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?