SAR Auto Products, an auto-components manufacturer, got listed on the Bombay Stock Exchange (BSE) in March 2015. It used to be listed on the regional exchanges of Ahmedabad, Vadodara and Pune. As per its annual report for 2015, SAR Auto, which achieved a turnover of Rs2.21 crore in FY14-15 with a production of 43,156 parts, has just four employees on its payroll. Nearly half the revenue is derived from ‘export sales’. In the same financial year, out of Rs28.81 lakh paid as salary and wages, Rs22.17 lakh was the remuneration of the two directors (promoters) and Rs6.63 lakh was paid as employee salaries. SAR Auto reported a net loss of Rs3.18 crore in 14-15. For the past nine-months ended December 2015, revenue was Rs2.09 crore and profit was Rs42 lakh. Despite its poor financials, the stock rocketed on the BSE by 1737%, or nearly 19 times, to Rs241 on 16 October 2015 from Rs13.12 on 5 March 2015. From there, the stock fell to Rs138 on 14 December 2015, down 43% from peak. Despite this fall, the stock is still up 1302%, at Rs184 on 20 April 2016, from its listing date in March 2015. This pump-&-dump operation did not go unnoticed. In March 2015, BSE sought a clarification, to which SAR Auto replied that “the management is not doing any internal activities” and that the price increase of shares “is market driven.” On 31 December 2015, there were just 597 public shareholders. Will the BSE do something more than seeking clarifications?
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