Delisting Dilemmas

Even though the stock market is buoyant and the Sensex is hovering at around 20,000, companies such as Nirma, Binani Cement and Sparsh BPO Services have decided to exit from the market. All three have announced their plans to voluntarily delist from the bourses. Binani Cement announced its delisting plan on October 6. Nirma followed soon after on October 9 and Sparsh BPO on October 11. But unlike the spate of initial public offers (IPOs), which reflect companies' desire to raise capital at good valuations in a buoyant market, there is no common reason for these companies' decision to delist. “These delistings are case specific and no common reason can be attributed to them,” says Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities. Reasons for delisting All the three companies have their own reasons for exiting from the bourses. Nirma, which was primarily focused on consumer products, has diversified into other areas. The company's business has become more complex and asset heavy. In its statement issued to the Bombay Stock Exchange (BSE), the company stated: “With the changing economic environment, the company's profile is likely to change further towards entering into select early-stage and capital-intensive businesses. The nature and risk profile of these businesses may not be easily understood by and may not be appropriate for non-promoter investors. Further, such businesses may also have long gestation periods. Therefore, the acquirers are of the view that the next phase of the company's life cycle can be better managed as an unlisted company.” Moreover, the company's promoters are of