Concurrent India Infrastructure kept silent for more than a month after announcing a power deal with Sikkim Power, and issued a clarification only after the latter refuted any deal with it. The BSE is silent—which encourages such malpractices
Moneylife has reported on how the media is being used to spread positive news about a company to stop its share price from falling further. We have come across one such company, which itself is propagating false announcements of its project wins. The saving grace was that investors ignored this 'positive' news.
On 10th May, Mumbai-based Concurrent (India) Infrastructure Ltd, in a regulatory filing said, "Concurrent to Develop Hydro project in Sikkim through PPP Mode". According to the release, Concurrent was all set to enter into an agreement with Sikkim Power Development Corp Ltd (SPDC) through PPP model to develop a 40MW hydro-project, estimated to cost Rs111.2 crore, at Labdang in Sikkim.
The company said that it had already spent Rs30 crore on developing preparations of Detailed Project Report (DPR); procurement of land and statutory clearance; access road and bridge at the site; a 30-metre tunnel and other civil works.
The release also quoted Concurrent's director and chief executive officer K Sudhir Babu as saying, "With this (deal), Concurrent will have a foothold in Sikkim. As per estimates, in Sikkim, (the) hydro-potential is 9,000MW, out of which only 4,000MW has been allotted."
Since the announcement was made after trading hours, next day, on 11th May, the Concurrent share opened Rs0.65 higher at Rs33.00 from its previous closing price on the Bombay Stock Exchange (BSE). However, at close, the shares fell by Rs2.1 to Rs30.75. During 10th May and 16th June (the day when Concurrent clarified that it had not signed any deal in Sikkim), Concurrent shares moved in a band between Rs29.55 to Rs34.80.
On 14th June, SPDC clarified that it has not entered into any kind of understanding or agreement with Concurrent (India) Infrastructure Ltd for development of a 40MW hydropower project in the State. According to a press statement, SPDC manager Palchen D Chaktha refuted any such development with Concurrent. He also said that SPDC has neither entered into any kind of agreement with Concurrent nor is it considering allotment of any project to the company in the near future.
Following the denial from SPDC, on 16th June, Concurrent said that it has not entered into any agreement yet in this regard and is still under the process of negotiations through various channels for a possible proposition of an agreement, if the efforts for the same fructifies.
The company conveniently kept mum throughout the period between its first announcement and subsequent denial by SPDC. Passing on the blame to the media, Concurrent said, "(The) Company through its press release dated May 09, 2010, stated very clearly that the Company is all set to enter an agreement for the said purpose, however the same was interpreted by some websites as such that (the) Company has entered already into an agreement."
Interestingly, the heading for its earlier announcement was "Concurrent to Develop Hydro project in Sikkim through PPP Mode" and not "Concurrent may Develop Hydro project in Sikkim through PPP Mode", if at all it was still at the negotiation stage.
We asked BSE officials if they will initiate any action against the false filing by Concurrent. However, until writing the story, there was no response from the Exchange. By keeping mum, the stock exchanges, which are the first level in stock market regulation, encourages such practices. As Moneylife magazine reports in every issue, misinformation and price-rigging is rampant in the BSE which the authorities turn a blind eye to.
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