Stories of Price Manipulation
Omni Ax’s Software (Rs2)
Omni Ax’s Software is listed on the Bombay Stock Exchange (BSE). Omni’s annual report for 2012 claims that it is engaged in developing computer software. There is no mention of the kind of software being developed nor who its clients are. Revenues for FY11-12 were reported as Rs56 lakh and expenses for the purchase of software are as high as Rs55.90 lakh, i.e., 93% of the total revenues. A similar figure was reported for the previous financial year. Are these numbers genuine? After all, for three consecutive quarters, ended December 2011, March 2012 and June 2012, Omni reported negligible sales. It was suspended by the BSE from 19 March 2013 to 28 March 2013 for not complying with the listing agreement. Omni has even invested Rs4.85 crore in two unlisted companies. The share price of the company shot up by as much as 175% in two months—from Rs0.71 on 7 June 2013 to Rs1.95 on 5th August. The stock price of another company, Eduexel Infotainment Ltd, with the same registered address and common director—Rajendra Jain—has more than doubled—from Rs4.66 in mid-April 2013 to Rs9.94 at the beginning of August 2013. Any expectations from the BSE or SEBI?
Stories of price manipulation
Integra Capital Management (Rs15)
Integra Capital Management is categorised as a ‘B’ group NBFC and is supposedly into leasing, hire purchase and ‘wealth management’. According to its 2012 annual report, the company did not undertake a single hire purchase or leasing transaction nor did it earn any revenues from consulting and advisory services. Instead, it has invested nearly Rs2 crore in mutual funds, mostly in fixed maturity plans. The company has just two employees on its payroll. In the past, the company had flouted BSE’s disclosure norms. The company’s fundamentals are a joke. It has earned marginal revenues in the past seven quarters and has incurred losses in six out of the seven quarters, with a total net loss during the preceding seven quarters amounting to Rs47 lakh. Yet, the share price of the company has ballooned 265%, from Rs4.11 to Rs15 between 6 June 2012 and 18 July 2013. As on 31 March 2013, the promoters hold 75% of the company’s equity while the retail shareholders hold 25%.
Despite spending over crores of rupees on detecting price rigging, neither SEBI nor the BSE have noticed this blatant case of price manipulation.
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.