Suspected stock price manipulation involving Shilpa Shetty and Raj Kundra, but looks like no one is checking on them! read on for detailed info..

The Bombay Stock Exchange (BSE) is the oldest exchange in Asia, regulated by SEBI. It traces its history to 1855, when four Gujarati and one Parsi stockbroker would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as "The Native Share & Stock Brokers Association".

On 31 August 1957, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. Currently it has 5749 companies listed with itself, which means the shares of these companies can be traded online without any hassle or face to face meetings.

Enough of Intros, lets skip to the main story.

Bollywood actress Shilpa Shetty and her businessman husband Raj Kundra on Wednesday launched Viaan Mobiles, named after their three-year-old son.

Five variants of the mobile phones, which come with a special personalised service, are priced between Rs.849 to Rs.12,999.

The phones were launched at a ceremony held here with celebrity guests Malaika Arora Khan, Farah Khan, Manish Paul and Jeetendra in attendance.

The phone will be manufactured by Viaan Industries Ltd., Shilpa Shetty being its Executive director.

This is absolutely normal except that the company Viaan Industries is not a new company. Raj Kundra (Ripu Sudan Kundra) and Shilpa Shetty Kundra, jointly bought 51% holding of an existing shelf company named Hindusthan Safety Glass Industries Ltd. (HSGIL) on September 3, 2014 at the price of Rs 10.60 per share and today the market price is Rs 334 per share (there are no trancsactions or contracts undertaken yet, no employess, no sales, no profit, nothing till today).

Shares in HSGIL have not been traded since February 21, 2014 (its listing date on BSE) . Its last trading price was Rs 10.10 per share when Bishnu, Jagdish and Kaushallya Devi Agarwal sold around 30000 shares into the market on 1^st September 2014.

HISTORY: The Company was incorporated as Hindusthan Safety Glass  Industries Limited on 19th October, 1982 as a public limited company and the  Certificate for commencement of business, dated 16th November, 1982 was duly issued by the Registrar of Companies Kolkata, West Bengal. It was listed on the Bombay Stock Exchange on February 20, 2014 and all it had was Rs 3 crore at issue price of Rs 10 per share. Back then, it had no MD or CFO in 2014 and has had no dividend or bonus in last 10 years. Bollywood actress Shilpa Shetty and her husband Raj Kundra bought a majority stake in the company on September 3, 2014. They bought about 51.5 percent stake or 15.7 lakh shares for Rs 1.88 crore. By September 11, 2014, the company’s market capitalisation was Rs 3.5 crore. However, the shares in the company have not traded since February 21, 2014 (the date of listing on BSE), which means the only transaction that happened was the transaction of purchase by Raj Kundra and Family. An open offer was made at Rs 12 per share on March 2 by Mark Corporate Advisors Pvt Ltd which closed on March 16 without any response, that means no one in the balance 48.5 % stake holders were interested in selling their 10 year old investment for a profit of 20%.

This story increased my curiosity and then I followed my instincts and I found these facts:

1.       The company was formed in 1982 with capital of Rs 85 lacs (8.5 lac shares of Rs 10 each), but there were no transactions undertaken by the company till June 2015.

2.       In 2013 the registered office was changed to Chatawala, 3rd floor, Room No. 309, Kolkata, West Bengal – 700012

3.       After change in registered office,  the company increased its number of shares by allotting additional 28.1 lac shares at Rs. 10 each to the existing shareholders in August 2013 (increased Authorised capital and then preferential allotment) thus, total capital increased to Rs. 366 lacs.

4.       Then it listed its shares in Kolkata stock exchange for trading.

5.       Then it listed its shares in Bombay Stock Exchange (BSE) on 20^th February 2014 for trading. Till 31^st March 2014, no transactions, no employees. (Nil Company)

6.       Then 786830 shares were purchased by Shilpa Shetty and Raj Kundra each on 3^rd September 2014 at Rs. 10.60 per share.

7.       Trading price on BSE is Rs. 334 as on 21^st December 2015. (real earnings per share as per books of accounts (EPS) is -0.58 as on 30^th September 2015, that means to earn Rs. Minus 0.58 per share, we have to invest Rs. 334 per share)

Now, this is so obvious that the share prices are inflated artificially on the stock market. SEBI has the means to find those traders who are trading these shares at these values and can take action at the earliest, so that no investor falls for the pseudo increased price and loose their hard earned money to a tip from luring brokers.

For someone who knows about stock market manipulations, can figure it out in a second, but for those who feel that the price is increased due to a big confidential contract signed by the company, let me tell you it’s a lie, the signed books of accounts of the company is available on BSE’s website and it shows no Tax deducted at source (TDS) on Contracts (which is compulsory if there was any such contract).

Who is behind this?
A group of stock market playersfrom Kolkata who were shareholders of Hindusthan Safety Glass (in the year 2012), and  who resided or had control of a flat at Chatawala, 3rd floor, Room No. 309, Kolkata, West Bengal – 700012, and created a few more NIL companies (Pvt. Ltds) like Amardhan Mercantile, Arrowspace Commodities, Talent Investment Co, Ocian Advisory. They may have planned this whole thing, along with a Chartered Accountant (or a group may be), and they increased the number of shares before listing it to Kolkata Stock exchange (with an inside influence at KSE – cause KSE approved listing of a NIL company), so that more people can be duped when listed on BSE. They used the names of reputed person (Shilpa shetty and Raj Kundra) to justify future expansion, but are now exposed due to early rise in price.

The Auditor of the Company (if not helping the company to cheat the retail investors on BSE) could have easily asked the following questions before issuing a clean audit report.(The Auditor of HSGIL for the FY 2014-15 was M/s Sekhri Kanodia & Associates.)

Will bank or any other valuer approve the market price of HSGIL for valuation purpose?
Why was registered office changed just before Shilpa and Raj wanted to buy?

Why has HSGIL Inveted heavily in Equity shares of Pvt Ltd Companies (who are also NIL companies)?
Why was preference allotment made, just before Shilpa and Raj wanted to buy? Cause no capital investments made after preference allotment. The only investment shown in balance sheet is office furnitures and computers for Rs. 14 lacs (as Fixed assets) and Investment in Equity of Pvt Ltd Companies for Rs 2.3 Crores.

The SEBI can easily find the culprit by finding the following answers:

When EPS is negative, how the hell can its share price rise? (Not just a normal rise, but rise of 3340% in 15 months)

Who is buying and from whom?

Is SEBI waiting for that drastic fall, when small and retail investors lose their money due this?

All facts from BSEIndia.Com and MoneyControl.Com