October 24, 2005
PR No. 141/2005

Order In The Matter Of Mega Corporation Ltd.

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


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


Spurt in price and trading volume of certain companies often referred to as �mid cap� or �small cap� companies, in a short period of time, have been engaging the attention of SEBI and the stock exchanges for some time. Such trading activity has been under the surveillance of SEBI and the stock exchanges to determine whether the trading volumes and price rise have been the result of unfair trade practices or market manipulation. One such company whose shares have shown a significant increase in price as well as trading volumes in a short period of time is Mega Corporation Ltd. (the Company), which was listed on BSE in February 1996. 


The trading history of the shares of the company (after the stock split w.e.f. September 26, 2002) showed that while there was limited trading in the shares till December 2004 the volume shot up dramatically from January 2005 onwards. After the stock split in August 2002, the shares of the company were traded in the range of Rs. 1.90 to Rs. 5.72 during the period September 2002 to December 2004, and the average monthly volume in the shares was around 15,720 shares during the period September 2002 to December 2004, accounting for only around 0.016% of the total equity capital. The very low turnover ratio clearly demonstrated lack of wide spread investor interest in this shares till that time. Subsequently, during the period from January 2005 to September 16, 2005 the price of the scrip moved sharply from Rs. 5.25 to Rs. 41.10 representing a rise of around 683% accompanied by a equally sudden spurt in average monthly volume thousand times over the previous period to around 1,56,22,538 shares. The marked increase in price and trading volume during the months from January 2005 to March 2005 was not accompanied by any positive corporate developments /announcements /actions.


The company had recorded a high income from investments and had shown a profit of around Rs. 10.08 crore which had resulted from the sale of shares of three companies, in one of which, namely M/s IFSL Ltd., action has been taken by SEBI. There was a web of off-market transactions between as many as 40 entities apparently interconnected with each other. There were subsequent dealings by these entities in the shares which helped to sustain a very high volume of trading for a period of five and a half months between April 2005 to September 2005. Besides 11 clients, namely, Vishal Kumar Textiles P Ltd, Amar Adhav, Deepak Narvekar, Deepak Todkar, Ganesh Raut, Jay Shah, Jayesh Waghela, Stockholm Mercantile Co Pvt L., Rajkishore Singh, Sharpline Trading Co Pvt Ltd, Umesh Choukekar who had dealt in a major way in the shares of Mega Corporation were also found to have dealt in the shares of M/s IFSl Ltd. and consequently debarred by SEBI vide an earlier order. The absence of wide spread investor interest in the share of the company since September 2002 to December 2004, coupled with the sudden increase in share price and volume since January 2005, the quantum jump in profit from the income generated from non-core business activity and from dealing in selected penny stocks by the company, together with a flurry of corporate announcements (such as entering in to the business of worldwide outbound packaged tour, forex service, etc., in which the company had no apparent track record) and also managing a web of off-market deals to transfer of large quantities of shares by the entities connected to the company to a group of interconnected clients, who in turn dealt heavily in the market and thereby contributed to the sudden rise in trading volumes and the corresponding price rise, clearly indicate a careful designing and orchestration of a plan by the promoters, to make personal gains at the expense of investors by enticing them to participate in the trading of the shares of the company and by possibly churning their own holdings.


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.
 
 
Mumbai

October 24, 2005

For full copy of order against AJIT SAMBHAJI SURYAVANSHI, click here.

For full copy of order against AMAR YUVRAJ ADHAV, click here.

For full copy of order against BEENA MEHTA, click here.

For full copy of order against CRAYONS GLOBAL FINANCE PVT.LTD., click here.

For full copy of order against DADASAHEB GAVHANE, click here.

For full copy of order against DATTU SHITOLE, click here.

For full copy of order against DEEPAK NARVEKAR, click here.

For full copy of order against DEEPAK TODKAR, click here.

For full copy of order against FINELINE MERCANTILE CO.PVT.LTD., click here.

For full copy of order against FORTIS SECURITIES LTD., click here.

For full copy of order against FORTIS SECURITIES LTD., click here.

For full copy of order against FORTIS SECURITIES LTD., click here.

For full copy of order against GANESH RAUT, click here.

For full copy of order against H.M.LALANI, click here.

For full copy of order against HARESH RAMCHANDRA POSNAK, click here.

For full copy of order against HIMANSHU RAMNIKLAL MEHTA, click here.

For full copy of order against HITEN MEHTA, click here.

For full copy of order against INDIABULLS SECURITIES LTD., click here.

For full copy of order against INDIABULLS SECURITIES LTD., click here.

For full copy of order against JAGDISH UTTAM PARAB, click here.

For full copy of order against JAY J.SHAH, click here.

For full copy of order against JAYDEEP MANE, click here.

For full copy of order against JAYESH WAGHELA, click here.

For full copy of order against K.S.VENKATARAMAN, click here.

For full copy of order against KIRAN DHANAVADE, click here.

For full copy of order against KUNAL LALANI, click here.

For full copy of order against LAXMANS SINGH SAIJARI, click here.

For full copy of order against LOKESH KAPOOR, click here.

For full copy of order against MAHENDRA GOPAL GORIVALE, click here.

For full copy of order against MAHESH KOKATE, click here.

For full copy of order against MEGA CORP.LTD., click here.

For full copy of order against MEGA CORP.LTD., click here.

For full copy of order against MEGA CORP.LTD., click here.

For full copy of order against MEGA CORP.LTD., click here.

For full copy of order against N.K.NAYAK, click here.

For full copy of order against NIRMAL JAIN, click here.

For full copy of order against ODYSSEY CORP.LTD., click here.

For full copy of order against PATRIC XESS, click here.

For full copy of order against POOJA EQUIRESEARCH PVT.LTD., click here.

For full copy of order against PREMKUMAR SINGH, click here.

For full copy of order against R.N.MEHTA, click here.

For full copy of order against RAJ KISHOR SINGH, click here.

For full copy of order against RAMDAS KSHIRSAGAR, click here.

For full copy of order against RANJAN MANDAL, click here.

For full copy of order against RIGHTSTAR TRADING CO.PVT.LTD., click here.

For full copy of order against RITEDEAL TRADING CO.PVT.LTD., click here.

For full copy of order against RUCHIRAJ SHARES & STOCK BROKERS PVT.LTD., click here.

For full copy of order against S.L.GOLCHHA, click here.

For full copy of order against SACHIN MEHRA, click here.

For full copy of order against SANDEEP BABAJI KADAM, click here.

For full copy of order against SANTOSH A.NARVEKAR, click here.

For full copy of order against SANTOSH KRISHNA PAWAR, click here.

For full copy of order against SANTOSH ROHIDAS JAGTAP, click here.

For full copy of order against SHARPLINE TRADING CO.PVT.LTD., click here.

For full copy of order against STOCKHOLM MERCANTILE CO.PVT.LTD., click here.

For full copy of order against SURENDRA CHHALANI, click here.

For full copy of order against TOPFLAG EXPORTS PVT.LTD., click here.

For full copy of order against UMESH B.CHOUKEKAR, click here.

For full copy of order against VIJAY S.SURYAVANSHI, click here.

For full copy of order against VIMI INVESTMENTS & FINANCE PVT.LTD., click here.

For full copy of order against VISHAL KUMAR TEXTILES PVT.LTD., click here.

For full copy of order against VIVEKANAND PATANKAR, click here.