Cebbco denies pledged share sale as stock plunges

MUMBAI: Shares of truck body maker Commercial Engineers & Body Builders (Cebbco), which were battered over the past few days, recovered from a 52-week low on Tuesday after the promoter denied speculation that a sale of pledged shares, resignation of a top official and financial concerns were behind heavy selling on the counter.


The stock, which declined almost 42% over the past three trading sessions, finally recovered on Tuesday to close at Rs 49.20, up 3.25%. “The company has been sanctioned working capital facilities by Axis Bank including cash credit facility aggregating to Rs 22 crore for which the bank has asked for pledge of equity shares of the company worth Rs 5 crore out of the shares owned by the promoters as an additional security,” the company informed the BSE.

The sudden fall, according to market sources, began on Friday after a high net worth investor sold a huge chunk of Cebbco shares to fund his margin call on another stock. The counter with a daily average volume of one lakh shares on both the exchanges witnessed a spurt in share traded volumes on Friday, pulling down the stock by 20%.

The sale by the HNI and subsequent fall in the share price triggered rumours that Tata Capital, one of the largest shareholders in the company with an 11% stake, had offloaded part of its stake. The other reason for the steep fall was attributed to a 30% yoy decline in Tata Motors’ vehicle volumes in January 2013. This is expected to impact Cebbco’s bottomline, which derives over 50% of its FBV (fully-built vehicles) revenue from Tata Motors. Other rumours included the sale of pledged shares by lenders and resignation of a top official. However, the company denied the rumours. “There is no stress or sale of pledged shares in the market and also there have been no resignations from the top management team,” said Ajay Gupta, ED, Cebbco. “Deloitte are the auditors for the company since 2007-08 and they have not reported any negative qualifications against the company,” he added.

The fall created panic among other shareholders who sold huge quantities on Monday. India Max Investment Fund and Aditya Birla Finance sold 4.19 lakh shares and 3.25 lakh shares, respectively. The other big seller was Prashant Desai, a former employee of Seagull Value Consultancy, who offloaded 7.33 lakh shares. Meanwhile, India Max Investment Fund sold another 15 lakh shares on Tuesday.

Tata Capital PE holds 11% of the company and has its nominee on the Cebbco’s board of directors .