Centurion Bank has declared itself an innocent bystander in the Pentamedia Graphics preferential allotment imbroglio on the reasoning that it is an issue to be sorted out between the three parties - Pentamedia, Malu Financial Securities and Nikko Stock Broker Pvt Ltd.
Pentamedia had made a preferential allotment of one million shares, worth Rs 50 crore, on January 30, 2001 to one Malu Financial Securities, but it went into the custody of Nikko who then pledged it with Centurion Bank.
The bank is very clear that unless the entire amount is recovered it will not be able to release the pledged shares, which were actually placed with the bank in order to cover a shortfall arising from a depreciation in the value of the securities pledged by Nikko Stock Brokers Pvt Ltd.
Sources in Centurion Bank revealed that in March this year they found that Nikko - one of their clients - value of assets already under pledge with the bank was running low due to a depreciation in the value of the securities and the bank asked them to "top it."
That was when Nikko, who was described as the safe custodian for Manu Financial Securities, brought in the one million shares of Pentamedia to replenish the eroded value. At that time the value of the shares was Rs 7.7 crore. According to bank sources they knew at that time that the shares were under a lock-in. The bank checked up with National Securities Depository Ltd (NSDL) regarding the feasibility of holding shares which were under lock-in and received an okay from them - but the shares were not to be disposed off.
With these clearances Centurion Bank accepted the additional securities. ". In fact, sources said the securities have again eroded in value requiring some more "topping" by Nikko. Officials asserted that the entire details of the transaction has been made available to Securities and Exchange Board of India (Sebi) which had asked for it.
With the hearing in the Chennai High Court over the stand-off between Pentamedia and The Stock Exchange, Mumbai (BSE) with respect to the proposed suspension in trading in the company's shares, postponed to October 31, the company is known to be attempting to retrieve the shares from the bank and regularise the deal. Faxes and e-mails sent to the company's executives in Chennai failed to elicit any response from them. The information is that the company might negotiate with Nikko in order to retrieve the shares.
The bank is however clear that it has no dealings with Pentamedia and is dealing only with Nikko, its client.
