BoR & Tayal group shares fall after Sebi ban

Share prices of Bank of Rajasthan and Tayal group’s other listed companies fell 4-6.7 per cent today after the Securities and Exchange Board of India (Sebi) order debarring 100 entities, including the promoter of the bank, Pravin Kumar Tayal. The entities have been debarred from accessing the securities market and dealing in the securities market for wrongly reporting the bank’s promoter shareholding.

Besides promoter Pravin Kumar Tayal, the other entities of the Tayal group that have been suspended include listed firms Jaybharat Textile & Real Estate, Eskay K’n’it India Limited and KSL & Industries.

BoR was the major loser today with a 6.7 per cent fall to Rs 62.35. Other companies whose shares fell were KSL & Industries (down 4.3 per cent) and Eskay K’ni’t (down 4.9 per cent). However, JayBharat Textiles and Real Estate remained flat.

On the Sebi order, Tayal said, “We will have to take up the matter with Sebi. I am yet to see the order.”

The market regulator, in a late-night order yesterday, said that claims by BoR promoters, by way of public disclosures, that their stake had dropped from 44.18 per cent at the end of June 2007 to 28.61 per cent by December 2009, were false. “This evidently conveyed a misleading picture to investors, stock exchanges and to Sebi,” board member K M Abraham said in a 24-page order.

The group, in filings to the stock exchanges, said it had reduced its stake but in reality, the holding of the promoters and their front entities had increased, said Sebi. A Sebi investigation found that the promoters’ stake rose from 44.71 per cent in the quarter ended June 2007 to 60 per cent by March 2008 and stood at 55 per cent in December 2009.

Disclosures related to acquisition were not made to the stock exchanges by any of the acquiring groups or by BoR over this extended period, providing misleading information to investors, the statement said.

BoR Chief Executive G Padmanabhan said, “Legal opinion has been obtained it has been established that they (Tayal and entities) are not the promoters. The bank doesn’t consider them its promoters...they are just dominant shareholders in the bank”.

Last year, Tayal had said that promoters of the bank had submitted a road map to the Reserve Bank of India to bring down their stake to meet the norms by 2013. “Every year we were to sell 5 per cent stake.

The bank has plans for a qualified institutional placement (QIP) that will bring down the stake of promoters. The bank is seeking shareholders’ nod for a QIP at the extra-ordinary general meeting slated for March 11, 2010.”

“There is sufficient evidence prima facie to indicate fraud in the dealings of shares by the promoters of Bank of Rajasthan, a company in the sensitive banking sector of the economy” said the Sebi order.

Sebi has also asked the National Stock Exchange and the Bombay Stock Exchange to square off all open positions of the 100 entities in the futures and options segment.

BoR eyes QIP in April-June 2010
Bank of Rajasthan expects hit the market with a qualified institutional placement (QIP) of equity shares to raise up to Rs 250 crore in April-June 2010 to strengthen its capital adequacy ratio. Its capital adequacy ratio was 11.29 per cent (under Basel-II norms) at the end of December 2009.

The bank expects to visit the market in the first quarter after shareholders’ nod. The expanded Tier-I capital (after the QIP) would give additional room for issuing Tier-II bonds (debt capital), said BoR Chief Executive G Padmanabhan said.