The relatively unknown BSE-listed Gujfun recently declared a bumper dividend of 110 per cent, and that too, for the nine-month period ended March 1999. On the basis of Gujfun's current market price of about Rs 17 per share, the dividend yield works out to a whopping 65 per cent!

Promoted by Nirmalsinh Rana and Rajendrasinh Zala, with perhaps one munificent Amit L Patel in the backdrop merely as the largest shareholder, Gujfun went public in August 1996 with an issue of 85 lakh shares at par. As per the offer document, the post-issue equity was to be Rs 12.54 crore, comprising promoters' equity of Rs 4.04 crore and public holding of Rs 8.50 crore. However, as per Gujfun's latest unaudited financialresults for the 9-month period ended March 1999, the paid-up equity still stands at Rs 8.35 crore! How could this be possible?

Well, according to the company, while the promoters hold 40.44 lakh fully paid-up shares, the public investors hold 85 lakh shares that are paid-up only to the extent of Rs 5 per share. All the same, as per BSE's official quotation list, the paid-up capital of Gujfun is shown as Rs 12.54 crore! In other words, BSE is misleading the investors showing the entire Gujfun equity as fully paid! Obviously, the BSE authorities have simply gone by the company's nearly three-year old offer document than its latest quarterly financial results even. When Investar tried to ascertain the true facts from BSE, the exchange could not locate anything in Gujfun's 'listing file'! The callous mutual indifference shown both by the stock exchange as well as the company to the investing public in terms of investment-sensitive information can only be descroribed atrocious and scandalous. There seems to be atotal collapse of official communication of true facts and figures between the company and the exchange over the years. However, this has not deterred the company from wooing the investors directly and indirectly via flashy insertions in largely circulated dailies extolling its performance and through freebies like its name-inscrribed mouse pads to stock brokers.

But, various attempts to visit the Gujfun website, www.gujfun.com, mentioned in the mouse pad, only proved elusive to most common search engines available for browsing. Thanks to the clearly operation-market-push-up gimmicks, the activity on the Gujfun counter has perked up in recent times. The scrrip had a roller-coaster ride since its listing on BSE. It was languishing at around Rs 16 at the end of 1998. Come 1999. The dole-out of 36 per cent second interim dividend for the quarter ended Dec 1998 (on top of 50 per cent first interim for the previous quarter) as well as the distribution of the mouse pads perhaps enabled the operators to push upthe price line to about Rs 25. Just the same, the scrip met with resistance at higher levels and promptly retraced its steps back to a lowly Rs 9.55 by the end of last month.

Significantly, however, since January this year, the growth in both the volume and the number of trades has been manifold. While the trading volume exceeded the one-lakh figure, the number of trades ran into three figures on many days. Since the beginning of the current month, the scrip has posted sustained gains on BSE on 12 consecutive trading days. While frugal volumes were witnessed during the early part of the month, there has been a quantum jump in the last few days, perhaps due to the company's declaration of seemingly excellent working results and also a final dividend of 24 per cent for the 9-month period ended March 1999.

However, from a qualitative review, it is apparent that Gujfun's promoters do not inspire much confidence. The group, apart from Gujfun, boasts of two public companies: Saya Housing Finance Co Ltd (SHFCL)and Funworld & Tourism Development Ltd (FTDL). While SHFCL came out with a maiden public offer in May 1986, FTDL was a forerunner to Gujfun by a few months.

Significantly, though FTDL is engaged in the same line of business as Gujfun, the track record of the former is unexciting, to say the least. Besides, many other ventures promoted by the fun and frolicking group in the past have invariably failed to deliver the goods.

Notwithstanding the rosy figures announced, Gujfun fails to enthuse classicists basically on account of lack of transparency and clarity. Take this most recent sample. In its publication of unaudited financial results for the period ended March 1999, Gujfun claims: "The company will now completely concentrate on the Sri Lankan project worth Rs 5,500 lakh to set up a water world and amusement park in Colombo. The company is also a joint promoter of this new company which will be based in Colombo. The company has also purchased land in Colombo and expects to start the park by the year end2000."

At the end of the long-winding boast, the reader is not even sure of the most simple investor-related answer as to just which company, Gujfun or the joint venture outfit, has acquired the land in Colombo!

Or, take the price-sensitive 'information', or the utter lack of it, related to equity. How many from the investing public are aware that of the entire lot of the promoter group owned over 40 lakh fully paid-up Gujfun shares, about 75 per cent are under lock-in till 2001? Coupled with the fact that the entire 85 lakh shares held by the public are partly paid, this means that what is available for hawking is only about 9.5 lakh fully paid up shares, or less than 8 per cent of the promised equity, and that too from the stable of the promoters!

Yet, BSE is oblivious to the fact. It does not even give a quote for the partly paid shares and caution the gullible investing public. Even seasoned brokers that Investar talked to were under the impression that Gujfun's shares are all fully paid! OnlySebi can bless such investor protection that is injurious to the market!

Arranged by INVESTAR - The Aarthik Research & Syndicate