SC orders restoration of MF units to Dalmia Bharat Group; stock zooms 11%

The Supreme Court on Tuesday ordered IL&FS Securities Services to release mutual fund units worth Rs 344 crore to the Dalmia Bharat Group

Shares of Dalmia Bharat surged 11 per cent to Rs 1,690.60, hitting a record high on the BSE, in the intra-day trade on Wednesday after the Supreme Court on Tuesday ordered IL&FS Securities Services (ISSL) to release mutual fund units worth Rs 344 crore to the Dalmia Bharat Group.

In August 2019, the Supreme Court had passed an interim order that Dalmia Cement, which is a subsidiary of Dalmia Bharat, may encash the securities and the said amount shall lie in fixed deposit with ISSL.

"Vide an order dated March 16, 2021, the order of August 2019, has been modified by the Supreme Court on an application filed by DCBL. The modification allowed is to the effect that the said Securities of DCBL lying with ISSL be released in favour of DCBL subject to DCBL furnishing requisite Bank Guarantee to the satisfaction of the trial court," Dalmia Bharat said in exchange filing.

The mutual fund units of two erstwhile subsidiaries of DCBL valued at approximately Rs 344 crore were fraudulently and illegally transferred by Allied Financial Services Private Limited in collusion with ISSL and the same have been lying with ISSL.

DCBL, as soon as it came to know about the fraud, filed complaints before the Economic Offence Wing (EOW), the Securities and Exchange Board of India (Sebi) and National Securities Depository Limited (NSDL) in February 2019. Sebi restrained Allied and its directors from dealing with the Securities. EOW registered an FIR against Allied; ISSL and their officials and charge sheet in the matter has also been filed in November, 2019.

In the past six months, the stock of Dalmia Bharat has zoomed 110 per cent supported by a strong operational performance and volume growth in Q3FY21. In comparison, the S&P BSE Sensex has risen 29 per cent during the same period.

For October-December quarter, the company had recorded a strong volume growth of 14 per cent, Ebitda growth of 51 per cent, Ebitda/t increase of 32 per cent and capacity utilization of 81 per cent. Premium products registered a growth of 66 per cent year on year and the company maintained its progress on fossil fuel substitution with alternative fuels and renewable energy. The company has a very strong balance-sheet and has repaid debt of Rs 1,379 crore during the financial year.

At 12:06 pm, the stock was trading 5 per cent higher at Rs 1,603 on the BSE, as compared to a 0.09 per cent decline in the S&P BSE Sensex. A combined 830,000 equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.