Shree Ganesh loses its shine

Shree Ganesh Jewellery, which had closed yesterday at Rs.36.95, opened weak and soon breached the 10% lower circuit filter at Rs.33.30.

This was on the back of the poor performance it reported for Q2FY14. The company reported a huge loss at Rs.1048 crore v/s a net profit of Rs.83 crore (YoY). Though its income rose 82% at Rs.4142 crore, operating expenses surged 140% at Rs.5150 crore and this pushed the company into the huge loss.

This was mainly on account of cancellation of contract by its subsidiary in the United Arab Emirates (UAE) for purchase of bullion and non saleability of the product due to which, it had to unwind the sales transactions and call the goods back. Both the calling back of goods and the termination of contract reduced the company's net worth by about Rs. 941 crore.