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Backgrounder

I have been in market for almost over decade, I had never heard of Binny Ltd (BSE Code – 514215), however I had heard of Mohan Distilleries or Meakin Mohan owner of popular brand Old Monk and many other alcoholic and non- alcoholic brands – Full List.

So when newspaper reported that Binny Ltd would consider merging with Mohan Distilleries (Mohan Meakin), needless to say how much unbelievable news that sounds.

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To verify above news I checked out stock exchange notices and was surprise to find notice did confirm the same. Company had put up notice on 14-Nov-14, full 14 days prior to it was carried in Hindu BusinesslIne (not sure about other major newspaper as I didn’t spot or I missed)

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Interesting thing was stock was up 10% on 14-Nov-14 (Friday) on day of announcement, even thought announcement was posted on BSE at 3.56pm, post market hours (nudge nudge wink wink). And o yeah stock was down for next 4 trading session post that.

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Then another announcement on 26-Nov-14 that says “board would consider development of land”. This was quickly followed by another announcement on 28-Nov-14 that reiterated land development and consider & evaluate merger with Mohan Distiller.

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Stock prices had marginally recovered post going down for few sessions

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Beginning of Upper circuit – 1-Dec-14

Then another announcement on 1-dec-14 that said “The Board has accorded its in-principle approval for the merger of M/s. Mohan Breweries and Distilleries Limited, a Company under the same management along with its Subsidiary, M/s. Arthos Breweries Limited with M/s. Binny Limited and directed the Company to submit the scheme of merger for final approval.”  Now it looks deal would be seal, if you had bought shares on first announcement (14-Nov) by now you would feel redeemed, things are moving, its matter of time before you recover your investment (by now stock was down by ~14% from 14-Nov).

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Day of reckoning – 15-Dec-14

Company made announcement of upcoming board meeting on 18-Dec-14 to update on merger

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It would here that you would feel like Bryan Adams singing “Cloud 9”, from 14-Nov-14 stock would have given return of 61% till 15-Dec-14. However if you had waited for more clarity post first announcement (14-Nov-14) and bought it on 1-Dec-14, return would be 87% till 15-dec-14.

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Beginning of down circuit – 18-Dec-14

Then on 18-Dec-14 company announces “decision to drop merger plan”,

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I am not sure what exactly is cooking up in Binny, but I am sure it raises question of corporate governance.

In markets, very often one discover cheap stock, there is reason why they are cheap.

Binny Ltd – Price (LHS) & Volume (RHS)

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