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WTM/ PS/ISD/01/2011 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER DIRECTIONS UNDER SECTIONS 11(1), 11(4) AND 11B

OF THE SEBI ACT, 1992 IN THE MATTER OF BODAL CHEMICALS LTD.

Background 1. BSE, on Aug 27, 2011 received a Fax from Bodal Chemicals Ltd. (hereinafter referred to as Bodal or company) on a letterhead of the company informing that the meeting of the Board of Director of the company will be held on August 29, 2011 to consider and approve the Bonus issue and also enclosed an undated press release issued by the company which inter alia stated about the disinvestments plans of the company. The letter was duly signed by the company secretary. The Press Release informed the following: a) That the meeting of the Board of Director of the company will be held on August 29, 2011 to consider and approve the issue of Bonus issue. b) The company announces the divestiture of its Single Super Phosphate (S.S.P) Plant situated at Padra, Vadodara for a cash consideration of Rs. 640 Crores to M/s Kiri Dyes Limited, Ahmedabad. c) CRISIL one of the most renowned credit rating agencies in India has assigned CRICIL GVC Level 3 rating on the companies corporate governance and value creation practices for all its stake holders. The rating indicates that the companys capability with regard to corporate governance and value creation for all its stake holders is high. d) The shares of the company are now listed at National Stock Exchange of India Ltd.

2. It is observed from the sender details of the fax that this letter from the company containing material disclosure was sent on a Saturday (August 27, 2011) with sender detail as Radheshyam Stationery (Fax No. 00917926761022).
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August 27, 2011 being a holiday, these string of announcements or disclosures on the letter and press release sent by fax were disseminated on BSE website on Aug 29, 2011, at 8:13 hrs and 8:18 hrs. Further, on the same day during market hours at 14:24 hrs, Exchange disseminated a clarification it received from the company with reference to the earlier two announcements disseminated on BSE website. Bodal informed that it had not issued any Press Release on August 27, 2011 for said subject and the Company has not sent any fax on August 27, 2011. While going through the disclosures received by the company it is noted that while both the letters are written on the letter head purportedly of Bodal but the appearance of the letter heads are different. The genuineness of the fax sent on August 27, 2011 needs to be verified in the course of investigation.

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Amid the above disclosures followed by the denial, it is observed that the price of the scrip at BSE moved from a previous day close price of Rs 21 and touched a high of Rs 23.90 (13.81% from the closing price) till 14:24 hrs when the denial was disseminated. The price of the scrip closed at Rs.18.35 and registered an intraday fall of 25.31% from Rs.23.90 to Rs.17.85. As there was a large fluctuation in the price of the scrip and a spurt in volumes, Exchanges (BSE and NSE) were asked to analyse the trading pattern in the scrip of Bodal chemicals Ltd and submit a report on the above incidents. The graphical presentation of the price movement on the said date is given below:

Details of the price and volume during the day are tabulated below: Open High Low Close Volume (BSE / (Rs) (Rs) (Rs) (Rs) NSE) Whole day (Aug 29, 18.35 10,35,975 / 23.9 17.85 22.65 9:15:02 14:49:20 2011) 3,58,709 Pre-denial period 23.9 20.35 20.55 (9:00 hrs to 14:23:59 22.65 7,19,866 / 2,67,691 9:15:02 14:16:12 14:23:51 hrs) Post-denial period 18.35 20.55 20.60 17.85 3,16,109 / 91,018 (14:24 hrs to 16:00 hrs) 14:24:02 14:24:43 14:59:18 5. In Pre-denial period a total of 9,87,577 shares were traded i.e. 70.81% of total market volume for that day and in the post denial period 4,07,127 shares were traded i.e. 29.19% of total market volume for that day. 6. BSE has observed that following clients are the major net sellers in pre denial period (9:00 to 14:24hrs):
Sr. Client No. 1 2 3 4 5 6 7 8 9 Bhavanaben Vaghasiya Hemaliben Mehta Hiteshbhai Sarvaiya Shantaben Patel Vaibhav Bhatt Bharati Desai Hemaliben Mehta Foram Enterprise Bharatkumar Suwalal Prajapati Navneet Shah PAN Trading Member Net Sell Sell Rate % to Mkt (Rs.) Volume 22.43 22.85 22.42 23.22 22.19 23.02 23.16 22.59 20.95 7.37 5.49 4.58 4.13 3.52 3.47 2.94 2.71 2.43

AHNPV2981P ACFPM2816F AIWPS2498E ARMPP5114H AFAPB8070Q AFJPD5672B ACFPM2816F ACYPP1919K APDPP8563R

Arcadia Share & Stock Brokers Pvt.Ltd.(3018) Mtl Share & Stock Brokers Ltd.(952) Mtl Share & Stock Brokers Ltd.(952) Arcadia Share & Stock Brokers Pvt.Ltd.(3018) Adroit Financial Services Pvt.Ltd.(3034) Emkay Global Financial Services Ltd.(185) Motilal Oswal Securities Ltd.(446) IFCI Financial Services Ltd.(3274) Guiness Securities Ltd.(3027) Emkay Global Financial Services Ltd.(185)

53055 39500 33000 29751 25323 25000 21183 19488 17500

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AAMPS9439D

13938

21.63

1.94

7. BSE has observed that Hemaliben Mehta alongwith Charuben Mehta have a common address viz. Plot No 1665/B Jntendraj Nr Aashiyana Flat Sardarnagar, Bhavnagar,Gujarat
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and had altogether sold 1,03,839 shares, out of which 71,683 shares were sold prior to the denial from the company. Further it was stated that the said entities are suspected to be part of an identified Group of entities Viz. Bhavesh Pabari Group. Several entities part of the said group have been barred by SEBI vide their order dated February 2, 2011. Hemaliben Mehta traded through MTL Share & Stock Brokers, which has the same director as Master Capital Services, member of NSE, through which Hemaliben Mehta was found to be trading in scrip of Bodal. Hiteshbhai Mansukhbhai Sarvaiya, another major net seller, sold 33,000 shares. The other major net seller on this day prior to the denial was Bhavanaben Vaghasiya from Rajkot Gujarat, who sold 53,055 shares @ Rs.22.43.
8. NSE analyzed the trading pattern in the scrip during the following two time patches before

the denial announcement. The major net sellers during 9:00:00 to 10:05:00 are given below:
Client Name Charuben Jitendrarai Mehta Bhavana Gautambhai Vaghasiya Hemaliben Bimalkumar Mehta Inventure Growth & Securities Ltd Vimalkumar B Thaker Trading Member Name Master Capital Services Limited Client PAN ADOPM4398N Buy Sell Qty Qty 0 Net % to Mkt Net 40.61

31000 31000

Arcadia Share & Stock Brokers Private AHNPV2981P Limited Master Capital Services Limited Inventure Growth & Securities Limited Motilal Oswal Securities Ltd. ACFPM2816F

25000 25000

32.75

15304 15304

20.05

AAACI2044K ADXPT5084D

8529 0

10827 1000

2298 1000

3.01 1.31

The major net sellers during 10:05:01 to 14:25:00 are given below:
Trading Member Name Bhavana Arcadia Share & Stock Gautambhai Brokers Private Vaghasiya Limited Emkay Global Bharati Deepak Financial Services Desai Limited Deepak Rasiklal Emkay Global Desai Financial Services Client Name
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Client PAN AHNPV2981P

Buy Sell Qty Qty 0

Net

% to Mkt Net 39.75

57000 57000

AFJPD5672B AACPD3575D

0 0

27000 27000 25600 25600

18.83 17.85

Limited Hiteshbhai Mansukhbhai Sarvaiy Dheeraj Lohia Master Capital Services Limited Integrated Master Securities Pvt. Ltd. AIWPS2498E AHCPK2417L 1 0 10239 10238 10203 10203 7.14 7.12

9. It is again observed that Hemaliben Mehta alongwith Charuben Mehta who have traded

through the same broker, Master Capital Services, alongwith Bhavanaben Vaghasiya, trading through broker Arcadia, are the top sellers during the crucial period of trading, which is pre-denial period when the investors were taking decisions on basis of incorrect positive news about the company. The needle of suspicion would turn to those clients who are selling large number of shares in order to prima facie benefit from the artificial boost to the price. 10. NSE has further observed that the following clients who figure among the top net sellers during the time patches have mostly traded in this particular scrip during the period August 22, 2011 to August 29, 2011, i.e from the date of listing at NSE:
Gross Amt in Rs. Lac in BODAL 12.12 69.61 18.92 5.94 16.95 Gross Amt in Rs. Lac across all securities from Aug 22, to Aug 29 12.12 69.61 24.47 5.94 19.58 % Gross Amt to Total Gross Amount 100.00% 100.00% 77.30% 100.00% 86.54%

Client Name

PAN No

Charuben Jitendrarai Mehta Bhavana Gautambhai Vaghasiya Hemaliben Bimalkumar Mehta Bharati Deepak Desai Deepak Rasiklal Desai

ADOPM4398N AHNPV2981P ACFPM2816F AFJPD5672B AACPD3575D

11. Given the above facts, it appears that there was an attempt to push apparently fraudulent announcements with a positive news in the public domain in order to mislead investors and a concentration of selling by a few entities, it is imperative that SEBI should intervene and prevent the attempt of a few to decamp with such prima facie ill-gotten profits. The integrity of the market is compromised when trading takes place on the basis of incorrect information as was later confirmed so by the company upon query by the Exchange. The persons who have engineered such false news and
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covered it in the garb of an official announcement by the company will need to be identified in the course of investigation. I therefore find that prima facie there has been a violation of the Regulation 3 (c ) and (d) as also of Regulation 4 (f) and (k) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. ORDER: Therefore, in order to protect the interest of investors and the integrity of the securities market, I, in exercise of the powers conferred upon me in terms of Section 19 read with Section 11(1), Section 11(4)(b) & (d) and Section 11B of SEBI Act, 1992, pending investigation and passing of final order, hereby; A. Direct BSE and NSE to withhold the pay-out of securities and funds for the trading done on their respective Exchanges on August 29, 2011. The purpose of this exercise is to ensure that the securities/funds are not disposed off by the alleged perpetrators of manipulation, if any. B. Prohibit the following persons from buying, selling or dealing in the securities market. in any manner whatsoever, till further directions: i. ii. iii. Hemaliben Bimalkumar Mehta (Pan no. ACFPM2816F) Charuben Jitendrarai Mehta (Pan no. ADOPM4398N) Bhavana Gautambhai Vaghasiya (Pan no. AHNPV2981P)

All the above directions shall take effect immediately and shall be in force until further orders. The aforesaid persons if aggrieved by this Order may file their written objections, if any, within 15 days from the date of this order.

Place: Mumbai Date: 30/08/2011

PRASHANT SARAN WHOLE-TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA


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