Value Of Cse-Held Harshad Group Stocks Drops Drastically

A number of blue-chip stocks including ACC, ITC, Tata Tea, Larsen & Toubro, Indian Rayon, Zuari Agro, Spic, GNFC and East India Hotels, belonging to Harshad Mehta group but currently held by the Calcutta Stock Exchange, has severely eroded in value, and is expected to snowball into a major problem for the bourse.

It is believed that as a result of the communication gap, these shares were transferred in the name of the Calcutta Stock Exchange (CSE). Since CSE is not a notified party, it will be difficult to cover the sale of these shares under the scheme for sale submitted recently by custodian B Bhattacharya.

According to figures available with Business Standard, the value of ACC has depreciated by about 64 per cent in the past five years. Nearly 21,278 shares of ACC worth Rs 17.02 crore, deposited with the CSE in June 1992, is currently worth only Rs 5.97 crore despite an increase in the number of stocks to 47,102 shares as a result of the rights/ bonus shares declared by the company in the interim period.

The value of ITC and Tata Tea stocks, too, dipped considerably if one takes into account the increase in the number of shares as a result of the 1:1 bonus shares issued. About 94,400 ITC stocks is currently worth only Rs 5.41 crore as against 47,200 stocks which was worth Rs 3.54 crore in June 1992. Similarly, about 30,487 Tata Tea stocks is currently worth only Rs 1.13 crore as against 13,550 shares valued at Rs 98.24 lakh in 1992.

Over a period of five years, the value of Larsen & Toubro stock has depreciated by nearly 44 per cent. About 16,034 L&T shares, valued at Rs 51.31 lakh, is currently worth only Rs 28.54 lakh.

Indian Rayon stocks also stands affected. In June 1992, about 72,605 Indian Rayon shares were worth Rs 3.04 crore. However, though the number of shares has increased to 1,11,408 shares, the shares are worth only Rs 2.21 crore today.

Though companies like Zuari Agro, Spic and Gujarat Narmada Fertiliser Corporation (GNFC) have not announced a rights or a bonus issue in the last five years or so, their value, too, have eroded.

Nearly 7,400 shares of Zuari Agro worth Rs 22.20 lakh is now valued at Rs 6.55 lakh. About 1,000 shares of Spic worth Rs 1.60 lakh is now valued at Rs 20,200, and about 2,000 shares of GNFC worth Rs 3.25 lakh currently stands at Rs 41,000.

The value of East India Hotels stocks has depreciated to Rs 11.01 lakh though the number of shares has increased from 1530 in June 1992 to 2754 scrips in December 1997.