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Stock manipulation: Smith & Founders
In March 2014, Shimoga Technologies merged with Smith & Founders (India) and the name of the company was changed to the latter. Smith & Founders manufactures closed die steel forgings, cast iron castings and cast iron cylinder liners.
 

In FY14-15, the revenue from operations of the micro-cap company worked out to Rs6.63 crore. Of this, as much as Rs2.41 crore was paid towards employee benefit expense, of which Rs1.19 crore was paid towards salaries and wages (to approximately 91 employees) and Rs84 lakh (nearly 35% of the total employee expense) was paid to four directors as remuneration. Smith & Founders reported an operating loss in each of the past nine quarters, after the merger. The stock price shot up by 50 times, or 4993%, from Rs0.28 on 25 March 2014 to Rs14.26 on 14 January 2015, after the announcement of the merger. Despite being a loss-making company, the stock price shot up 435% in the past six months from Rs3.42 on 25 February 2016 to Rs18.30 on 8 August 2016. However, by 10 August 2016, the stock price dropped to Rs12, down 33%. Will the regulator investigate the suspicious price movement?

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COMMENTS

Anil Kumar

6 months ago

I appreciate the constant unearthing of these price manipulation by Moneylife. I don't know if you have addressed another very rampant rigging in the market. Movement of shares price to declaration of result. The leakage seems to be from the stock exchanges. Example - Scrip - Store One Retail. The result (below expectation) was published on the BSE website at 4.04 pm. However from 2.10 pm, the share fell 10% . I think the leakage is from stock exchange staff. (If it was from Company side, the share would have fallen a couple of days before the results were declared). So it seems the companies disclose their results with exchanges, the staff in concern department leak it to their friends etc. Don't know if Moneylife has touched on this topic. An update / article investigating this issue - will be much appreciated.

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