Valecha Engineering shares continue to slide; drop 10% today

Valecha Engineering shares continued to slide on the bourses and plunged by 18 per cent in just two trading sessions, eroding Rs 21 crore from its valuation after markets regulator Sebi imposed a ban of three years on the company.
The stock, which fell 10 per cent yesterday, extended its decline today as well and settled for the day at Rs 43.10, down 10.40 per cent, on BSE.
Similar movement was seen on NSE where the scrip closed at Rs 43.15, down 10.29 per cent.
The markets watchdog found instances of fraud in preferential allotment of convertible warrants of Valecha Engineering (VEL) to some entities in 2005. It also charged other entities with no-genuine and fraud trade in the scrips of the company.

In just two trading sessions, the stock of Valecha Engineering has seen an erosion of Rs 21.41 crore in its market capitalisation. Its market valuation at the end of today's trading session stood at Rs 97.10 crore.
VEL had made a preferential allotment of 14,23,900 convertible warrants, which were to be converted into equity shares at a later date, to certain entities. VEL and all preferential allottees are connected with each other.

However, preferential allottees did not pay the full consideration for the allotment of such warrants and VEL allotted such securities to the allottees without getting actual consideration for that and "as such, was sham", Sebi said in an order.

"... Being the MD of VEL and having active role in its preferential allotment, Jagdish Valecha is liable for the acts of VEL with regard to the preferential allotment.
"The preferential allottees and other noticees who acted in concert and in league with VEL and Valecha in the whole scheme of fraudulent preferential allotment are also equally responsible for such fraudulent acts," it said.
According to Sebi, some of the entities executed sham transactions in the scrip of VEL, thereby creating artificial volumes in the company's shares.