How small investors got trapped in Manpasand, Vakrangee in June quarter
These counters have been witnessing heavy selling due to corporate governance issues.
Both these counters have been witnessing heavy selling this calendar due to corporate governance issues.
Retail investors more than doubled their stake in Vakrangee to 10.55 per cent at the end of June quarter from 4.63 per cent and 4.16 per cent at the end of March and December quarters, respectively.
Foreign portfolio investors (FPI) also reduced stake in Vakrangee to 20.55 per cent from 29.12 per cent at the end of March.
Mutual funds held just 42,051 shares of Vakrangee as of June 30 against nearly 5 lakh at the end of December quarter.
On a year-to-date basis, shares of Vakrangee have tumbled more than 85 per cent till July 11, falling from Rs 420.10 on January 1 to Rs 55.10 as of July 11.
Vakrangee shares have taken a beating after Price Waterhouse & Co resigned as auditors on concerns about the company’s accounts, mainly related to its bullion and jewellery businesses.
Some media reports suggested that the company was facing regulatory scrutiny over alleged disclosure and corporate governance lapses.
Likewise in Manpasand Beverages, retail investors’ with share capital of up to Rs 2 lakh hiked their stake to 6.19 per cent during the quarter gone by from 2.49 per cent at the end of previous quarter. Foreign portfolio investors reduced their holding to 13.35 per cent from 21.56 per cent, and mutual funds reduced their holdings to 10.83 per cent from 11.60 per cent at the end of previous quarter.
Last month, shares of Manpasand plunged over 60 per cent within a week after statutory auditor Deloitte Haskins & Sells resigned ahead of its May 30 board meeting scheduled for consideration of financial results.
Nomura Group and Parvest Equity India also exited the Vadodara-based fruit juice maker during the quarter gone by.
Nomura Group held shares in Manpasand through Nomura India Investment Mother Fund (2.43 per cent), Nomura Trust and Banking (1.38 per cent) and Nomura Funds Ireland Public Ltd Co (1.05 per cent).
Another FPI, Baron Emerging Markets Fund, reduced its exposure to Manpasand to 3.62 per cent from 4.97 per cent. Shares of the company slipped 68 per cent to Rs 143.70 as of July 11, 2018 from 445.90 on May 22, 2018.
One needs to keep in mind that these kind of corporate governance issues have been few and far between in this bull market. The way Sebi and the auditing community have been dealing with corporate governance issues and managements that have issues with their financials has improved dramatically over the past several years, says Dipan Mehta, Member, BSE & NSE.
“As investors, we appreciate auditors as well as whistleblowers coming out and pointing out financial irregularities in accounts, and that is great news. At the end of the day, investors rely on financial statements to make investment decisions. That explains why stocks like Vakrangee and Manpasand deserve the kind of correction that they have witnessed so far,” he said.
Manpasand Beverages is said to be planning aggressive expansion across India and abroad and aims to enhance production capacity, after stitching an ambitious distribution pact with Parle Products for the domestic market.
The company currently has five manufacturing facilities – two in Vadodara and one each in Ambala, Varanasi and Dehradun.
In December, 2017, the company got regulatory approvals from the Reserve Bank of India (RBI) to raise FPI holding in the company up to 49 per cent from an earlier limit of 24 per cent.