This article has been modified. Please see the clarification at the end.
Two of the three listed companies in India, named in Conflict Armament Research (CAR) report on the sources of materials used by Islamic State (IS) forces, doubled in market value during the period of ascendance of the terrorist group.
CAR, nominated by European Union to investigate weapon supplies to the terrorist group, had named seven Indian companies in its report titled “Tracing the Supply of Components Used in Islamic State IEDs.” These companies were part of a larger group of 51 companies from 20 countries, from which the components for improvised explosive devices (IEDs) were sourced by the IS.
Of the seven Indian companies, Business Standard Research Bureau found three companies — Solar Industries, Premier Explosives and GOCL Corp (formerly Gulf Oil Corporation) — are listed on the BSE. The share price appreciation of these companies — between June 2014, when IS captured Mosul in Iraq, and February 2016 — completely defied the broader market trend, represented by a 6.2 per cent fall in the Sensex.
Shares of Premier Explosives rose 113.36 per cent to Rs 309.9 on Friday from Rs 145.25 on June 2, 2014. Similarly, Solar Industries, formerly Solar Explosives, gained 104.76 per cent in the same period to close at Rs 3,196.65 on Friday on the BSE. At these prices, Nagpur-based Solar Industries was valued at Rs 5,785 crore, while Premier’s market capitalisation was Rs 274.53 crore. While Solar Industries supplied detonating cords, Premier supplied both detonating cords and detonators to the IS, according to the CAR report.
GOCL, which de-merged its lubricants business into a separate listed entity, saw its share prices fall 24.27 per cent during the same period. From the June 26, 2014, when the de-merger took place, the stock has fallen about 14 per cent. GOCL is registered in Hyderabad and is part of the Hinduja group, which has diverse global interests across sectors, has a market capitalisation of Rs 620 crore.
Records from Ministry of Corporate Affairs (MCA) showed that Economic Explosives, an unlisted company which supplied detonators according to the CAR report, was part of the Nagpur-based Solar group. Economic Explosives shared common directors including promoters Kailash Chandra Nuwal and Satyanarayan Nuwal.
CAR has said that under Indian law, transfer of these materials requires a licence. “All components documented by CAR were legally exported under government-issued licences from India to entities in Lebanon and Turkey,” it said.
The independent research organisation said that IEDs have become IS forces’ signature weapon. “Their chains of supply differ from those of military weapons. Indeed, for the most part, IED components are commercial goods that are not subject to government export licences and whose transfer is far less scrutinised and regulated than the transfer of weapons.”
Of the remaining three unlisted firms, Chamundi Explosives, which supplied safety fuses, was also based in Nagpur. The company is headed by Shivshankar Khemka, who was also a director on other firms such as Khemka Motors and CDET Explosives, according to MCA records. Delhi-based Rajasthan Explosives and Chemicals was among the most well capitalised of the lot with a paid up capital of Rs 55 crore. Another such firm, Ideal Industrial Explosives, was promoted by Secunderabad-based Podduttur family, which had business interests across sectors such as realty, multiplexes and textiles.
Since July 2014, CAR has worked in partnership with Iraqi and Syrian forces to document materiel recovered in military action against Islamic state forces. These partners include: the Iraqi Popular Mobilisation Units, the Iraqi Federal Police, the Kurdistan Region Security Council, the Peshmerga forces of the Kurdistan Regional Government, and the Military Council of the Kurdish People’s Protection Units in Syria.
CAR documented the components presented in the report following their recovery during major battles around the Iraqi towns of al Rabia, Kirkuk, Mosul, and Tikrit and the Syrian town of Kobane.
In an earlier version of this article, the share prices of Solar Industries and Premier Explosives were interchanged. The error is regretted.