Loss hit investors in Adani Ent shares complain to Sebi

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Moneycontrol Bureau

The Investors Grievances Forum (IGF) has complained to Sebi that many investors in Adani Enterprises suffered losses on Wednesday because of stock exchanges not following the normal practice for trading in shares after a demerger of business.

Adani Enterprises opened at Rs 574 on Wednesday and then plunged over 80 percent percent  as the stock price adjusted for demerger of its port, power and transmission businesses. Investors who were unaware of demerger becoming effective bought the shares at higher levels and lost money when the price crashed, IGF wrote to Sebi.

“As a normal practice and considering the interest of investors, the shares of Adani Enterprises should have been allowed for trading at an adjusted price considering the hiving off its businesses into separate companies or there should have been special session for discovery of price of the shares of Adani Enterprises as it was done in the past for the shares of Reliance Industries,” the IGF letter to Sebi said. Following is the full text of the letter:

Dear Sir, Sub: Trading in demerged shares of ADANI ENTERPRISE (Scrip Code 512599) without adjustment of price or calling for special session for proper discovery of price.

Investors Grievances Forum (IGF) has been taking up issues concerning investors with SEBI and other authorities so as to protect the interest of investors. The IGF is at pain to bring to your notice about the gross irregularities (which appears to be deliberate and mala fide) seen in the trading of demerged shares of Adani Enterprises.

Today i.e. on June 03, 2015, the shares of Adani Enterprises were listed for trading after the implementation of composite scheme of arrangement and demerger. Hence, the listing of Adani Enterprises today is as a demerged company having hived off its port, power, power transmission businesses into separate companies. As a normal practice and considering the interest of investors, the shares of Adani Enterprises should have been allowed for trading at an adjusted price considering the hiving off its businesses into separate companies or there should have been special session for discovery of price of the shares of Adani Enterprises as it was done in the past for the shares of Reliance Industries.

However, today as a sudden shock and surprise to investors as well as to IGF, the shares of Adani Enterprises were allowed to be traded without any adjustment of price of shares or without calling for special session for proper discovery of share prices. According to the sources having expertise in the valuation of shares, the fair value of shares of Adani Enterprises is not more than Rs.120/= and as such the trading in the shares of Adani Enterprises should not have been allowed at the maximum of Rs.120/= per shares or special session should have been called for the purpose of determining fair value of shares through the price discovery mechanism.

However, by brushing aside and throwing all the norms which should have been observed by the Stock Exchanges, the shares of Adani Enterpirses were allowed to be traded by the Stock Exchanges in a most shocking manner. The shares of the Adani Enterprises opened at whopping high of Rs.537/=, touched a drastic low of Rs.116/= and currently trading at around Rs.120/=. It is pertinent to mention that the large number of gullible innocent investors (being not aware of adjusted share prices after demerger or having no knowledge of the cunning way in which Exchanges allowed trading of share of Adani Enterprises) who have bought shares at the higher prices have been trapped resulting into losses to them. The IGF is of the considered view that the Exchanges should have held special session for discovery of shares prices of Adani Enterprises or should have sought proper valuation of shares for adjusting the share prices.

Needless to mention that the SEBI is having primary duty to protect the interest of investors, hence, it is necessary that a thorough investigation is carried out to examine the role of the Exchanges in allowing shares to be traded with such a high and vide trading price zones. We apprehend that the vested interests in Exchanges with connivance of manipulators allowed trading in Adani Enterprises in such a high and vide trading price zone with mala fide intentions to cause loss to large number of investors. The IGF feels that the manner in which trading took place in Adani Enterprises, addition of scrips in F&O, changes in Nifty components etc., the state of affairs at the Exchanges needs to be examined so as to avoid the possibility of instutionalised scams orchestrated and executed by the unethical highly qualified professionals.

Therefore, IGF demands a time bound investigations into the above so as to ensure that the sanctity of the trading platform is always maintained and investors are not put to any loss by discriminatory treatments. This is necessary to maintain the confidence of investors into the regulatory systems and also to stop further desertion of investors from stock market.

Immediate action by SEBI shall be highly appreciated.

Thanking you,

Yours truly,

For INVESTORS GRIEVANCES FORUM

SANDEEP SHAH

MEMBER – CORE COMMITTEE