Order in the matter of M/s.Bodal Chemicals Limited

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 company’s 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).

3. 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.

4. 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, 23.9 17.85 18.35 10,35,975 / 22.65 2011) 9:15:02 14:49:20 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 20.55 20.60 17.85 18.35 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 PAN Trading Member Net Sell Sell Rate % to Mkt No. (Rs.) Volume 1 Bhavanaben AHNPV2981P Arcadia Share & Stock 53055 22.43 7.37 Vaghasiya Brokers Pvt.Ltd.(3018) 2 Hemaliben ACFPM2816F Mtl Share & Stock 39500 22.85 5.49 Mehta Brokers Ltd.(952) 3 Hiteshbhai AIWPS2498E Mtl Share & Stock 33000 22.42 4.58 Sarvaiya Brokers Ltd.(952) 4 Shantaben Patel ARMPP5114H Arcadia Share & Stock 29751 23.22 4.13 Brokers Pvt.Ltd.(3018) 5 Vaibhav Bhatt AFAPB8070Q Adroit Financial 25323 22.19 3.52 Services Pvt.Ltd.(3034) 6 Bharati Desai AFJPD5672B Emkay Global Financial 25000 23.02 3.47 Services Ltd.(185) 7 Hemaliben ACFPM2816F Motilal Oswal 21183 23.16 2.94 Mehta Securities Ltd.(446) 8 Foram ACYPP1919K IFCI Financial Services 19488 22.59 2.71 Enterprise Ltd.(3274) 9 Bharatkumar APDPP8563R Guiness Securities 17500 20.95 2.43 Suwalal Ltd.(3027) Prajapati 10 Navneet Shah AAMPS9439D Emkay Global Financial 13938 21.63 1.94 Services Ltd.(185)

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 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: Trading Member Buy % to Mkt Client Name Client PAN Sell Qty Net Name Qty Net Charuben Master Capital Jitendrarai ADOPM4398N 0 31000 31000 40.61 Services Limited Mehta Bhavana Arcadia Share & Stock Gautambhai Brokers Private AHNPV2981P 0 25000 25000 32.75 Vaghasiya Limited Hemaliben Master Capital Bimalkumar ACFPM2816F 0 15304 15304 20.05 Services Limited Mehta Inventure Inventure Growth & Growth & AAACI2044K 8529 10827 2298 3.01 Securities Limited Securities Ltd Vimalkumar B Motilal Oswal ADXPT5084D 0 1000 1000 1.31 Thaker Securities Ltd. The major net sellers during 10:05:01 to 14:25:00 are given below: Trading Member Buy % to Mkt Client Name Client PAN Sell Qty Net Name Qty Net Bhavana Arcadia Share & Stock Gautambhai Brokers Private AHNPV2981P 0 57000 57000 39.75 Vaghasiya Limited Emkay Global Bharati Deepak Financial Services AFJPD5672B 0 27000 27000 18.83 Desai Limited Deepak Rasiklal Emkay Global AACPD3575D 0 25600 25600 17.85 Desai Financial Services

Limited Hiteshbhai Master Capital Mansukhbhai AIWPS2498E 1 10239 10238 7.14 Services Limited Sarvaiy Integrated Master Dheeraj Lohia AHCPK2417L 0 10203 10203 7.12 Securities Pvt. Ltd. 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 Gross Amt in Rs. % Gross Amt in Lac across all Amt to Client Name PAN No Rs. Lac securities from Total Gross in Aug 22, to Aug 29 Amount BODAL Charuben Jitendrarai ADOPM4398N 12.12 12.12 100.00% Mehta Bhavana Gautambhai AHNPV2981P 69.61 69.61 100.00% Vaghasiya Hemaliben Bimalkumar ACFPM2816F 18.92 24.47 77.30% Mehta Bharati Deepak Desai AFJPD5672B 5.94 5.94 100.00% Deepak Rasiklal Desai AACPD3575D 16.95 19.58 86.54%

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 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. Hemaliben Bimalkumar Mehta (Pan no. ACFPM2816F) ii. Charuben Jitendrarai Mehta (Pan no. ADOPM4398N) iii. 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 PRASHANT SARAN Date: 30/08/2011 WHOLE-TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA