Stock manipulation: Galada Power & Telecommunication
14 May 2015
In less than a year, the stock price of Galada Power & Telecommunication shot up by 813%. Astonishing for a company which has been declared sick
Galada Power & Telecommunication (GPT) manufactures electrical conductors and related products. In 2001, Galada’s bankers initiated legal proceedings for recovery of debts. GPT had defaulted in the payment of dues to its lenders and was declared a sick company by the Board for Industrial & Financial Reconstruction (BIFR) in September 2007. The order for winding up the company was stayed by the Andhra Pradesh High Court. Over the past year, a couple of lenders agreed to a one-time settlement of dues. GPT has generated revenue of just about Rs2 crore-Rs3 crore in each of the past five quarters with a net loss in a couple of quarters. Yet, the stock price shot up by 813%, to a high of Rs30.85 as on 27 February 2015 from Rs3.38 as on 26 March 2014, i.e., an investment of Rs1 lakh would have grown to Rs9 lakh in less than a year. From the peak, the price has fallen by nearly 25% to Rs23 on 5 May 2015. Despite the steep fall, it is still nearly 580% up compared to a year ago. The regulators, as usual, do not find this suspicious.