Stock manipulation: Sapan Chemicals

5 August 2015

Moneylife

The share price of Sapan Chemicals was up 743%, in just about six months. On an average, there were just three-four trades per day Sapan Chemicals—earlier known as Suryadeep Salt Refinery & Chemicals Works—is into ‘development and marketing of software along with consultation for portfolio management’, according to its annual report. The Vadodara-based company, in its former and present avatars, has been pulled up several times by Securities and Exchange Board of India (SEBI) for capital market violations. In August 2014, the regulator charged it with the creation of an artificial market and price manipulation through matched transactions in the scrip of Kelvin Fincap. The company got away with a minor suspension. This was not the first time. In May 2006, too, a prosecution was launched against the promoter, Rajendra Rathod, for fraudulent and unfair trade practices.According to the regulator, Mr Rathod connived with five other entities to create a false market in the scrip of Sapan Chemicals by “buying and selling through various brokers knowing fully well that there was hardly any floating stock.” This Rs3-crore market-cap company reported revenues of Rs44 lakh for the year ended March 2015 and generated no profits over this period. Yet, the price was up 743%, in just about six months, to a peak of Rs4.55 on 8 May 2015 from Rs0.54 on 22 December 2014. On an average, there were just three-four trades per day when the stock was traded. Thanks to the lax regulation, such market manipulation continues with impunity.