If you are trying to sell the shares of Vakrangee Ltd, you are in for trying times. The shares of Vakrangee hit 27 straight lower circuit filters, which means there are no buyers and if you want to sell, you are trapped.
On Monday the lower circuit filter opened, giving a window of opportunity for those who were trapped and wanted to sell. The opportunity is lost once again, as the stock on Tuesday and Wednesday is back to the lower circuit limit - trapped once again.
What's ailing the stock?
The auditors have raised concerns on lack of adequate information provided by the company, which is one of the big reasons for the stock to drop. Now, when auditors question certain aspects of income and expenditure, it leads to suspicion, which further raises doubts on transparency and good governance.
According to reports, the auditors Price Water House asked the management for "information on several matters pertaining to election books, bullion and jewellery businesses". The management's responses were inadequate or contradicted earlier explanations.
"In the absence of adequate and relevant information and explanations, the fundamental objective of an audit...cannot be achieved, " the auditors stated. Price Water House has resigned since and new auditors have been appointed.
However, Vakrangee had clarified stating that the company has provided all the information with respect to business and affairs of the company to the auditor and the audit committee.
In the markets, all these things are viewed very seriously. Can you believe Vakrangee is a stock that was once trading at Rs 500 and is now down to Rs 32. This is extremely hard on investors. In fact, even some large institutional investors have lost money in the stock.
Yet another example where investors have lost money has been Manpasand Beverages, where the auditors have resigned. This was perceived to be a good stock with large institutional investors like SAIF Partners. That stock has collapsed from Rs 510 and is now trading at Rs 173.30, with only sellers.
Auditors resigning is now playing havoc with stock prices.