Hindustan Motors stock hits upper circuit

Hindustan Motors stock on Monday finished up 20 per cent on the upper circuit as unconfirmed reports suggested that a number of overseas carmakers evinced interest in investing in the loss-making company. The stock closed at Rs 24.60, its monthly high, and clocked a trading volume of 51 lakh shares on the BSE and 75 lakh shares on the NSE. Apart from the record volume, the closing price was a little short of its year-high of Rs 28.80, recorded in November 2009. Business Line could not reach the Company Secretary, Mr Yogesh Goenka. However, a Bloomberg report quoting the company's spokesperson, Mr Ravi Kathuria, said that he declined to comment on speculation. Market analysts said it would be inappropriate to price in such unconfirmed developments ahead of the company's submission of report to the Board for Industrial and Financial Reconstruction (BIFR) on erosion of 50 per cent of its net worth. On May 3, Hindustan Motors informed the stock exchanges that the company would report to the BIFR about substantial erosion (over 50 per cent) of its peak net worth in the past five financial years, as required under the Sick Industrial Companies (Special Provisions) Act, 1985. A company spokesperson had then told Business Line that the company would submit its report to the BIFR after finalisation of 2009-10 accounts at the AGM, which was expected to happen by July-August. "It was difficult to take into cognisance rumours until the company came out clearly on the fresh investment proposal to turn it around," said Mr Kishor Ostwal of SMC Capital. Mr Rajesh Agarwal of CD Equisearch said such rumours had seen retail investors getting stuck at higher levels. Hindustan Motors enlarged its net loss at Rs 51.10 crore during the year to March 31, 2010, against Rs 38.86 crore in the previous financial year. The accumulated loss was at Rs 132.28 crore. The paid-up equity is Rs 161.17 crore and the reserves stand at Rs 3.36 crore. Loan fund, however, saw a reduction to Rs 90.03 crore from Rs 113.68 crore. As on March 31, the promoter holding stood at 27.22 per cent. With approval from lenders, under a corporate debt restructuring scheme, the lossmaking company recreated pledge in favour of the lenders for 23.72 lakh shares held by promoters, representing 1.47 per cent stake in the company, on April 15. According to a note to the audited annual accounts, this was done to facilitate inter-se transfer of shares held by the core promoters. On March 30, for such transfer of shares, pledge had been released.

Source: indiacar.com Source : Business Line (Online Edition) (6/21/2010)