-----------
UPDATE (16 August 2017, Wednesday)
Both the companies - J Kumar Infraprojects and Prakash Industries Limited, actively moved to the SAT (Securities Appellate Tribunal) against the SEBI order of putting them into restricted trade category

SAT has ruled in favor of the companies and stocks of both the companies are now moved out of the restricted trade category. Normal trading has resumed in the stocks of both the companies. We are not adding back these stocks to the smallcases, as a precautionary liquidity measure and will be reviewed during our upcoming quarterly rebalance on 31 August 2017
-----------

What happened?

On Tuesday, 8th August 2017, SEBI put 162 listed companies in a restricted trade category on the basis that they are shell companies as identified by the Ministry of Corporate Affairs. Under the restriction, shares of these companies can only be traded on first Monday of every month. Thus, trade in these securities is suspended till first Monday of the next month. Link to the SEBI Letter to Exchanges

Prakash Industries Limited was part of 2 smallcases – Propelling Growth and Value & Momentum.

J Kumar Infraprojects was part of the Smart Cities smallcase

What does it mean for these stocks?

Trading has been suspended for these stocks, and the price will not change till the next trading date i.e. first Monday of September (4th September) and first monday of October, and henceforth

About the companies

J Kumar Infraprojects

Background
The company has generated an YTD return of more than 43%. It has as institutional holding of more than 38% – mutual funds holding close to 11% and foreign institutional investors holding around 27%

Clarification provided by company
The company said that the suspicion of the regulator is uncalled for. The company statement pointed out that a majority of its clients consists of government authorities like Mumbai Metro, Delhi Metro and JNPT Port Connectivity. The company also pointed out that it has an order book of 9334.81 crores and has paid tax to the tune of 120 crores in the last three years. Here is the link to clarification submitted by the company

Prakash Industries Limited

Background
The company has generated an YTD return of 208%. It has an institutional holding of more than 7% with ace investor Rakesh Jhunjhunwala holding more than 1%.

Clarification provided by company
The company said that it is a healthy profit making company having an annual turnover of Rs 2,400 crore and generated a profit of Rs 78 crore, during the last financial year (2016-17). It also said that it has paid more than Rs 675 crore as excise duty and income tax in the last three years. Company also pointed out that based on these facts it is clear that the direction is misconceived and the data collected by the MCA is totally incorrect. Here is the link to clarification submitted by the company

What’s next?

Both companies have approached regulators to remove the restriction and are seeking legal advice. On our end, we will keep a close eye on the developments and will also send an email reminder for the first Monday of next month, or whenever the trading resumes

Did this answer your question?