When it comes to Vijay Mallya, delayed barking is a norm for watchdogs.
It was after about seven long months of flight disruptions and passenger troubles that the DGCA woke up to ask Kingfisher Airlnes what is really happening at the airline. Same was the case with its boss, the aviation ministry.
As far the stock market is concerned, the exchanges imposed a narrower circuit filter on Kingfisher shares only after many months of wild price volatility.
Now Sebi has also woken up to see that there is something wrong with share movements of United Spirits, another group company.
According to a report in the Business Line, Sebi has sought detailed chronology of events until a joint announcement was made by United Spirits and Diageo to the exchanges.
For weeks, rumour mills had worked overtime to produce speculative stories of sale of stake by United Spirits to Diageo, impacting the liquor companies’ shares.
A confirmation to the stake sale talks came only on 25 September.
“United Spirits Limited and Diageo plc confirm that Diageo plc is in discussion with United Spirits Limited and United Breweries (Holdings) Limited in respect of possible transactions for Diageo plc to acquire an interest in United Spirits Limited. However there is no certainty that these discussions will lead to a transaction,” the statement to the exchanges on 25 September.
More curious is the case of Kingfisher Airlines shares.
The stock had fallen below Rs 10, to become a penny stock. Later, it clawed back to rise above Rs 10 and even touched a high of Rs 17.18. And now it is careening down the hill. Today it is down 5 percent, the maximum it can fall a day, at Rs 10.90.
To put this in perspective, one has to look at the sequence of events over the last few weeks.
On 26 September, a day after the joint statement, Vijay Mallya told reporters that Kingfisher Airlines was in talks with foreign airlines to sell a stake.
He did not provide details citing “privacy and confidentiality” reasons.
However, this disclosure was not made to the exchanges, which prompted them to ask for the details of the news.
“The Exchange, in order to verify the accuracy or otherwise of the information reported in the media and to inform the market place so that the interest of the investors is safeguarded, had written to the company,” the NSE had said.
This itself was a violation of exchange norms.
The BSE had also halved the daily price movement limit for the stock to 5 percent. Even this action from the exchanges came in a bit too late.
Mallya’s disclosure of talks with foreign airlines to reporters had pushed up the stock 8.6 percent.
The stock surged 20 percent after the government allowed foreign carriers to pick up 49 percent in Indian counterparts.
This is surprising as by no stretch of imagination can one believe that Kingfisher, laden with a huge Rs 7,500 crore debt to lenders, is a likely candidate for a foreign investment.
While it is a known fact penny stocks (which Kingfisher will soon be after taking a short break) are vulnerable to such swings, the action to curb speculative movement of the stock, i.e. imposing a narrower circuit filter, came in late.
So, now it is Sebi’s turn to bark, though again with a delay. But barking dogs seldom bite, as the saying goes.
It is for Sebi to prove that this old adage no longer holds water. Other watchdogs are yet to prove it, in case of Vijay Mallya.