How Vakrangee Destroyed Investor Wealth?

Business

oi-Sunil Fernandes

By Sunil Fernandes

Published: Saturday, May 5, 2018, 7:17 [IST]

If you were an investor of the Vakrangee stock in Jan 2018, chances are you would have lost 80 per cent of your invested amount. The stock was trading at Rs 500 in the month of Jan, 2018, and is today available at just Rs 85.

Interestingly, on Friday it was locked at the lower end of the circuit filter, which means there is more downside risk to the stock next week.

The latest round of sell-off is linked to the resignation of auditors of the company - Price Waterhouse. The auditors resigned due to the lack of "adequate and relevant information and explanations" regarding the company's "Election Books, bullion and jewellery businesses".

Earlier, the company was investigated by the Securities and Exchange Board of India (SEBI), for price manipulation, but was later given a cleat chit.

For investors in Vakrangee, it has been a nightmare in the last few months. Remember, that this stock was once a penny stock and was trading at Rs 9 in 2009.

It is difficult to say where the stock is headed, though if there is even a "whiff" of corporate governance issues, stock prices these days tend to plunge.

Vakrangee is one of the top Aadhar enrollment agencies in the country. The company also provides BFSI services, B2C services etc.

Interestingly, in 2013-14, the company was a high debt company, with a negative cash flow. By 2017-18, it was debt free with a strong cash flow. Almost 96 per cent of its revenues now come from the many Vakrangee Kendras that it has set up.

The company claims to be the third largest franchisee network in the country. As per a Jan 2018 presentation, there were 44,000 Vakrangee Kendras that the company had set up. For investors that does not matter, at the moment, they are sitting on huge losses.

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