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No beating about the bush.
Stories of price manipulation
Lime Chemicals (Rs5)
Lime Chemicals Ltd manufactures calcium carbonate, a raw material for several industries. It failed to disclose its shareholding pattern as per the listing agreement of the BSE in June 2011. Interestingly, the company was declared ‘sick’ by an order from the Board for Industrial and Financial Reconstruction, way back in 2010, and Bank of Baroda had been appointed to revive the company. But nothing has happened so far; the company continues to incur losses. Over the past nine reported quarters, beginning September 2011 and up to September 2013, its net sales increased from Rs2.72 crore in September 2011, peaked at Rs8.67 crore in March 2013, and declined marginally after that. However, during the same period, i.e., from September 2011 to September 2013, the company reported losses in eight out of nine quarters. The biggest joke is on the regulators, namely, the BSE and SEBI. Why? The share price of this sick company rocketed a humongous 492% between 29 April 2013 and 13 January 2014. Clearly, the regulators don’t give a damn about regulating.
Cindrella Hotel’s stock price rose by 279% in little over a year. How?
Cindrella Hotels (Rs49)
Cindrella Hotels, which is suppsoedly into hospitality, runs a four-star facility hotel—The Cindrella Hotel—in Siliguri. BSE found that the company had failed to disclose its shareholding pattern for the December 2010 quarter under Clause 35 of the listing agreement. We could not locate the company’s latest annual report either on the company’s website or on the BSE’s. In fact, BSE had only the 2010 and 2011 annual reports.
As expected, the company’s fundamentals were erratic. It reported net sales of Rs73 lakh, Rs1.07 crore, Rs93 lakh and Rs89 lakh for the December 2012, March 2013, June 2013 and September 2013 quarters, respectively. For the same periods, the respective net profits were just Rs4 lakh, Rs11 lakh, Rs8 lakh and Rs1 lakh. Yet, the company’s share price rocketed 279%, from Rs12.86 to Rs48.80, in a little over a year up to 18 December 2013. And right under the nose of the regulators!
Regulators sleeping in their ivory towers, the company’s share price has rocketed a humungous 270% between 17 January 2013 and 6 December 2013, from Rs11 to Rs40.65.
According to the BSE’s website, Kailash Auto is supposedly into ‘miscellaneous commercial services’ whatever that means. It has flouted listing norms, for which it got suspended by the BSE in February 2009, as well as shareholding disclosure and corporate governance norms.
Strangely, in March 2009, just a little over a month after the company was suspended, BSE revoked the suspension. The auditors’ report of 2011-12 noted that accumulated losses exceeded half of the company’s net worth. During the past four quarters, from December 2012 to September 2013, Kailash Auto reported erratic net sales of nil, Rs34 lakh, Rs16 lakh and Rs20 lakh, respectively. Its net profits for the same quarters were even more erratic, starting with a net loss of Rs73,000, followed by net profits of Rs9 lakh, Rs2 lakh and Rs9 lakh. But, with the regulators sleeping in their ivory towers, the company’s share price has rocketed a humungous 270% between 17 January 2013 and 6 December 2013, from Rs11 to Rs40.65.