India’s leading stock exchanges – The Bombay Stock Exchange and National Stock Exchange will suspend trading in shares of Coffee Day Enterprises (CCD) and fraud-hit CG Power & Industrial Solutions (CG Power) from February 3 for not complying with SEBI’s listing norms pertaining to the submission of quarterly financial results.
Trading will not be suspended if these companies comply with the listing norms on or before January 29, BSE and NSE said in separate circulars.
The circular further added that neither of these firms submitted the financial results for the April-June 2019 and July-September 2019 quarters and have failed to pay the fine amount levied for non-compliance, as required.
Consequently, trading in securities of these companies will be suspended with effect from February 3, 2020.
Also, the entire promoter shareholding of the firms have been frozen from January 10, onwards.
It may be recalled that CCD founder/owner VG Siddharth committed suicide last year due to huge debts. Siddhharth- the son-in-law of Karnataka’s ex-Chief Minister S M Krishna, failed to raise the amount to meet his debt obligations.
A financial fraud worth thousands of crores has been detected at the Gautam Thapar-promoted CG Power and Industrial Solutions.
The company informed stock exchanges that an investigation by an independent law firm had found that some employees had carried out unauthorized transactions, which led to a potential understatement of not only the liabilities of CG Power but even advances to related and unrelated parties of the company and the group.
The CG Power promoters have pledged 100% of their holding in the company.
In both the cases of both Café Coffee Day and CG Power the delisting proposal is a big negative for retail shareholders and makes no difference to the promoters of these companies.
Also in case of Café Coffee Day which was reportedly a popular stock with funds and PE investors, the wealth destruction was quite evident right from the time of its IPO which never made money ever since its got listed
As fas as CG Power is concerned also, the Crompton Group managed by the Thapars has been an old name in the Indian capital markets has also offered little respite to shareholders.
In the end, if finally, delisting happens, it will make the investment value of both these stocks virtually zero as there will be no exit
Hence before the delisting happens, we expect significant selling pressure in these stocks as once this window closes, retail investors will find it hard to exit such stocks.
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