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

HUGE PREMIUM...INSURANCE..!!!!

Future Generali stake transactions don't add up Published: Sunday, Nov 25, 2012, 21:13 IST  By Rajiv Ranjan Singh | Place: Mumbai | Agency: DNA A company with no asset of its own issued shares to two different companies on the same day. While one company bought the shares at a face value of Rs10, the other paidRs2,500 apiece. And these weren't one-off deals. Thepractice has gone on for five years now – in Sprint Advisory Services PvtLtd.Sprint, incorporated in 2005-06 as a chain marketing company andrechristened as Sain Advisory Services in 2007-08, and further as Sprint Advisory Services in 2010-11, has no employees on record.What's more, it has posted losses year after year and gets only a paltry income through consultancy services, which has never exceeded Rs5 lakhper annum in the last five years.Still, it has been able to command a 250-time premium.What gives? Well, Sprint Advisory holds 49% stake in Future Generali Life Insurance Company, while Pantaloon Retail India and Maatschappij GraafsschapHolland NV hold 25.5% stake each.Between 2007-08 and 2010-11, Maatschappij, a little known firm based out of a tax heaven in Netherlands, invested Rs268 crore directly in FutureGenerali Life, while Pantaloon Retail invested a like amount, to take at 25.5% each.For the remaining 49% stake in Future Generali Life, Sprint Advisory invested Rs515 crore with an almost equal contribution coming fromMaatschappij and Pantaloon Retail. Maatschappij started investing in Sprint in 2007-08, against which Sprint Advisory issued shares at Rs2,500 a share for a face value of Rs10. As of 2010-11 fiscal end, Maatschappij had invested Rs283.66 crore in Sprint, but got just a 0.4% stake. However, Pantaloon Retail invested Rs283.54 crore in it and commanded a 99.96% stake.For 2010-11, Sprint registered a loss of Rs15.90 lakh, though its income from consultancy services stood at Rs1.2 lakh and other income atRs69,000.To be sure, between 2007-08 and 2011-12, Future Generali Life has attracted investments of Rs1,200 crore from these players, though DNAcould only collate the figures till March 2011 as Sprint is yet to file its annual return for the last fiscal. As these numbers show, despite investing 50% in the share capital of Future Generali Life, Maatschappij holds just 25.5% stake in the company, thanks to the hefty premium charged by Sprint Advisory, in which VijayBiyani, Future Group chairman Kishore Biyani's brother, is one of the four directors. The other three are Prakash Chandra Toshniwal, KrishnakantRathi and Roberto Gasso.For the record, Biyani and Gasso are also on the board of Future GeneraliLife, as Sprint representatives.Surely, all this can't be a coincidence; there has to be a game plan somewhere.Makes one ask – was theMaatschappij and Sprint Advisory transaction done to bypass the norm of a 26% limit for foreign companies in insurance?A detailed questionnaire sent to Sprint Advisory remained unanswered. Deepak Sood, CEO, Future Generali Life refused to give any answer.Curiously, there is little in the public domain about Maatschappij or its key executives.As per Bloomberg Businessweek, Maatschappij Graafsschap Holland NV was founded in 1975 and is based in Diemen, the Netherlands. ParticipatieMaatschappij Graafschap Holland NV operates as a subsidiary ofAssicurazioni Generali SpA.It is ironical that the absurd pricing scheme in Sprint was not questioned by the star-studded board of Future Generali Life. Former SEBI chairman GNBajpai, who is supposed to be an authority on pricing of shares, has headed the board for the last three financial years and Gorakhnath Agarwal, the head of the Acturial Society of India, is on its board and acts as the chief actuary and chief risk officer.It is also reliably learnt that Girish Kulkarni, one of the pilots of the absurd pricing scheme of Sprint Advisory, working as the chief marketing officer and a director of Future Generali in 2007-08 when Maatschappij started paying the premium for Sprint, now heads Star Union Dai-ichi, an insurance company promoted by a public sector bank. http://www.dnaindia.com/money/report_future-generali-stake-transactions-don-t-add-up_1769378-2