Transgene Biotek Ltd- a copy of clarification

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Clarification		05 Dec 2012 12:49
Transgene Biotek Ltd has submitted to BSE a copy of clarification regarding "Article titled 'Whiff of GDR scam at Transgene Biotek' published in Financial Express dated December 04, 2012".

is GDR scam at Transgene Biotek real?

FE » Story

Whiff of GDR scam at Transgene Biotek

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ANKIT DOSHI: MUMBAI, DEC 04 2012, 01:56 IST

Mumbai: A group of shareholders of Transgene Biotek has complained to the Securities and Exchange Board of India (Sebi) about a ‘GDR scam’ that the company has allegedly perpetrated on the basis of several price-sensitive announcements with an ‘ulterior motive’ of pushing up the stock price and giving an attractive exit to a select set of investors.

Shareholders of the BSE-listed company allege that the promoters of the company allotted depository receipts (using structured GDR route) to an FII/sub-account, who, in collusion with the promoters, converted the receipts into equity shares and sold them in the domestic market by creating artificial volumes.

As per the complaint filed with Sebi’s Investor Grievance cell — a copy of which is with FE — investors remonstrate the use of several price-sensitive announcements (including delisting at a much higher price than the prevailing market price) as a decoy to elevate the stock price and trap retail investors so that GDR holders can exit.

Further, investors raised doubts over the existence of Transgene Biotek HK — a subsidiary entity — and have asked Sebi to probe the fund flows between the parent and subsidiary entities.

Investors said that within a few days of incorporating the Hong Kong subsidiary, the parent company raised $17.50 million (nearly R86.5 crore) through GDRs and most of the money was remitted to the subsidiary for buying technology.

“What has happened to the technology transfer, which accounts for 25% of the size of balance sheet? Was the technology bought or were the funds given back to the ghost GDR holder?” said another investor, on conditions of anonymity. Investors have also questioned the role of GDR allottee, stream value fund (FII) and inventure merchant bankers.

“The modus operandi is similar. The trades are concentrated among a few entities, which could be fronts for GDR holders. The question is where and how much of the money was siphoned off?” the investor asked.

Incidentally, the auditors of the Hyderabad-based company highlighted a similar point in the FY12 annual report. It said the company does not have an internal audit system commensurate with its size and nature of its business, and that it was in no position to comment on the end use of money raised via GDRs as the utilisation proceeds from these GDRs were made through its wholly-owned subsidiary, which was not audited by the auditor, stated the FY12 annual report.

Meanwhile, several email queries sent to the company remained unanswered till the time of going to press. Repeated attempts to get in touch with the management and the registrar also proved futile.

Market participants, meanwhile, feel that the regulator should tighten the regulations on GDR issuances by Indian companies. Ashok Bakliwal, president, Bombay Shareholders' Association said, “It becomes incumbent on the part of Sebi to investigate this matter and take strong action. Sebi cannot always rely on official complaints to initiate an investigation. It needs to take suo moto action and must have a strong surveillance system in place.”

Shares of Transgene gained 1.98% on Monday to close at Rs 4.63. The scrip has plunged nearly 70% since the highs of September when the merchant banker was appointed to manage the delisting offer.

http://www.financialexpress.com/news/whiff-of-gdr-scam-at-transgene-biotek/1040017/0

Transgene Biotek

Transgene Biotek investors cry foul over delisting plans

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ANKIT DOSHI: MUMBAI, NOV 16 2012, 03:29 IST

Mumbai: A group of shareholders of Transgene Biotek is planning to lodge a formal complaint with the Securities and Exchange Board of India (Sebi) over the manner in which the company recently conducted a postal ballot to get shareholders’ approval for its delisting proposal.

Shareholders of the Hyderabad-based company allege that the announcement related to delisting was done with a motive of pushing up the stock price and that there was never a serious intention of getting the entity delisted from the bourses. The company is currently listed on the Bombay Stock Exchange and the Delhi Stock Exchange.

Shareholders told FE, on condition of anonymity, that the ballot forms were sent just days before the deadline and the whole process was managed in a way that a majority of shareholders could not exercise their votes. According to Bloomberg, shares of Transgene Biotek surged nearly 30% in a span of 20 days to a high of R14.20 (from August 27, when the decision to consider delisting was announced, to September 17, when a merchant banker was appointed for the purpose).

The average daily volume in the period rose to 23.12 lakh shares against 7.28 lakh shares in April-November. Since the highs of September 17, the stock plunged over 60% to R5.10 as of November 15.

“They (Transgene Biotek) announced delisting of shares with a price tag which was about 2.5 times the market price and put out a deluge of forward looking statements so that the stock price would move higher,” said a Transgene investor who holds nearly a lakh shares and did not wish to be identified.

“Which investor would not want the company to delist at R25 when the current stock price is around R5?” asked another Transgene investor. An email query sent to the company on Saturday remained unanswered till the time of going to press.

Repeated attempts to get in touch with the company officials and the registrar also proved futile. Investors allege that since all shareholders could not participate in the ballot, the delisting proposal was rejected based on the number of votes that were received prior to the deadline — November 6.

Through discussions with a group of investors holding a sizable amount of Transgene's shares, it was ascertained that many investors did not receive postal ballot forms. “What is the mystery behind postal ballots not being received by several investors I have spoken to, across the country?” asked the shareholder quoted earlier. To seek shareholders' approval on delisting of shares from the BSE and the Delhi Stock Exchange, the company approved the notice of postal ballot on September 20 and fixed October 5 as the date of completion of dispatch of notice along with postal ballot to all its shareholders.

Another investor said he received the form just four days before the deadline for the ballot forms reaching the scrutiniser. The investor said: “Since the postal ballot forms were dispatched via registered post and were self-addressed, it would be impossible for my form to reach the company on/before the last date of receiving ballot forms.”

Shareholders have also raised doubts over the promoters' motive to delist the company as the latter hold less than 10% in the Hyderabad-based entity. Given the stringent delisting guidelines and rare instances of delisiting attempts in the Indian market, promoters could have first increased their stake through creeping acquisition, they say.

http://www.financialexpress.com/news/transgene-biotek-investors-cry-foul-over-delisting-plans/1031794/0