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Zylog Systems slumps to record low as Sebi bars promoters

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Meanwhile, the Sensex was up 235.95 points or 1.25% to 19,063.11

On BSE, 13,381 shares were traded in the counter with pending sell orders of 15,202 shares at lower circuit. The scrip has an average daily volume of 65,669 shares in the past one quarter.

The stock opened at 5% lower circuit of Rs 30.50 and remained locked at the lower circuit so far during the day. The stock's low of Rs 30.50 is a record low. The stock had hit a record high of Rs 340 on 9 July 2012.

The stock underperformed the market over the past one month till 13 June 2013, falling 31.99% compared with the Sensex's 4.39% fall. The scrip had also underperformed the market in past one quarter, declining 37.3% as against Sensex's 2.77% fall.

The company has an equity capital of Rs 20.07 crore. Face value per share is Rs 5.

Market regulator Securities and Exchange Board of (Sebi) passed an ad interim ex -parte order dated Thursday, 13 June 2013 against Sudarshan Venkatraman - promoter, chairman and chief executive officer of Zylog Systems; Ramanujam Sesharathnam - promoter, managing director and chief operating officer; S P Srihari - chief financial officer; Sthithi Insurance Services - promoter; Parthasarathy Srikanth - whole time director and Srikanth Sripriya - wife of Parthasarathy Srikanth from buying, selling or dealing in securities in any manner whatsoever, till further directions in the matter.

had, suo moto, carried out an examination in the scrip of in view of surveillance alerts regarding variation in price. during examination of the scrip prima-facie observed that the company provided misleading information to the stock exchanges wherein it stated that its promoters have been buying and increasing their stake while actually the promoters were net sellers and their shareholding declined due to invocation of pledge by financiers. Similar misleading clarification was also given by the promoter of Zylog Systems, Sudarshan, to the media.

order said that disclosed incorrect and false information in the quarterly shareholding pattern for the four quarters in the year 2012 to the stock exchanges by overstating the holding of the promoters and understating the quantum of shares pledged by the promoters.

Sebi also observed various instances of non-adherences to accounting standards and listing agreement in the annual report by

Sebi further said that there have been repeated instances of false, incorrect and misleading disclosures and concealment of material information by the Zylog Systems and its promoters/directors to the stock exchanges with respect to their on-market and off-market transactions in the scrip and their pledge related transactions.

Sebi order further said that Zylog Systems has provided funds on several occasions to the promoter entity Sthithi and one Srikanth Sripriya for dealing in shares of the company.

As per Sebi order, the promoters of Zylog Systems along with Srikanth Sripriya, acting in concert have acquired shares in the company beyond the threshold stipulated under regulation 3(2) of the Sebi (substantial acquisition of shares and takeovers) Regulations without complying with the obligation of making open offer.

Sebi added that the examination, prima facie, shows that the conduct of the promoters/directors and Zylog Systems is, prima facie, mala fide and that the above activities are in violation of the Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003, Sebi (Prohibition of Insider Trading) Regulations, 1992, Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the Companies Act, 1956 and the Listing Agreement.

Zylog Systems' consolidated net profit dropped 98.31% to Rs 0.63 crore on 16.99% fall in net sales to Rs 561.22 crore in Q4 March 2013 over Q3 December 2012.

Zylog Systems is a Chennai-based leading technology solutions company and software service provider.

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First Published: Fri, June 14 2013. 12:44 IST