Stories of price manipulation

Moneylife Digital Team

Karma Industries

Laxmankumar Birla Trading started in 1977. It then became Karma Ispat; now it is Karma Industries. The firm says it is engaged in the textiles business, but it also makes steel products. Its name changes (nearly half a dozen times) have accompanied changes in product profile; its financials are distorted. For the June 2010 quarter, the company reported operating profit of Rs67 lakh (revenues Rs62.59 crore). Revenues in the September 2010 quarter were Rs95.21 crore (operating profit Rs80 lakh).



In the December 2010 quarter, revenues were Rs242.98 crore (operating profit Rs1.77 crore). The scrip rose 643% from Rs23.10 on 30 April 2010 to Rs171.60 apiece on 4 April 2011. The regulators should examine the unusual jump in the stock and a huge rise in its financials in the December quarter.

Arrow Securities

Ahmedabad-based Arrow Securities is engaged in  leasing and hire purchase business. The shares of the company come under the ‘T’ group of the BSE. Arrow Securities reported revenues of Rs1.19 crore and operating profit of Rs3 lakh for the June 2010 quarter. Revenues in the September 2010 quarter increased to Rs1.22 crore but operating profit remained stagnant at Rs3 lakh.

 

Operating profit in the December 2010 quarter fell to Rs1 lakh while revenues rose to Rs1.54 crore. The stock declined 88% to Rs9.56 per share on 4 April 2011 from Rs83 apiece on 28 October 2010. On an average, 28,558 shares were traded in this six-month period. With such distorted financials, and tumbling share price, it’s time the regulators take a closer look at the company’s performance.