September 28, 2005
PR No. 124/2005

Order in the matter of Minal Engineering Ltd.

SEBI vide order dated September 28, 2005 has issued the following directions in the matter of Minal Engineering Ltd.:


The promoters and directors of of Minal Engineering Ltd. viz. J B Parikh, Shrikant J Parikh, J V Joshi, Amul J Patel, Vikram J Parikh, Malay Karbhari and Kamlesh Khandhor shall not buy, sell or deal in securities of Minal Engineering Ltd., directly or indirectly;

(b) the Depositories shall not give effect to any transfer of shares of Minal Engineering Ltd. lying in the beneficial owner accounts of said promoters and directors;
(c) Minal Engineering Ltd. shall not reissue its forfeited shares nor shall issue any bonus shares. If such reissue or issue is already made, the allottees shall not further transfer the shares and the company and the depositories shall not give effect to any such transfer, if attempted to be made.

All the above directions shall take effect immediately and shall be in force until further orders. 

The order has been passed by Shri G Anantharaman, Whole Time Member, SEBI in the following context: 

Trading and sharp rise in a short period in shares of companies with low market capitalization commonly referred to as �small cap stocks� or �penny stocks� in the recent times have been engaging the attention of SEBI, the stock exchanges and the media. Minal Engineering Ltd., is one such �small cap� company, whose shares witnessed a sharp price variation during the period February 2005 to September 2005. The share price of the company went up from a below par level of Rs.4.33 on February 7, 2005 to Rs.452.35 on September 15, 2005 in 97 trading days representing a rise of 105 times or 10,446%. The shares were traded at or near the upper circuit limit on most of the days during the entire period, February 2005 to September 2005.

While the highest trading volume of 8,403 shares were observed only on one day on September 15, 2005, the average daily volume during the period under examination was only around 663 shares, against a total non-promoter holding of 1,29,000 shares. There were even a few starkly lean days when only one share was traded. Clearly, the quantum jump in price of 105 times from below par of Rs.4.33 to a high of Rs 452.35 in 97 trading days took place on very thin volumes, signifying only limited investor interest and participation in the share. What makes this sharp price rise and sudden increase in trading frequency only during the above mentioned period (February 

2005 to September 2005), more astonishing is the trading record of the share during the past nine years or so. 

The shares traded only on 4 days in 1996 at Rs.12. There was no trading in the share till 1999, when the shares were traded only on 3 days and that too sporadically at below par of Rs.7. The share was traded only once in 2000, again at below par of Rs. 5.4. Thereafter the share languished without any trading for nearly 5 years between July 20, 2000 and February 06, 2005. Thus the share remained infrequently traded at below par price for nearly nine years. The share resumed trading regularly from February 7, 2005, when 100 shares were traded at below par at Rs 4.33, after nearly 5 years since the last trading in 2000. By February 22, 2005, the price of the shares rose to Rs. 8.97 (more than 100%) and by March 11, 2005, the price of the share rose by 481.52% in 14 trading days to Rs.20.85. This unusual movement in price prompted the BSE on which the share is listed, to transfer the shares to Trade for Trade segment on February 22, 2005 and to reduce the circuit filter in the shares from 10 % to 5 % on March 11, 2005, as a part of BSE�s normal surveillance measure. 

The above developments in the share of the company warranted an immediate inquiry in to the dealings in the shares. While the inquiry is in progress, based on findings of the preliminary inquiry, SEBI has issued the above directions.

September 28, 2005

For full copy of order against AMUL J.PATEL, click here.

For full copy of order against J.B.PARIKH, click here.

For full copy of order against J.V.JOSHI, click here.

For full copy of order against KAMLESH KHANDHOR, click here.

For full copy of order against MALAY KARBHARI, click here.

For full copy of order against MINAL ENGINEERING LTD., click here.

For full copy of order against SHRIKANT J.PARIKH, click here.

For full copy of order against VIKRAM J.PARIKH, click here.