collateral against loans advanced and that the shares can be released only against the payment of the loan. Acknowledging this in a letter to BSE on Sept 6, Pentamedia has said that they met with Centurion Bank officials regarding the matter and "it is understood that the matter will be sorted out expeditiously." At that time the company had sought two weeks time in clearing up the matter.
