This is an interesting story of a listed company in stock market, which was once a penny stock of 50 paise in 2009 and went straight into the Forbes list in six years.
Forbes had named Vakrangee Ltd among Asia's 200 'Best Under a Billion' companies for 2015 with market capitalisation of USD 821 million. Till January 25, 2018, with the stock price of Rs 505 per share, Vakrangee Ltd was nearly a Rs 40,000 crore company by market value. Founded on May 29, 1990, Vakrangee is a technology-driven company and a major player in providing e-governance services such as Aadhaar biometric cards, passport and railway tickets across India.
THE FALL Over the past eight days, the stock price of Vakrangee Ltd has crashed by almost 60 per cent and is locked in a 10 per cent lower circuit at Rs 192 per share. Due to heavy selling of shares, more than Rs 27,000 crore (market cap) of investor's money in Vakrangee stocks has been wiped out.
According to National Stock Exchange (NSE), it had submitted three analysis reports (kind of complaint) to market regulator SEBI pertaining to insider trading and price and volume manipulation in November 2009, May 2012 and July 2016.
The third analysis report filed by NSE (the copy is with Indiatoday.in) before SEBI highlighted that during period January 2016 to June 30, 2016, a group of 22 clients related to each other as well as to the company was seen continuously buying and selling, together accounting significantly to the market gross.
"On a daily basis, the group accounted for as high as 74.87 per cent to market gross on certain days", the report said.
"The average quantity traded per day by this group of clients during the period July 1, 2015 to December 31, 2015 was 4.25 lakh shares buy and 5.19 lakh shares sell which increased significantly by almost 70 per cent to 8.05 lakh shares buy and 8.16 lakh shares sell during January 2016 to June 30, 2016," the NSE report informed. Of the 22 clients, 18 had more than 90 per cent trading activity in this scrip only.
SEBI began its preliminary enquiry. The Integrated Surveillance Department (ISD) of SEBI observed that large group of connected entities hasbeen contributing significantly to the gross traded volume, with significant percentage of trade happening among themselves and several of them having 100 per cent concentration in Vakrangee scrip only. ISD expanded the list of connected clients from 22 to 119 clients based on the available information.
After finding suspicious trading, ISD forwarded the matter to Investigation Department (IVD) of SEBI to ascertain whether there was any violation of the provisions of SEBI Act, 1992 and SEBI Regulations, 2003 in the trading by 119 suspected entities in the scrip of Vakrangee Ltd during the investigation period.
In a confidential report (the copy is with Indiatoday.in), SEBI highlighted its findings before giving a clean chit to Vakrangee Ltd.
These findings were:
Total synchronised trades by the suspected entities on BSE and NSE was 12.34 per cent and 1.97 per cent of total market volume of the respective exchange during the investigation period. Thus, the percentage of synchronised trades to total market volume by suspected entities in BSE and NSE is insignificant.
On circular/reversal of trade issue, no specific trading pattern such as circular of trades/reversal of trades was observed during investigation period.
LTP contribution by suspected entities on BSE/NSE is not substantial.
No major off market transfers have been observed during the investigation period.
No adverse inference is drawn from the analysis of trading of suspected entities.
Based on findings of the investigation, it is recommended that we may not pursue the matter any further.
Queries sent to SEBI officials by Indiatoday.in remain unanswered.