Emkay Global @ Rs 17 in trouble as NSE rejects application to annul trades of October 5 2012

Emkay Global @ Rs 17 in trouble as NSE rejects application to annul trades of October 5 2012

On October 5,2012 Emkay Global suffered a Loss of Rs 51 crs on squaring up trades that were executed from a Templeton order  punched in by a dealer erroneously in  more quantum than it should have been ~ the order was of a value of Rs 17 lakhs but the dealer instead punched in 17 lakhs nos  and the order value shot to nearly a Rs 1000 crs ! of which nearly Rs 700 crs was executed before the mistake was discovered and thus had to be squared off

NSE after an extensive investigation just rejected Emkay’s application to cancel all the relevant Trades of October 5,2012 early morning as there was material error in punching

Emkay has also send a notice to the BSE as below

“We are in receipt of NSE letter dated April 30, 2013 on May 01, 2013 late in the evening regarding the decision of the Relevant Authority of NSE on the application made by us for the annulment of the error trade of October 5, 2012. The Relevant Authority of NSE has denied our application for annulment of trades arising out of a clearly erroneous entry of sale order on October 05, 2012. The Company is considering various legal course of action including challenging the decision in exercise of its statutory right to appeal.”.’

Emkay is quoted at Rs 17 (FV Rs 10) giving a market cap of Rs 41 crs ~ Promoters hold 73.24%

In March/April 2006 it came out with a Rs 75 crs IPO offerring 62.50 lakhs shares in the price bad of Rs 100 to Rs 120 ~ and the following year 2007/8 was their best with Profit of Rs 23.50 crs ~ since then the next four Financial Years  dragged down a loss in 2008/9 followed by Rs 8 crs each profit in the following years and again drifted to a marginal loss in FY 11/12

Current Book Value is Rs 50+ with Networth at Rs 134 crs of which Equity is Rs 24+ crs

Clearly Rs 51 crs loss will be a huge setback to Emkay ~ destabilising their operations big time in very competitive times ~ Emkay will surely appeal

Several years ago the Emkay Promoters had sought a meeting with me as one of their Broking Clients and my Advisory one had made a 600% + gains on his Portfolio inside a year and they wanted to meet with the guy whose advice did this ! ~ they had only recently set up a Research Team taking several analysts from a leading stock market media  house  and they wanted to tie up with me  ~ did not work out as I must have quoted too high I suppose !

…and it’s sad luck that Emkay did this deal on NSE and not BSE for BSE may just have helped them out given it’s past track record for doing so when during Broker Dominated Boards, EDs and Presidents have had to resign for malpractices ~ like opening the Exchange in the middle of the night to insert trades ! or else some brokers would have gone bankrupt on their positions !

In 1996 even I faced such a situation with BSE ~ I was deprived of Rs 3 lakhs in early morning intra day trading profits on the newly listed Bank of Baroda when despite a clear notice that partly paid up shares trading and fully paid up shares trading have do be done in separate Codes,many brokers traded in just one code and suffered losses~ they quickly approached BSE Authorities to cancel the trades ~Mr R C Mathur was the ED at the time  and he took a unilateral decision to do so without even talking with the counter party Brokers whose clients,me being one of them,had made the profits ~ I was livid and spoke directly to Mr Mathur as my Broker was unwilling to take an aggressive stand ~ Mr Mathur had the arrogance and audacity to say he need not have to talk or consult with Brokers before making any decision ! ~ I told him with such an attitude he would not last long  as ED and God help BSE while he was there ! ~But he did last another two years before  He had to take the fall for the 1998 fiasco for Harshad Mehta’s trading and payment crisis on BSE in BPL,Sterlite and Videocon

Given their Closeness with Brokers and past precedence of going out of their way to help them, BSE certainly would have had a soft approach with Emkay

Emkay Bad Luck it had to happen on NSE  and not BSE ~ BSE did not have depth for such Nifty basket Shorts at the time !

3 thoughts on “Emkay Global @ Rs 17 in trouble as NSE rejects application to annul trades of October 5 2012

  1. Well i am not a broker but i had better experience with BSE, once due to punching error wrong amount was offered in auction & since the error was obvious the matter was decided in my favour in no profit no loss manner.Some how i had feel that in BSE practical approach is taken,whereas in NSE, very high level of arrogance is ruling. Yes i fully agree with you that BSE mgt has digged their own grave though.

  2. I somehow feel NSE is correct. In this world, every action has cost associated with it and there has to be proper control associated with each order, so that such mistakes dont happen.

    NSE is being professional here is what I feel. Will Emkay would have apealed if they had made 51 crs ?

  3. From the Media Report seems NSE took a tough stand because Emkay,instead of immediately approaching NSE to cancel trades,first tried to clean up their risk management act so as to show up favourably on a NSE investigation ~ mistake on hindsight ? ~ and of course Mayur you are absolutely right ! ~ in these times when Profits and Gains are tough unless you are an insider who would give away a Rs 51 Crs Windfall courtesy a punching error by a dealer !?

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