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Commodity bull run turns zombie company stock a multibagger

NEW DELHI: If the rally in commodity stocks has pushed some of the established names from the metals and mining industry to fresh highs, some others have become unintended beneficiaries.

Shares of

, a company that shut its operations eight years back, have surged nearly 600 per cent, or seven times, in the last six months, and no one has any idea why.

The stock, which traded at Rs 2.71 in November 2020, is now valued at Rs 18.45. It hit the 2 per cent upper circuit placed on the counter on Friday, and traded at a 52-week high.

Some market participants believe, given the low volume of trade, this has likely become a pump-and-dump trade that often happens in such counters. Some gullible investors have been buying the stock by simply looking at the name amid the commodity bull run.

“The company was incurring operating losses for the last several years and was declared as a sick industrial company by the Board for Industrial and Financial Reconstruction (BIFR) during 2009-10,” the company website states.

“Further, the company was facing various problems like liquidity crunch, labour problems, power cuts, poor order book position due to the economic slowdown, credit crunch etc. and M/s Alumeco A/s (Denmark) – its parents – had also taken a commercial decision to stop further material supply on credit to the company. Under the said situation, the production at the company was stopped in July 2013,” the website states.

For the nine months ended December 2020, the company’s total revenue stood at Rs 1.58 crore, all of which came as other income, and not from operations. Net profit stood at Rs 1.38 crore.

The company cites some employee benefit expenses, but its annual report said there were no confirmed employees on the rolls as on March 31, 2020. That expense is likely towards the remuneration of its whole-time director, a scan of the annual report suggests.

Promoters of the company held 60.49 per cent in Golkonda Aluminium Extrusions, while the rest is owned by retail and high networth investors. Interestingly, two mutual fund houses held 645 shares in the company, latest shareholding data showed.

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