The capital market regulator has started an investigation into possible rigging of Castex Technologies' share price through forcible conversion of foreign bonds.
In more troubles for crisis-hit Amtek Auto, Sebi has widened its investigation into alleged share price manipulation at its subsidiary Castex Technologies with role of banks, mutual funds and rating agencies also coming under the scanner.
The capital market regulator has started an investigation into possible rigging of Castex Technologies' share price through forcible conversion of foreign bonds.
While it has taken a serious note of the allegations, sources said Sebi has expanded the probe into the matter suspecting that more players could be involved in efforts to manipulate the share price of Castex Technologies.
Besides promoters of the company, Sebi is now looking at the possible role of banks, mutual funds and rating agencies in the whole issue, according to sources.
It was alleged by some bondholders that efforts were being made to rig the share price of Castex Technologies by forcibly asking investors to convert their bonds.
Amtek Auto and Castex Technologies could not be immediately contacted for their comments.
Auto component maker Amtek is grappling with financial troubles and its shares have been battered in recent weeks.
Besides, exposure to the company's bonds have created ripple effects in the mutual funds and other market segments as well.
In a regulatory filing today, Castex Technologies said that pursuant to mandatory conversion notice issued to bondholders in July it has received conversion notices of $80.2 million.
"The balance $0.6 million is also being converted by the company in accordance with the mandatory conversion notice and the conditions laid down in the bond document," it noted.
The company has alloted more than 3.94 crore equity at the fixed conversion price of Rs 103.005 apiece, "thereby effecting the conversion of the outstanding bonds worth $80.8 million out of the $130 million 6% FCCB (Foreign Currency Convertible Bond) issue".
Last month, Amtek Auto -- which is a promoter of Castex Technologies -- had said that "there is temporary cash flow mismatch in the company."
Recently, JP Morgan Mutual Fund restricted redemptions from two of its debt schemes - Short Term Income Fund and India Treasury Fund.
The move came in the wake of a decline in NAVs (net assets value) of the schemes due to fund house's exposure to Amtek Auto's debt papers. These schemes have a collective exposure of about Rs 200 crore in Amtek Auto.
Shares of Castex Technologies plunged nearly 5% to close at Rs 40.35 while that of Amtek Auto ended flat at Rs 30.40 on the BSE on Thursday.
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