Corporate Nov 3, 2012
Sebi has again barked at UB group Chairman Vijay Mallya, but softly.
According to a report in the Business Standard, it has asked Mallya and United Breweries Holdings Ltd (UBHL) to give details of the fall in promoter holdings in the company.
The newspaper had earlier reported that promoter holding in UBHL had fallen to 43.09 percent as of 30 September from 51.50 percent as of June-end.
The 8.41 percent reduction in the stake worth Rs 55 crore has been attributed to a sale of shares by three promoter group companies, Mallya Pvt Ltd, Kamsco Industries and Gem Investment & Trading Pvt Ltd.
According to today's report, the company has not informed the exchanges about the stake reduction, which is a violation of Takeover Regulations and Prohibition of Insider Trading Regulations.
The norm stipulates companies have to intimate any substantial promoter stake reduction to exchanges in two days.
The fact that the Sebi is seeking details is significant because Mallya cut his holding in the company at a time when the share prices had soared on speculation that he may sell a stake in United Spirits Ltd to UK company Diageo.
"The UBHL scrip had seen a three-fold rise from its 52-week low of Rs 53 in June to touch a high of Rs 155 in September on the Bombay Stock Exchange (BSE)," the report said.
After weeks of speculation, both the companies had on 25 September confirmed to the exchanges that they were in talks for a possible deal.
The stocks of all Mallya group companies had been volatile during the period when the rumour mills worked hard. Even Kingfisher Airlines rose, an unlikely one given the troubles it was facing.
Earlier, there were reports that Sebi is also probing whether there has been any insider trading in the shares of Kingfisher, United Spirits and UBHL during the period.
Interestingly, in an anti-climax to the whole episode, Mallya last week told Reuters that he is not sure whether the deal with Diageo will actually happen.
Reacting to the statement, shares of United Spirits and UBHL had nosedived. Yesterday, United Spirits had closed at Rs 1184.30 and UBHL at Rs 114.80.
Now, it is clear that Mallya made a neat profit during the period when speculation ruled the roost. But what about the lay investor who may have invested in these shares during the period?
Should one expect that the regulator will get to the bottom of these developments and find out the truth?
As of now, that seems to be expecting too much. Sebi has only asked for the details now and the BS report says it may even send a showcause notice to the company, if Mallya's response fails to convince.
Analyst SP Tulsian has been quoted as saying in the report that many companies have escaped these rules in the past five years as Sebi lacks adequate monitoring system.
"But Mallya's case is serious due to deal talks," he has told the newspaper.
But let's wait and see how serious Sebi can get.
More From Rajesh Pandathil.