I started this thread on 31st Oct 2013, at a time when i had no clarity on the stock and therefore termed it a "mysterious stock". My initial post and a few subsequent ones spell out why i said so. One member
Rish wrote on 3rd November 2013 "...................So, don't see the Balance Sheet (EPS/BV/Dividend- All put it into Dust Bin), it will never works out in Rei Agro... Any rise you can sell Rei Agro.... "
As the stock continued to slide showing no prospect of improvement, I had sent e-mails to the Company Secretary REIAGRO on 8th November 2013 and forwarded the same to the Auditors of the company. K. Lilha & Co. and i am reproducing below the relevant portion of that mail:
"
However, the performance of the stock on the bourses since the last four months, which is totally in divergence with the reported numbers, is causing concern and anxiety in the minds of investors. This has lead to all kinds of rumors being spread on leading financial portals like moneycontrol about, manipulation of price and movement of the stock, numbers being cooked-up, financial scam etc. I am are aware that the REI management does not control and also can not be expected to control the open market buying/selling of its stock and the market determined stock price, which is making new lows continuously. Nevertheless I also beleive that the management can not simply ignore the battering of its stock on the bourses.
Under these circumstances, I request you to bring to the notice of the Audit Committee of the Board which would be discussing the Q2 results on 14th August 2013 that the CMP of Reiagro negates the company's performance as per reported numbers and that this needs to be kept in view while considering the Q2 results and discussion with Company Auditors to re-affirm that the CMP of the stock is not a reflection of any deficiencies in in operational or fundamental factors,which are as robust as the numbers indicate and the exceptional performance of the company need not be doubted. Perhaps it would be great if the management comes out with a clear statement in this reagrd while announcing the Q2 results. This will certainly demonstrate the company's professed commitment to Corporate Governance".
I followed up this e-mail with information mailed to EDSs of Integrated Surveillance Department(ISD) and Investigations Department(IVD) of SEBI on 20th November 2013 complaining of trading irregularities, stating, inter alia, as follows:
"
The REI management has remained indifferent to the continuous battering of its stock on the bourses (for THREE long years). When a stock is beaten down to a level that NEGATES its Performance numbers and the Company management remains a silent spectator, while continuing to BUY the stock in the open market, it implies the existence of a situation of price manipulation that authorities like SEBI need to take cognizance of without insisting for any proof from an ordinary investor. The current situation gives an irrefutable impression that either, the reported numbers are cooked-up, or there is rampant manipulation in trading, both of which are a cause for immediate investigation.
It is requested that SEBI takes up investigation into what appears to be a prima facie case of POSSIBLE wrong doing by vested interests, to protect the interests of small shareholders of REIAGRO .It is hoped that SEBI will get cracking with this case ASAP, given the track record of REIAGRO management having already been penalised by SEBI, vide its ADJUDICATION ORDER NO. EAD-2/AO/ 112 /2012 Dated December 31, 2012 for trading irregularities. This order has also been UPHELD by the SECURITIES APPELLATE TRIBUNAL in its Order dated 19th November 2013 in Appeal No. 44 of 2013 filed by REIAGRO Promoters."
The weakness of REI became evident when they defaulted payment of interest to IFCI which recently sold the pledget shares for recovering the interest amount. The publication of Q3 results exposed a glaring abnormality. The RM consumption figure raises doubts when compared with the figures of other quarters which i am copy pasting from moneycontrol quarterly results web page:
Consumption of Raw Materials:
Dec `13----Sep `13----Jun `13----Mar `13----Dec `12
2,618.46----969.29-----650.65----799.87-----925.52
So the consumption is almost three times the normal quarterly consuption.The quarterly P&L figures do not contain the Power & Fuel cost for the corresponding quarters which, being a related expense, could have helped in judging RM consumption figures. It is difficult to understand how in one quarter it was possible to process such a huge quantity of RM, given that there is no increase either in manpower costs or the operating expenses. Further the accretion to FG during this quarter is Rs 1700 Cr. Apparently, the RM consumption and FG figures appear to be fudged. If that be so one has to assume that the numbers of previous years/quarters may also have been fudged.
CARE has recently downgraded REI's rating in respect borrowings to the tune of about Rs.
5500 Cr. Here is their latest Reort dt 24th February 2014:
http://www.careratings.com/findratings.aspx?cid=%2fBfGTXwEdi%2fVLrNu%2f1meIg%3d%3d
The mystery now is why are the lenders keeping quiet with this kind of functioning by REI and why the authorities under the Ministry of Corporate Affairs are not acting when
suspicion of fraud is so much evident?
