Hinduja TMT plunged on Friday on reports that the market regulator has barred the company from dealing in securities as an intermediary.

The stock of the IT and media firm was down by 12.6% to Rs 222 on the BSE in early-afternoon trades. A high volume of 1.12 million shares was recorded on the counter in just a couple of hours of trading.

The scrip has declined since the last few sessions. From a recent high of Rs 284.30 on 20 January 2003, it has lost 21.9% in the last four sessions to the current Rs 222.

Today's sharp setback on the counter comes after reports that the Securities & Exchange Board of India has issued an order directing Hinduja TMT not to deal in securities as an intermediary in any manner whatsoever for a period of 2 years.

However, the Sebi ruling would not have any impact for Hinduja TMT as it has already transformed itself from a finance company to an IT-enabled services and media company in the last couple of years. It has already surrendered its non-banking financial company registration to the Reserve Bank of India and plans to focus only on its on new activities. The company had consolidated the Hinduja group's telecom and media businesses earlier, and as reflected by its new name, has positioned itself as a full-fledged TMT (technology, media and telecom) company.

But the Sebi directive had a sentimental impact on the stock. The market regulator has barred Hinduja TMT from dealing in securities as a capital market intermediary for two years, for violating its regulations in the Subash Projects rights issue in 1995 where Hinduja TMT was a lead manager. The intermediary has to take the responsibility for the infractions committed as an intermediary even after the lapse of registration, Sebi said in its order dated 11 January 2003.

Recently, Hinduja TMT posted a 26% rise in its Q3 net profit to Rs 16.51 crore for the quarter ended 31 December 2002 as compared to net profit of Rs 13.10 crore in the quarter ended 31 December 2001. Its total income rose by 46.8% to Rs 29.60 crore (Rs 20.16 crore).

Meanwhile, Hinduja TMT said that in order to manage risks posed by external environment and meet the requirements of its overseas clients for geographical diversity and disaster recovery, it has entered into an agreement with a call centre company in the Philippines and is providing such services for its clients with effect from 15 November 2002.

Hinduja TMT, as part of its IT/BPO combination, is also focusing on high-end applications like engineering design and R&D services and has successfully completed pilots in engineering design software services for two companies in Europe - an automobile major and an engineering services company - and regular orders are likely to flow from them for onsite and offshore services.