Prices started to move only in 2015, far away from the 2011 allotment, says Om Garg, Chairman and MD, Cupid Limited.
BSE has suspended trading in securities of 31 companies from Thursday.
The ban is intended to curb manipulation and abrupt movement in their share prices.
Condom manufacturer Cupid Limited was amongst the companies suspended. It has been asked to submit guidelines on the preferential shares it had allotted to promoters in 2011 which reportedly led to irrational price movements.
Speaking to CNBC-TV18, Om Garg, Chairman and MD of the company, said the prices started to move only in 2015, far away from the 2011 allotment. He insists that the money raised was used for working capital needs.
Garg puts the total value of preferential shares offered at Rs 1.5 crore.
Cupid has also filed an application to list on NSE. Garg looks to hear from NSE in April.
Below is the verbatim transcript of Om Garg's interview with Mangalam Maloo and Ekta Batra on CNBC-TV18.
Mangalam: Could you tell us what is the communication that you have received from the exchanges, any rationale behind them suspending or taking this decision to suspend Cupid from trade effective March 31?
A: First time we heard from them was on March 29 stating that there will be a trading ban on Cupid two days later effective March 31. This is the first shocking news we got without any prior notice or any opportunity that we could submit any documents.
Cupid had a clean record since we got listed on BSE. From 1995 to 2016, in 21 years history of Cupid, we had no violation, no notices from BSE at all.
Ekta: As of March 29, there was no communication except for the notice that there will be a suspension of trading come March 31?
A: They had mentioned some general guidelines why Cupid and others have been suspended.
Ekta: What were those general guidelines that were mentioned?
A: They were saying that they submit the documents related to preferential shares, which Cupid had issued back in 2011.
Mangalam: Are you going to submit them and at the same time any communication from the exchanges whether this ban is temporary or permanent in nature?
A: We have submitted all the documents they had requested today. They would review these documents and they say as soon as possible, hopefully in next two-three days, they would come back to us.
Ekta: Can you give us more details about these preferential shares, which were allotted in 2011 and what were the details of that?
A: The preferential shares were allotted to only two individuals and they have not been trading in the shares and that was in 2011. The other issue that they were trying to link was the price movement but in Cupid's case, the price started to move in June 2015 and all the bank documents where the money came in at that time and the money was used for the purpose for which it was raised like working capital loans. So we have submitted all those documents in detail today and we are quite hopeful that we come out clean on this.
Mangalam: Could you also tell us that considering Cupid is just listed on BSE right now, you are at the behest of just one exchange, any plans that you are mulling on listing on the other exchanges, the NSE and all of them as well?
A: Yes, we have filed an application for listing on the NSE a couple of months ago and we are expecting to hear from NSE in April.
Mangalam: Any communication that you would received from NSE in light of your announcement of trading or the pronouncement of your trading being suspended from the BSE, any comments that have come in from NSE in that regard?
A: None at all.
Ekta: Regarding your preferential allotment, how much was that worth at that point and any more such actions, which were taken by the company post 2011 or was that preferential allotment only limited to that year?
A: It was only limited to that one and the total value was about Rs 1.5 crore and since then we have not issued any preferential shares at all.
Ekta: When they were talking about the price movement, which period were they speaking about in terms of the irrational price movement, which possibly led to the suspension?
A: No, they mentioned started to go up in June 2015 and they also realised that Cupid's performance and the business condition have been steadily improving in parallel to the price movement.
Ekta: This preferential allotment was to the promoters?
A: It was to promoters and it was for the working capital loan and we have submitted all the documents where the money came in, how the money was used for the purpose it was raised. So, full documents have been submitted.
Ekta: When would you possibly hear back from the exchange? What has your latest communication been?
A: The latest communication was this morning and they are saying that they have internal procedure to review this information we have submitted and certainly they would try to expedite because they did mention that Cupid has an excellent reputation and a good track record. So I am hoping it would be next few days.
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