You are using an older browser version. Please use a supported version for the best MSN experience.

J Kumar Infra moves SAT against Sebi’s shell companies order

LiveMint logoLiveMint 09-08-2017 Jayshree P. Upadhyay

Mumbai: J Kumar Infraprojects Ltd, one of the 331 companies facing action on allegations of being a shell company, has moved the Securities and Appellate Tribunal (SAT) against capital markets regulator Securities and Exchange Board of India (Sebi), said two people with knowledge of the matter, including a spokesperson for J Kumar Infra.

Sebi on Tuesday directed stock exchanges to initiate action against 331 listed entities suspected of being shell companies. Of them, 162 were actively traded, and 169 had already been suspended.

“J Kumar has moved SAT against Sebi directions. In the plea they have highlighted that they do not fit in the definition of shell company and have a good track record of compliance. This order has hurt its image. The company in a letter to Sebi last evening had requested it to remove it from the list but the regulator did not review its decision forcing the company to file an appeal in SAT,” said the first person.

A spokesperson for J Kumar Infra, which has a market capitalization of Rs2,146 crore, confirmed the development without going into details.

Soon after the Sebi direction, the company issued a press release, saying, “We are not a shell company and suspicion is uncalled for. We are seeking legal advice in the matter and we are approaching the regulator ie Sebi requesting it to recall its directions qua us.”

In a letter sent to Sebi on Tuesday evening, the company said to the regulator that it does not fit in the criterion of shell companies

“According to Ministry of Finance statement shell companies are characterised by 1) Nominal paid-up capital; 2) High reserves and surplus on account of receipt of high share premium; 3) Investment in unlisted companies; 4) No dividend income; 5) High cash in hand; 6) Private companies as majority shareholders; 7) Low turnover and operating income; 8) Nominal expenses; 9) Nominal statutory payments and stock in trade; 10) Minimum fixed asset. JKIL doesn’t fall under any of the said categories,” said the company in the letter, a copy of which has been reviewed by Mint.

The company added that many of the institutional and retail investors are in a state of panic and are continuously following up with the management on further updates as they could not ascertain any rationale of branding J Kumar Infra as one of the purported shell companies.

J Kumar Infra has 38.44% of institutional holding, and mutual funds such as UTI Mutual Fund, HDFC Mutual, Reliance Mutual Fund, DSP Black Rock Mutual Fund and IDFC Mutual Fund hold 11% in the company.

More companies are expected to follow suit and approach SAT against the Sebi order. Some of the other big names in the list are Parsvnath Developers Ltd, Prakash Industries Ltd, Pincon Spirit Ltd and SQS India BFSI Ltd.

All these companies, in separate statements to BSE Ltd, said that they are shocked at being referred to as shell companies and are seeking legal opinion.

More From LiveMint

image beaconimage beaconimage beacon