The Securities and Exchange Board of India (Sebi) Chairman U K Sinha expressed concern over the state of primary markets on Friday saying that corporations are not raising money or making investments and instead are sitting with cash on their books.
Sinha, who was addressing the CII national council meeting here where Ratan Tata was given the first CII President’s award by Finance Minister P Chidambaram said, “It is worrying that during 2010-11, Rs 58,000 crore of money was raised and this number fell to Rs 15,000 crore in 2012-13 and further to Rs 3,200 crore in the first seven months of this year.”
Comparing this data with buyback which on the other hand has gone up comparatively from 32 in 2011-12 to 22 this year, he said it was apparent that corporates had cash.
Further, offer documents are coming down as there have been just 16 filed so far and even out of the documents filed, 75 per cent were not acted upon even though Sebi had given observations for these.
The Sebi chief further said that 1,100 listed companies had violated Clause 35 of the listing agreement which pertains to shareholding pattern, while 900 companies had violated corporate governance guidelines as per clause 49.
On Monday, Sebi will issue fresh guidelines on the quality of filing of corporate disclosures that will improve the kind of information that is given out by corporates.
The regulator also said that they would have a re-look at the delisting guidelines. “We will have a re-look at delisting guidelines...The process has already started,” Sinha said adding if required, Sebi may look at the rules for preferential allotment of shares by companies.
Sinha spoke extensively on shareholder activism giving examples of how chief executive of Fortune-500 companies are voted out due to lack of performance. “World over shareholder activism is lining with institutional investors and they are taking a close look at corporate.”
Chairman of Godrej Industries Adi Godrej asked the Sebi chief on the ease of raising money at the capital market to which Sinha said that the cost of raising capital in India is comparable to anywhere in the world.