Curious Case of Bhageria Industries sale of subsidiary at peanuts!

This announcement triggered huge volatility in the stock price. The stock made an intraday high of Rs 192.95 and thereafter, fell nearly Rs 17 from the day’s high.

Bhageria Industries is engaged in manufacturing as well as trading dyes & dye intermediates along with the generation and distribution of solar power.   

On September 29, the company informed the exchanges about the disinvestment of its wholly-owned subsidiary company i.e. Bhageria Exim Private Limited (BEPL).   

In its press release, the company mentioned, “We wish to inform you that Bhageria Industries Ltd has entered into a share purchase agreement dated September 29, 2022, for sale/disposal of 100 per cent equity shares held in Bhageria Exim Private Limited. Pursuant to the execution of the share purchase agreement and transfer of shares, Bhageria Exim Private Limited will cease to be the wholly-owned subsidiary of the company.”   

Until here, everything looks quite normal; however, the devil lies in the details. Bhageria Industries received Rs 1,00,000 from the sale of the subsidiary, which contributed Rs 12.99 crore or 2.16 per cent of the total revenue of the parent company in the previous fiscal. Moreover, a net profit of Rs 27 lakh in the previous fiscal was merely 0.05 per cent of the total PAT of the parent company. The unit was sold to Ramchandra S Ramuka and Gaurav R Ramuka, who do not belong to the promoter or promoter group companies.   

Now, the question is, why the company sold unit, generating Rs 27 lakh of net profit in the previous fiscal, at a meagre amount of Rs 1 lakh only?! This announcement triggered huge volatility in the stock price. The stock made an intraday high of Rs 192.95 and thereafter, fell nearly Rs 17 from the day’s high.  

To everyone’s amazement, the company came out with a clarification the very next day that there was a typographical error as the net profit figure was Rs 6 lakh instead of Rs 27 lakh.   

What’s your opinion about this typo error? Let us know in the comments section!