KGN scrip moves from Rs 100 to Rs 55,000

KGN scrip moves from Rs 100 to Rs 55,000
AHMEDABAD: An Ahmedabad-based company had an unbelievable run on the Bombay Stock Exchange upon re-listing on Wednesday, shooting from Rs 100 to Rs 55,000 during early trade, breaking the record of MMTC which is the most expensive scrip on the bourses at Rs 27,050.

The stock of KGN Industries, which is headquartered off C G Road, closed at Rs 15,001 on rather thin volumes of 827 shares, but not before creating history of sorts and also trading being suspended on the bourse after nearly two-and-half hours of trading.

Since it was the day of re-listing, as per current rules no circuit-breakers were in place, allowing the stock a free run to find its level on the day of its re-admission for trading. However, since the bourse officials found that orders were being placed at unrealistic prices, the trading in the scrip was suspended at 12.20 pm, as a proactive surveillance measure, BSE said in a release. KGN Industries used to be known as Royal Finance till it was de-listed in February 2001 when the last traded price was just Rs 11.

In the release, BSE, acknowledging the unusual trading in the KGN stock, said it had already started an investigation to examine the orders which were placed at unrealistic prices and added that "appropriate action, if any, will be initiated against the concerned entities."

KGN Inds scrip is under the trade to trade category of BSE. This means every trade, buying and seeling, has to result into payment of cash (for buying) and delivery of shares (for selling). No netting of trades is permitted for stocks in the trade to trade category.

The closing price of Rs 5,216.30 has been arrived as per the existing methodology but taking into consideration the entire trading duration, the BSE release said. A few years ago, the company surrendered its licence as a non-banking finance company (NBFC) to the Reserve Bank of India and the promoter, Aris Menon, got into castor-oil trading business.

The company's name was changed to KGN Industries in 2007 and it did a rather fiery relisting on Wednesday which analysts found completely baffling. "We will advise investors to stay away till the fundamentals of the company are properly scrutinised," said an analyst. While his staff said that Menon, the company's managing director, was travelling abroad, one company official said KGN Industries had only about 15 employees and a net profit of Rs 1.25 crore from a turnover of Rs 250 crore.