Aug 10, 2017 01:49 PM IST | Source:

Are you stuck too? FIIs hold stake in 24 shell cos listed by SEBI; MFs trapped in 22

Funds held a maximum stake in J Kumar Infrastructure in which they hold as much as 11.3 percent stake, followed by Suraj Stone which funds have 10.04 percent stake in the company.

Kshitij Anand @kshanand

When the market regulator, SEBI earlier in the week released a list of 331 companies which were identified as shell companies trapped not only retail investors but foreign institutional investors as well as mutual funds.

Out of the list of 331 companies, only 249 companies were actively tracked by data providers, because most of them were already suspended even before the SEBI order.

Foreign institutional investors held a stake in 24 companies which include names like JKumar Infrastructure in which they hold more than 27 percent, followed by Info Drive Software which has accumulated 14 percent FII stake. They hold 10 percent stake in Cals Refiners, Capitaline data showed.

Other stocks in which FIIs holding stake include names like REI Agro, REI Six Ten, Parsavnath Developers, Pincon Spirit, Winsome Diamonds, Brushman India, Iris Mediaworks, Birla Power, SQS India BFSI, Rasoya Proteins, Gallantt Ispat etc. among others.

Some of the FIIs which have invested in JKumar Infrastructure include names like - Fullerton Lux funds, American Funds Insyrance Series, The Wellington Trust Company, Smallcap World Fund Inc., Letko Brosseau Emerging Markets Equity Funds, Blackrock Global Funds Asian Dragon Fund etc. among others.


Stocks of the 331 companies which are suspected to be shell companies can now only be traded once a month, the first Monday of every month. Those holding the stock will need to deposit an additional margin of 200 percent of the trade value with the exchanges.

In short, to buy Rs 10,000 worth of shares, the buyer will have to deposit an additional Rs 20,000 with the exchange. The buyer will get the margin money back only after five months.

Market regulator SEBI has now given a week’s time to stock exchanges to check whether the 331 companies identified as shell companies do in fact exist, according to a source who spoke to Moneycontrol on condition of anonymity.

Officials at the stock exchanges have been told to check the legitimacy of these companies and submit a report as early as next Tuesday (August 15).

“This is an excellent move from MCA to SEBI and yes there are 6-7 companies can be taken as genuine companies. Some of them have already made their presentation to SEBI,” SP Tulsian of said in an interview with CNBC-TV18.

“At the start of the financial year we have prepared a negative list of companies and when I compared it with the SEBI list, almost 150 stocks are falling in the same category,” he said.

While there are some companies which have a genuine business and the word ‘shell’ might be used loosely in this context, added Tulsian. But, many of the companies in the list have originated from Investment Company from Kolkata or others parts of Delhi.

If we look at the auditors of these companies, we found one auditor serving more than one company. As much as 30 auditors were found to be managing company affairs of 2-4 companies.


Mutual Funds:

Data collated from Capitaline showed that domestic funds hold a stake in as much as 22 companies which include names like JKumar Infrastructure, Suraj Stone, SBL industries, Knitworth Export, SQS India, Palco, Prakash Industries, Triton Corp etc. among others.

Funds held a maximum stake in J Kumar Infrastructure in which they hold as much as 11.3 percent stake, followed by Suraj Stone which funds have 10.04 percent stake in the company.

SBL Industries holds 5.6 percent stake, and Knitworth Export has accumulated nearly 2 percent stake.

Some of the funds invested in JKumar Infrastructure include names like DSP Blackrock, Birla Sunlife, HDFC Trustee Company, Reliance Capital Trustee Company, UTI Midcap Fund among others.
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