Stock Manipulation
Unquoted: Nova Iron & Steel

Stories of price manipulation

Nova Iron & Steel (Rs40)


Nova Iron & Steel is partly owned by Bhushan Power & Steel Ltd; the latter holds over 39.48% of the shares outstanding. The latter also has a subsidiary which holds 27.57% of Nova Iron & Steel. It is pertinent to note that Nova Iron & Steel was suspended by the BSE in the past for violation of listing norms.

BSE revoked the suspension on 7 May 2010. In October 2012, the company reduced the face value of its equity share from Rs10 to Rs2.40. The fundamentals of the company have been erratic. Sales seesawed over the past five quarters; in the March 2012 quarter, sales were Rs54.85 crore; they were Rs15.15 crore in the June quarter, Rs53.92 crore in the September quarter and Rs24.20 crore in the December quarter before sliding to Rs12.09 crore in the March 2013 quarter.

The company did not make profits in four out of these five quarters. Yet, the share price rocketed 591% between 17 September 2012 and 12 July 2013, from Rs6.08 to Rs42. As usual, after investing crores of rupees in surveillance equipment, SEBI couldn’t care less.

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Unquoted: KMG Milk Foods

Stories of price manipulation

KMG Milk Foods (Rs40)


Earlier known as Rahul Dairy & Allied Products Ltd, the company changed its name to KMG Milk Foods Limited on 28 April 2012. In 2007, the company was suspended by the BSE for non-compliance with the listing agreement. The suspension got revoked on 28 September 2012. The company also did not comply with shareholding as well as corporate governance norms in June 2011. The company’s fundamentals are erratic. Strangely, it reported four consecutive quarters of net sales of Rs50 lakh, starting from the June 2012 quarter up to March 2013 quarter. Its net profits were erratic as well starting with a Rs14 lakh net loss in the March 2012 quarter, Rs5 lakh and Rs6 lakh in the next two quarters, a whopping Rs17 lakh net loss in the December 2012 quarter followed by a high net profit of Rs32 lakh in March 2013 quarter.
With such erratic fundamentals, the stock price rose a stupendous 133%, from Rs17.15 to Rs40, in just over seven months between 1 November 2012 and 3 June 2013. What is the BSE doing about this company that recently got its suspension revoked? Nothing.

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Unquoted: Venkat Pharma

Stories of price manipulation


Venkat Pharma (Rs5)

The company is supposedly into pharmaceuticals, but nobody knows what its business is really. The BSE does not make its annual reports available and the company’s website is not functional. How does the BSE expect small investors to obtain information? Venkat Pharma has been implicated by the BSE in the past for non-compliance of shareholder as well as corporate governance norms, in June 2011 and December 2011, respectively.
The company’s fundamentals are bizarre. It generated no sales at all for the past six quarters ending December 2012 and did not generate a single rupee of profit. In fact, in the past six quarters, it recorded losses in all the quarters. However, you will be shocked to learn about how its share price has moved. Despite such lousy fundamentals, the stock price rose a whopping 178% within three months (5 March 2013 to 13 June 2013), from Rs1.87 to Rs5.20. SEBI, which has spent crores of taxpayers’ rupees over the past decade on its ‘modern’ surveillance systems to catch precisely such cases, has remained shamelessly quiet. Blatant price-rigging continues unabated.

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