The long delayed, controversy ridden and unique IPO from Vaswani Industries finally listed on “Dhanteras” day on the BSE and NSE. The company had issued 1 crore shares in a price band of Rs 45-49 which was subscribed with the help of friendly intermediaries. The QIB portion was undersubscribed with a mere 16% of the allocation being subscribed to while the HNI portion was subscribed 11.29 times and the retail portion 6.82 times. The overall issue was subscribed 4.16 times.

The stock listed at the BSE at Rs 33.45 on the BSE and at Rs 33.70 on the NSE. The high of the day was Rs 35.40 on the BSE and Rs 33.70 on the NSE. The low was Rs 13 on the BSE and Rs 14 on the NSE. The share closed at Rs 17.75 on the BSE and Rs 17.80 on the NSE.

The issue was open between the 29th of April and the 3rd of May. The issue was dogged with controversies of various kinds which began with withdrawal of applications by HNI’s and retail investors getting allotted higher number of shares. There was rampant grey market activity in this share and large number of application forms was procured by the company. Post this withdrawal of applications there was a complaint made to SEBI by a group of investors in Ahmedabad and the protest culminated in ransacking of the office of SEBI in Ahmedabad. The issue allotment was completed but the issue was not allowed to list. SEBI then issued some orders about the same which was challenged or contested in SAT by the company and then a very funny, unheard of, unparalleled and only of its kind ever solution was hammered out. The gist of the same was that the company would through an open offer by back 15% of shares from the original shareholders who had applied and received shares in the IPO at the issue price and the company was at liberty to reallot these shares. Post this exercise the company would issue bonus shares in the ratio of 1 share for every 4 shares held to the new shareholders who had become so through the IPO. This meant that the cost of the shares post the bonus became Rs 39.20 instead of the original Rs 49. The shares were allotted, process completed and listing done but trading not permitted. Finally after a period of almost 5 and a half months against the normal 15 days trading began in the shares of the Vaswani Industries, and it turned out to be yet another disaster.

The total traded volume was 592.35 lac shares which was 4.74 times the IPO size of 1.25 cr shares. Readers would recall that the original issue of 1 crore shares was increased post bonus to 1.25 crore shares. The delivery volume was 47.80 lac shares which was 38.24% of the IPO size. The weighted average of the day’s trade was Rs 20.64 on the BSE and Rs 20.56 on the NSE. The net loss was Rs 21.45 on the BSE or 54.72% while it was Rs 21.40 on the NSE or 54.59%.

From the price chart of the share one can see that the high and the low of the day were made within a few minutes of the open of the day’s trading itself. The share then steadied down at the upper end of the price and started drifting downward. By 12.30 pm when the stock hit Rs 17 it rallied for the the next 90 minutes to make a high of Rs 22 and then again began to fall. By the end of the day slightly more than half the IPO amount was wiped out and the point that if fundamentals are poor or non-existent, a share post listing has to sooner or later move or converge to its fair fundamental value.

Vaswani Industries Limited is one more example of an issue going wrong where the asking price was not justifiable with the fundamentals. It also created a dubious record with all that happened in SEBI and SAT and the settlement which at best could be said to be face saving. One hopes and prays that after one more debacle on listing day, retial investors learn their lesson the hard way.