Shares of the country's biggest public listed real estate developer DLF Limited crashed to its lowest level ever, a day after market regulator Securities and Exchange Board of India (SEBI) barred the firm, its billionaire promoter K P Singh, son Rajiv and daughter Pia among three other group executives from accessing the securities market for three years over lapses in making a material disclosure during its initial public offer (IPO) filing.
The scrip tanked 28.46 per cent to close at Rs 104.95 a share on the Bombay Stock Exchange on Tuesday.
DLF in a public statement sought to assure its investors and all other stakeholders that it has not acted in contravention of law either during its IPO or otherwise. “DLF and its board were guided by and acted on the advice of eminent legal advisors, merchant bankers and audit firms while formulating its offer documents,” the note said.
The developer also said it will defend itself to the fullest extent against any adverse findings and measures contained in the order passed by SEBI.
The case dates back to 2007 when an individual Kimsuk Krishna Sinha had filed two complaints with SEBI on June 4, 2007 and July 19, 2007. He had stated that Sudipti Estates and certain other persons had duped him of Rs 34 crore in relation to a land transaction and he had registered an FIR against Sudipti and at that time it was a step down subsidiary of DLF.
In view of the said allegations, Sinha had requested that considering the imperative of safeguarding the interests of general public, the listing of DLF pursuant to the IPO be disallowed and immediate action be taken in this regard. DLF had replied to him that it was not connected with Sudipti at that point of time.
In an order dated October 10, Rajeev Kumar Agarwal, a whole-time director of SEBI, said DLF and six of the seven individuals named in the case failed to make requisite disclosures about related party transactions in its IPO documents and executed a 'sham' transaction to camouflage the case. (Read here for more).
“This is big news and it will impact entire realty sector and stock negatively. Big giants like HDIL, Indiabulls Real Estate and Unitech may continue southward journey. Investors should stay away from these sectors as of now. It is bit difficult to say how big the correction would be, but we are expecting at least 7-10 per cent downside in stocks,” said Vivek Gupta, CMT – director research, CapitalVia Global Research Limited.
(Edited by Joby Puthuparampil Johnson)