Heard on the street: Farmax crashes 66% as co defers bonus issue

Shares of Farmax India, a Hyderabad-based household products company, have been hitting the lower end of the intra-day circuit filter for the past eight trading sessions, after the company recently deferred the proposal to issue bonus shares as announced earlier.

From its 52-week high of Rs 46 touched on November 10, the share price has crashed 66% to close at Rs 15.5 on Tuesday. However , the management has justified the move on grounds that it would help preserve resources for the company’s progress.

“The management and most of our shareholders did not favour bonus issue since we felt the company would require funds to grow in future,” said M Srinivasa Reddy, MD, Farmax India. He admitted that the cancellation of bonus has caused a slump in the share price, but denied any selling by the promoters. Farmax India posted a net profit of Rs 2.3 crore on sales of Rs 64 crore in 2009-10 .

(Contributed by Vijay Gurav)