Ridiculous Resurgere Rattles the Market as Share Price races Downhill rapidly !

Hey ! Manoj…this blog on Resurgere Mines and Minerals is on your request…..and it’s in  Red,some bold, for obvious reasons……..

What’s happening is that the Share Price is free falling ad racing downhill in Resurgence Mines & Minerals…..Ridiculous Situation….it’s rattling the Markets and destroying Investors and Traders

But this was always a Suspect Scrip right from Listing two years ago….One simply should not have flirted with it ever…devil in disguise!?

Headed by Subhash and Amit Sharma,Resurgere had its IPO in August 2008 in the Price band of Rs 263 to Rs 272 and the Price was fixed at Rs 270….FV is Rs 10….IPO Size was Rs 120 crs with issuance of 44.50 lakh shares….It got listed on BSE and NSE on September 1,2008 and was clearly manipulated to zoom to close at Rs 524…next day it zoomed again to Rs 626…then dropped on the third day,fourth and fifth day to Rs 500,Rs 400 and Rs 300 respectively….and thus inside five days of Listing the IPO Investor Returns Story ended !….it’s been downhill since then and touched a woeful Rs 36 on March 9,2009….it was issued just six months earlier at Rs 270!

Resurgere is simply poisoning all those who are drinking it…it’s like being lured to vist those tempting ‘Girlie Bars’ only to get drunk and realise,a bit too late, on getting sober that you’ve been stripped and robbed after your drink was spiked ! 

Resurgere seems to be simply digging Mines to extract ore and dump and bury it’s Investors in !  

I normally do not cover such companies that

  • Appear as a strong recommendation in repeated unsolicited SMSes
  • Appear regularly in Bulk Deals….Tool to rig volumes and prices to show false hyper activity
  • Auditors have been changed inside months of listing….Resurgere did so in June 2009
  • Earn well but skip dividends…creating doubt if earnings are truly genuine  
  • New Non Executive & Independent Directors enter and exit the Board inside a year of the IPO as if it’s some Garden Party and they are merely Guests…have a look below

Directors who have exited

Pradeep Bishnoi…Appointed Whole Time Director post IPO on 16/10/2008….Resigned  in  eight months 19/6/2009

Aditya Singh…..Appointed Non Executive Independent Director on 16/10/2008…Resigned inside seven months on 8/5/2009

Suresh Kumar Singh….Appointed Non Executive Independent Director on 16/10/2008…Resigned inside eight months on 10/6/2009

I D Agarwal and Burzin Somandy…both  Non Executive Independent Directors resigned in August 2010

Non Executive and Independent Directors just appointed in August 2010

Ashwin Shankar Iyer and Ajay Sethi

It is High time that SEBI must make it mandatory for resigning Directors to specify the real reason that they are resigning…and that too within months of being appointed  

Post IPO GDR Issue,Conversion of Warrants and Announcement of Liberal Bonus and Split

On July 27,2010,Resurgere announced a liberal Bonus of 2:1 and Split in Face Value of the Equity Share from Rs 10 to Rs 1!…Price surged to Rs 146 and closed at Rs 140 on that day

Post IPO Capital was Rs 28.54 crs…Then In June 2010 it announced that it has successfully placed 5208333 GDRs @ US $ 10.32 each aggregating US $ 53.75 Million representing 31249998 Equity Shares at Rs 75…that’s a Rs 234 crs Issue…..in fact more than doubled the Equity !….On August 26,2010 it announced that 65 lakh Equity warrants will be converted to similar number of shares…..(This has been considered at Rs 75) Thus Equity Capital is now to be Rs 66.29 crs of FV Rs 10….With Bonus this will jump to Rs 198.87 crs !

The Reserves that were Rs 357 crs at March 31,2010 were boosted by an incremental Rs 203 crs to Rs 560 crs because of the GDR issue….This Issue also took the networth to Rs 620 crs….Book Value was adjusted from Rs 135 at March 31,2010 to Rs 103 on this issue and Rs 100 on conversion of warrants…it will further adjust to Rs 3.50 after the Bonus and Split and an assumption of Rs 30 crs PAT for the Current year…Reserves would be close to Rs 500 crs

Today the Share Price closed at Rs 69 cum bonus and cum split after hitting a 52 week low of Rs 62 on NSE…if you adjust for this the ex bonus and ex split price computes to just Rs 2.30  for  share of FV Rs 1!…Such Corporate Actions simply serve no purpose other than facilitating Price manipulation on the Bourses

In 2010 it earned Rs 27.50 crs and an EPS of near Rs 10…yet it failed to issue a Dividend….It’s latest quarter earnings at June 30,2010 are just above Rs 12 crs

Mines over 320 acres in Jharkhand has been reclaimed by the State Government from the leaseholder and Resurgere,who had taken a sub lease after paying a security deposit of Rs 10 crs and Advance Royalty of Rs 15 crs is unable to mine iron ore from these mines

So what will Resurgere earn in the coming year or two ?….I have assumed it will  continue to record atleast Rs 30 crs PAT….may show higher to seduce new ‘bakra’ investors 

As Corporate Governance issues surface,I’m sure SEBI,BSE and NSE will take this company to task…..wonder what’s taking them so long!

Nothing to Cheer about Resurgere…remember Austral Coke !…you can search it on this blog….Investors were destroyed there too after SEBI allowed the IPO despite significant controversies being raised

Sad…….

  

2 thoughts on “Ridiculous Resurgere Rattles the Market as Share Price races Downhill rapidly !

  1. Dear Gaurav,
    You have over whelmed me, not only by the exhaustive research but by the effort and hard work you have put in to give the details as requested by me. I am currently learning how to carry out technical analysis, and this stock seemed like good candidate for reversal. I was trying to find structural soundness which i was unable to find due to lack of knowledge as what to look for.
    THANK YOU…sir
    🙂

  2. Most Welcome Manoj…I enjoy research and it’s a passion that makes me skip lunch and dinner without realising and even not realise its 4 am in the morning !…my wife has given up complaining !

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