I would like to inform all concerned about how corporates cheat Small Investors.
Few years back Mumbai based CEAT Ltd. (Tyres company of Goyenka) passed a resolution and decided to convert 25% holding of Ceat Ltd. into equity shares of their group company and issued equal number of an Investment company CHI Ltd. The shareholders were informed that CHI will deal with their Bhandup, Mumbai land and hence will have good valuation. Recently they merged CHI with another group company Summit Securities Ltd. and alloted equity shares in the ratio of 6 CHI: 1 of SSL. The share of Summit Securities Ltd.was quoted last in February. The promoters hold majority holding and hence small investors have virtually no say.
An Investor was holding 250 shares of Ceat Ltd., market price @ Rs. 140.
25% of 1000 shares converted to CHI Ltd. 250 shares of CHI Ltd. quoted @ Rs. 46. Meaning 250 shares of Ceat Ltd @ 140 valued at Rs. 35000 reduced to CHI's 250 x 46 = Rs. 11500.
Now 250 shares of CHI ltd is reduced to 41 shares of Summit Sec. At last quote (Feb) of Rs. 16/- this will amount to Summit Sec's 41x16 = Rs.646/-
Conclusion: Investment of Rs. 35000/- in Ceat Ltd in 3 years has reduced to Rs. 646./- The investor feels ChEATed but he is helpless! Isn’t SEBI supposed to look into the matter?
0 comments