KGN Industries ka kamaal

The “relisting syndrome” surfaced again on Wednesday when Ahmedabad-based KGN Industries Ltd soared to Rs 55,000 a share on BSE after listing at Rs 100, forcing the exchange to suspend trading on the stock mid-session.

The Z-category stock was trading after a gap of seven years. Before its Wednesday relisting, it had last traded at Rs 11 in 2001 when it was suspended.

A BSE release noted that there are no price bands on scrips on the opening day of trading in order to allow price discovery.

“During the early hours of trading, it was discovered that orders were being placed at an unrealistic price. In order not to distort the price discovery process, as few orders were being placed at unrealistic prices, the trading of the scrip was suspended at 12.20 hours as a proactive surveillance measure,” said a BSE news release.

KGN Industries’ spot price at the time of suspension of trading was Rs 15,001. However, BSE said it has set a closing price of Rs 5,216.30 per share using the existing methodology but taking into consideration the entire trading duration. Trading will resume on Thursday with the applicable price band, it said

SEBI has proposed to impose a 20 per cent circuit filter on the first day of re-commencement of trading in stocks in all cases of revocation of suspension, demerger, amalgamation, capital reduction and scheme of arrangements as decided by stock exchanges through a concept paper brought out last year in April.

The regulator had also proposed a base price to be fixed in consultation with SEBI registered merchant bankers for applying the 20 per cent circuit filter.

Again in January 2008, SEBI brought a concept note for a limited price band for the IPOs whose issue size was upto Rs 250 crore on their day of listings.

SEBI proposed imposing a price band of 25 per cent on the issue price on the day of listing of IPOs of issue size upto Rs 250 Cr but the proposal does not apply in case of re-commencement of trading of the equity shares of a company on the stock exchanges.

However no guideline has been issued so far for either of the two proposals.

Earlier last year on February 22 when trading in Ahluwalia Contracts began on the BSE after restructuring of the company, it opened at Rs 101.50 and touched a high of Rs 611.90 and finally closed at Rs 577.80.

(Only Metal and Mineral Trading Corporation has in recent times touched such a high price, MMTC had touched a high of Rs 56,931.50 on November 12.)

KGN Industries is engaged in the business of trading in agro commodities like castor seeds, edible oils like soyabean oil, palm oil, non edible oils like petroleum products, lubricants, used oil.

The company reported a turnover of Rs 326.87 crore during the year 2006-07

via BL