Archit Organosys, which manufactures chemicals, specialty derivatives and adhesives and sealants, claims to be of the leading chemicals companies in India. The surprising part is that, though the company’s website claims that it has maintained a steady growth and has ‘matured itself in capturing a major share in the market’ expanding to the US, Europe, Middle East across 50 countries, nowhere in its annual report or website is there a mention of clients’ names.
Archit, which operated as Shri Chlochem Limited earlier, did not submit its shareholding pattern for the June 2011 quarter and did not appoint a whole-time secretary in 2003, according to www.watchoutinvestor.com. Shri Chlochem was suspended by the Bombay Stock Exchange in 2007 for not complying with its listing agreement. The suspension was later revoked.
The auditors, GK Choksi & Co gave a qualified opinion on the FY16-17 accounts, for non-provision of a liability of Rs1.5 crore that violated Accounting Standard 29 and also resulted in the understatement of current liabilities.
Sales fell 5% year-on-year (y-o-y), from Rs10.65 crore to Rs10.08 crore in the June 2017, and it made a loss of Rs1.94 crore compared to a profit of Rs0.46 crore. The average sales for the past 10 quarters have been Rs12.4 crore and the average net profit was Rs0.11 crore. Despite such poor results, the stock rose 478%, from Rs8.57 on 17 June '15 to Rs49.5 on 24 November '17. How the stock of a company with no growth and a qualified opinion on its financial statements shoot up so much? The regulators are not interested in finding out.