updated on 12 June 2018
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Think before buying shares of these companies as losses multiplies
As many as seven debt loaded companies have run up massive losses for 2017-18. That's up to 22 times their prevailing market capitalisation (m-cap). These companies reported losses for the fourth year in a row. Adhunik Metaliks is one. Its net loss of Rs 1,017 crore for FY18 came on Rs 709 crore sales. The loss is 22.13 times higher than the company's total market capitalisation of Rs 45.94 crore. M-cap denotes a company's market valuation. The company was incurring losses and consequently, the net worth has eroded completely, with the current liabilities exceeding the current assets, the independent auditor that prepared the company's financial statement for FY18 said. The company was admitted to insolvency resolution process, but no resolution could be approved within the stipulated 270-day deadline. This prompted the resolution professional (RP) on April 29 to seek 20 additional days for completion of the process. Adhunik, along with three other group companies, has defaulted on Rs 5,000 crore loan.
Uttam Value Steels is another case. It reported Rs 466 crore loss for FY18 on Rs 2,636.26 crore net sales, which is 3.71 times its m-cap of Rs 125 crore. The lenders in question have referred the loan repayment default case to the NCLT for resolution and the petition has not been admitted so far. Similarly, GTL Infra's Rs 454 crore loss for FY18 is 3.39 times its market value. Its lenders are looking to cut down their exposure to the company by selling the debt to asset reconstruction companies (ARCs).
Gujarat NRE Coke is on the same boat. The company, whose shares last traded on the BSE on February 9, suffered FY18 loss at Rs 427 crore -- 2.8 times its market value. Promoter Arun Kumar Jagatramka has filed an application proposing a composite scheme of compromise and arrangement between the company and its creditors. The NCLT this month has admitted the referred application and asked for convening a meeting of each class of creditors and shareholders on July 16. are three other instances where annual losses have zipped past their prevailing market value. McNally Bharat, Ballarpur Industries and Rattanindia Power