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BSE defers Pentamedia Graphics suspension

Janaki Krishnan & Anusha Subramaniam

The Bombay Stock Exchange on Wednesday deferred the suspension of Pentamedia Graphics, which was supposed to have come into effect from October 4.

This follows the Madras high court's ex parte injunction against the BSE suspension.

"The trading in the Pentamedia scrip will continue until further orders of the Madras high court," the BSE said in a notice to members. However, the BSE said it is in the process of getting the ad interim injunction vacated.

"Trading in the aforesaid scrip will be suspended without any further notice period as soon as the necessary order are obtained," the BSE notice said.

A Pentamedia spokesperson said that the company officials on Wednesday had two-conference calls with the BSE and the Securities and Exchange Board of India officials in Bombay, adding that BSE had scheduled another conference call on Thursday to take a final view on the issue. "Pentamedia is hopeful of positive result by Thrusday," the spokesperson said.

Meanwhile, a Pentamedia lawyer met Sebi officials. The Securities and Exchange Board of India is probing the ultimate beneficiary in Pentamedia Graphic's Rs 500-million preferential allotment made in January this year.

Tracing the sequence of events leading to the shares issued in the preferential allotment finding their way into the market, Sebi is trying to find out who the shares were ultimately allotted to.

The markets regulator has also indicated that it has no intention of holding any talks with the company until it has got all the details of the entire preferential allotment from the company and the exchanges.

According to sources familiar with the developments, the securities watchdog is also not ruling out some systems error at National Securities Depository Ltd. Sebi is focussing on whether there was any violation of the one year lock-in on private placements on a preferential basis.

"We want to know who benefited from this entire transaction," Sebi sources said.

Sebi is also questioning BSE's wisdom in suspending trading in all the shares of the company for an indefinite period.

"This will unnecessarily harm the interests of the investors," the source added, reflecting the prevailing feeling at the regulator's end. The BSE, said in a notice last Saturday that it was suspending trading in shares of Pentamedia Graphics. The BSE suspension followed Pentamedia's alleged inability to explain and set right the irregularities in its private placement of 1 million equity shares.

Numerous deadlines were set by the company as well as the exchange by which time the company was supposed to sort out the issue. However, none of the deadlines were met with, exchange officials said.

Finally the exchanges took the decisive step of suspending trading in the shares. In the meantime, the exchanges also wrote to Sebi apprising it of the entire affair, which prompted the markets watchdog to launch a probe of its own.

The entire issue is over how the Rs 500-million worth of preferential allotment made by Pentamedia to Malu Financial Securities in January this year could have found its way into the hands of Nikko Broker Pvt Ltd, who pledged the shares with Centurion Bank.

The shares were not supposed to be sold, transferred or hypothecated till January 2002. In the face of conflicting answers from Pentamedia and Malu, BSE launched its investigations into the deal.

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