Ess Dee Aluminium slips further
Ess Dee Aluminium has been having a pretty volatile run on the bourses lately. Last week, on 7th, 8th and 9th June to be precise, the stock hit the upper circuit for these three consecutive days. And then yesterday, there was more volatility – the stock price first hit a 5% upper circuit at Rs.49.25 and then the 5% lower circuit at Rs.44.65. Today too, it went down almost 5% to Rs.42.55.
All was hunky dory on the counter till the company announced yesterday afternoon that it has suspended operations at manufacturing plant in Kolkata with effect from July 1, 2016. In fact the company has said that it has been facing severe financial stress and all of its manufacturing units have been virtually non-operational for extended period of time.
The company has stated that this has forced it to issue notice suspending work at its Kolkatta unit, effective 1sy July, 2016. Yes, the Press statement says 2016 which means it has been shut down for almost one year? Or is this a typo error by the company where it wanted to actually say, 1st July 2017?
A look at its financial statements of last couple of quarters shows that indeed there has been no manufacturing activity and it has stated in the ‘Notes’ which follows after the results that it is undergoing financial duress and all manufacturing activity is at standstill. So cannot help but wonder what was new about this news which the company announced yesterday – it was a repetition of what it has been saying all along for past two quarters, except it is only now that it says Kolkatta unit was shut since 1st July 2016.
So why was the share price hitting UC last week when materially nothing has changed yet? The company is hoping to get over this crisis soon. SSG Capital management did take over debt of one lender and now talks are on for others as well. It says it will be able to get over crisis in 8-10 weeks (said so as on 27th May’17).
The company ended FY17 with a consolidated net loss of Rs.567 crore where income was Rs.82 lakh and interest outgo was at Rs.113 crore.
Keep a watch on the counter as surely something is cooking here.