Murli Industries scrip shoots up on corporate debt restructuring plans
Alekh Angre 09 March 2011

The stock of Murli Industries, whose promoter was indicted recently by SEBI, is shooting up. Since 28th February, the share price has gained over 40%, indicating possible market manipulation

The promoter of Murli Industries was recently banned from trading, by the market regulator for involvement in price-rigging. Yet, the Murli Industries (MIL) stock price has recently seen an upward trend after sliding since November, suggesting that there is some manipulation.

Since 28 February 2011, till the time it was last traded, the share price has moved up from Rs26.35 to Rs37.05, a leap of over 40%.

On 7th March, when the BSE benchmark index, the Sensex, was down by 236 points, MIL climbed by Rs2.75, or nearly 10%. In three months from 25 November 2010, the stock price crashed from Rs111.20 crashed to Rs25.75 on 25 February 2011, a fall of 77%.

According to industry sources, last week the company's officials met bankers for the first round of corporate debt restructuring (CDR). This is said to be the main reason for the stock hitting the upper circuit over the past couple of days.

The company, which is into diversified businesses like power, cement, paper and paperboard and operates a solvent extraction refinery, reported a loss of around Rs97.20 crore for the December 2010 quarter.

Moneylife recently reported on possible accounting manipulation in Murli Industries. The interest cost for the third quarter stood at Rs52.48 crore, nearly double that in the earlier quarter when it was at Rs25.68crore. According to industry sources, the company has not taken on any new debt during this quarter. (Read, Murli Industries: A story of accounting malpractices?)

MIL made an ambitious foray into cement, but was weighed down by the debt that it ostensibly used to build up its production capacity. Now that it is selling off its cement business, the company will be able to concentrate more on its core businesses like solvent extraction, paper and power.

In November last year, there were various media reports which indicated that MIL was close to offloading its cement division to Mexico's Cemex, the world's third-largest cement maker.

A few months ago, SEBI banned the company and its promoter from trading in its own shares and the shares of group companies. MIL was one of the four companies where promoters had colluded with speculators to ramp up prices. The others were Ackruti City, Welspun Gujarat Stahl Rohren and Brushman India.

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