NSE turns down Spice Telecom’s plea on listing

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BK Modi-owned GSM operator Spice Telecom, which caters to the Punjab and Karnataka circles, has been denied listing permission by the National Stock Exchange (NSE) on the grounds that its accumulated losses have exceeded the net worth.

The company is planning to tap the capital market with its initial public offering (IPO) through a 100% book-built issue. It will raise Rs 632 crore by offering 11.31 crore shares in the price band of Rs 41-46. The issue will open for subscription on June 25-27.

However, NSE followed the criteria laid down by market regulator Securities and Exchange Board of India (Sebi) for listing. As per Sebi Disclosure and Investor Protection (DIP) Guidelines, 2000, an un-listed company may offer an IPO of equity shares, or any other security, which may be converted into or exchanged with equity shares at a later date, only if the company has a track record of distributable profits in accordance with Section 205 of the Companies Act, 1956, for at least three out of immediately preceding five-year period. Spice Telecom's Red Herring Prospectus shows that the company, as on June 30, 2006, accumulated losses to the tune of Rs 642.54 crore. Also, it further continued to post negative net worth of Rs 684.35 crore as on December 31, 2006.

Dilip Modi, chairman and managing director of Spice Telecom, said, "NSE insisted on a positive net worth during the pre-IPO period when the company incurred losses. Hence, we withdrew our application for in-principle listing on NSE. In the case of BSE, they did not mention anything like NSE", reports The Financial Express.