Enkei Wheels irk's market

Enkei Wheels has been breaching the lower circuit since 9^th Dec and today, though it has not hit the lower circuit, it remains in the red, down over 2% at Rs.143.20, with an intra day low at Rs.141.05.  

This small cap auto component maker has drawn the ire of the market men after the Board, during the meeting held on 11^th Dec, issued shares on a preferential basis to its Japanese promoter, Enkei Corp at a discounted price of Rs.50/share. They will be allotted 6.71 lakh at this lower-than-market price.

Markets generally look down upon such discounted issues to themselves. It is good that the promoters want to enhance their stake in the company but then why at a discount? Why not through the open market which could have helped reduce floating stocks, which in turn would have boosted the stock price.

Here, promoters, Enkei Corp holds 64.72% stake and there is no FII or DII holding.

This seems all the more unfair as the company turned around in current Q2 with a net profit at Rs.2 crore v/s loss of Rs.3 crore in previous Q2.