Some great man once said “If you play with fire, you must not complain of burnt fingers”. Today, when Fulford India slumped 20% in the wake of its management deciding to call off the delisting proposal, the punters left holding the stock were reminded of the wisdom of this great man.
The Fulford delisting episode has been a chequered affair. The offer was announced on 25th April 2014 when the stock price was languishing at the Rs. 700 mark. Within seconds of the announcement, the punters laid siege on the counter and dragged the price to Rs. 1600. At this stage, Dashtag (the promoter) got jittery and sent a grim message on 17th July that it followed “stringent financial discipline” and did not intend to go ahead with the delisting offer if the discovered price/ exit price was too high. It also advised the punters to “use discretion and caution” when trading in the shares of Fulford.
The punters should have paid heed to this advisory and made a dignified exit. However, they were emboldened by veteran trader S. P. Tulsian, who thundered that “The delisting price discovery will happen between Rs 1750-2000”. Tulsian implied that Dashtag was only indulging in a bit of scare mongering. He advised the punters to hold on to their shares tightly and not succumb to such tactics.
Inspired by Tulsian, the punters dragged Fulford’s stock price even higher – all the way to Rs. 2,160.
Unfortunately, today, it has transpired that Dashtag/ Fulford were not indulging in scare mongering but were dead serious about their intent. Dashtag issued a terse communication dated 01.12.2014 stating that despite the warning issued earlier, the stock price has continued to remain at an abnormal level which does not reflect the fundamentals of the company. It has accordingly decided not to make a public announcement of the delisting offer at this time.
This spells doom for the punters because the stock is headed for a free fall all the way back from where it started.
One interesting aside is that a shareholder named “Pat Financial Consultant Pvt. Ltd” managed to palm off a huge chunk of 60,000 shares of Fulford India to an entity called “ITF Mauritius” on 26th and 28th November 2014 at Rs. 2050. It will be interesting to know what are the circumstances of the sale and why ITF Mauritius bought the stock at the exalted price.
The other thing that the punters have to watch out for is that Panasonic Appliances has issued a similar warning. It has cautioned the punters that if they don’t loosen their grip on the stock, the delisting offer can fail. So far, the punters have turned a deaf ear to Panasonic’s entreaties. It needs to be seen whether the Fulford fiasco will change their attitude.