PC Jeweller slumps 7% after Sebi seeks show-cause in insider trading case

Shares of PC Jeweller slumped 7.14 per cent to Rs 24.05 per share on the BSE on Wednesday after market regulator Securities and Exchange Board of India (Sebi) demanded a show-cause from those whom it identified to have benefitted, in the insider-trading case, from price-sensitive information pertaining to the company’s buyback announcement and its subsequent withdrawal. It also ordered impounding Rs 8 crore from the alleged insiders.

The regulator said the order, which named Shivani Gupta (daughter-in-law of PC Jeweller Chairman Padam Chand Gupta), Padam’s son and Shivan's husband Sachin Gupta, Shivani's brother-in-law Amit Garg, and Quick Developers (QDPL), where Garg was earlier a director, should be considered as a notice by the identified insiders and they should furnish show-cause, on why they should not be directed to disgorge the amount equivalent to gains or losses avoided through the insider trading, and why they should not be kept off the securities market.

Sebi observed after the announcement of the buyback on May 10, 2018, the shares of PC Jeweller were locked at the upper circuit of 10 per cent. After the announcement that the board okayed the withdrawal of the buyback, the scrip hit the lower circuit of 20 per cent

At 9:53 am, the stock was trading 4.63 per cent lower at Rs 24.70 apiece, as against a 0.21 per cent rise in the benchmark S&P BSE Sensex. About 3.3 million shares have changed hands on the NSE and BSE till the time of writing of this report.

On December 11, the stock had hit a lifetime low of Rs 20.60 per share after rating agency CRISIL downgraded its long-term and short-term ratings to the company's bank loan facilities to CRISIL D. The instruments with this rating are in default or are expected to be in default soon, as per the rating agency.

As per the rating rationale, the downgrade in the rating factored in the instances of development of Letter of Credits (LC) and overutilization in working capital limits for more than 30 days. The same was reflective of the fact that the liquidity profile of the group has deteriorated in past few months on account of cash flow mismatches.

The company, however, clarified that Indian jewellery demand during Q2 at 101.6 tonnes was almost a third lower year-on-year due to weaker consumer sentiments and there was a decline of nearly 51 per cent in Indian bullion imports on quarter-on-quarter basis.

Previously, in November, CARE Ratings had downgraded the compnay's rating for fixed deposits from “BB+” to “B” on stressed liquidity position and deterioration in the financial flexibility of the company.