Stories of price manipulation
LS Industries (Rs8)
LS Industries Ltd is supposed to be a vertically integrated supply-chain which includes manufacturing textiles and electronics from its own and sub-contracted factories. Despite a 15-fold increase in revenues from March 2010 to September 2011, its operating profits have been low and erratic; current profits are Rs65 lakh on sales of Rs30.24 crore, or a profit turnover ratio of 2%. To wipe off accumulated losses of Rs4.4 crore, the management had reduced its capital base.
And, to make up for lack of liquidity and to make trading easier, a stock split in the ratio of 1:5 was announced. Two foreign nationals, namely, Suet Meng Chay and Chee Ai Liew, hold 24% of the company’s shares, while the promoter—Strategybot Finance Pvt Ltd—holds 74%. As part of extreme market manipulation, the share price has zoomed 460% but the regulators are somnolent.
Arcadia Mercantile Capital (Rs11)
Arcadia Mercantile Capital Ltd supposedly into securities trading and ‘infrastructure related’ business, saw its share price tank 81% over the past 10 months, from Rs62 to Rs11.80. It has changed its registered office twice in the last year. Three directors have tendered their resignation in the last three months.
One director had sold off his stake in the months prior to his departure, according to a filing on BSE. The company had posted sales of Rs18 lakh in the December 2011 quarter, down from a sizeable Rs17 crore it had reported in the March 2010 quarter, a fall of 98%. It reported earnings of Rs72,000 in the latest quarter, down from Rs3.84 crore it had reported eight quarters ago. According to BSE filings, Amrapali Capital and Finance Services Ltd, once implicated and fined by SEBI for manipulative activities, had bought 15,55,100 shares in Arcadia early last year.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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