Lost in transit

Financial mismanagement and governance issues have taken the wind off Arshiya’s sails for good

Soumik Kar

It’s the stock market equivalent of a train wreck — enormous damage and bystanders watching in fascinated horror. In December 2012, Arshiya International was one of the top five stocks Kotak Securities recommended for 2013, assigning a target price of ₹188 — it was trading at ₹120-130. Just a few weeks later, wham! A report in a national daily sent the stock crashing into the lower circuit on January 9. By March 12, it had declined to ₹29.65, an over 76% fall. Most brokerages have suspended coverage of the stock now and the future looks singularly bleak. Could one small news item really do so much damage to a stock or is there more to the Arshiya story than meets the eye?

First, though, what is Arshiya? The Mumbai-based company’s claim to fame is the country’s first fully functional free trade and warehousing zone (FTWZ) at Panvel outside Mumbai, where goods can be imported and stored for clients ranging from auto giants, pharma companies, luxury goods and consumer electronics brands. The ₹1,046-crore company is also the second-largest private rail player in India after Gateway and Concor. It’s a fairly well-known name in investment circles, with star fund managers like Samir Arora of Helios and Dron Capital’s Pathik Gandotra having put money into Arshiya. 

From the looks of it, though, even they were taken aback when a national newspaper reported on January 9 that over the preceding weekend, Arshiya had fired 290 employees, many of them at senior levels. Anonymous ex-employees claimed salaries hadn’t been paid since September 2012 and that vendors, too, were owed substantial dues. The most damaging allegation, though, was that Arshiya had misguided investors, lenders and other stakeholders. “Inside the books, the company is hollow — it is a mini-Satyam,” one sacked employee charged.

The company clarified immediately that it had “terminated the services of a few employees based solely on their performance and our internal need to rationalise employee costs”, adding that the allegations of financial irregularity were baseless — but nobody bought the story. “Many are questioning the authenticity of on-ground assets and whether the FTWZ land in Panvel and Khurja is in the company’s name or not,” says an analyst with a leading brokerage firm. Yet another admits that the investor community


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