Tuesday, November 27, 2012

List of 87 Companies that have Vanished after raising funds through IPO in India

This is probably one of the hottest topics in the Indian Stock Market today. Every year hundreds of companies submit applications with SEBI (Securities & Exchanges Board of India) and a % of those companies manage to raise funds through Initial Public Offerings or IPO's. Indians are a notoriously smart bunch of guys who try to find out new and ingeneous ways of cheating others. Though the stock market regulator (SEBI) has strict norms and filtration criteria before they actually allow some company to issue an IPO, some crooks manage to find a way to go around the checks. They eventually offer IPO's and once investors buy their shares they just disappear. Recently the Ministor of Corporate Affairs Mr. Sachin Pilot, in a written reply to the Rajya Sabha has said that a total of 238 firms have been featured in the "List of Vanishing Companies" at the end of the financial year 2011-2012. The purpose of this article is to understand what is meant by vanishing. None of the news articles in the Internet actually listed down those 87 companies that cheated Indian Investors of their hard earned money. I did some digging and was finally able to find that information in the Ministry of Corporate Affairs website hidden away in some corner. So, for the benefit of all the Indian Investors who follow my blog - here is the list...

Before We Begin:

The following are some old articles in our blog that covered the topic of Initial Public Offering. You can revisit them to brush up your memory if you arent too sure about the IPO Process.

1. IPO Process Explained
2. Intermediaries involved in an IPO Process
3. IPO - Different Types of Issues

When is a company considered "Vanishing"?

A Company is considered "Vanishing" if it fails to file their financial statements, their operational details etc with SEBI on a quarterly basis. If a company fails to file its statements, SEBI tries to contact them at their registered office and if that too fails, SEBI tries to reach the directors of the company directly. If all of the 3 steps fail, a company is considered "Vanishing" which means SEBI does not know where the company is or what it is doing with the money that investors put into it during the IPO Process.

Did SEBI Miss all 238 Companies as mentioned in the first paragraph?

Actually, NO.

Of the 238, 151 companies have been traced. Of the 151, 31 are currently under liquidation. Which leaves us with "87" that still remain untraced.

What are the Government and Market Regulators Doing about this?

Mr. Pilot has said that government has been taking action against companies and their directors which disappear after raising money from public. He said that a central coordination and monitoring committee, co-chaired by ministry of corporate affairs chairman and market regulator SEBI monitors efforts to identify "vanishing companies" and take stock of action against them. The minister said that government is seeking assistance of police authorities and filing FIRs. He also said that, based on feedback from all stakeholders, procedural adjustments will be made in the IPO Process to minimize such situations in future.

Do we have a list of those 87 Companies that have Vanished this year?


The list contains the Name of the Company and the amount of money (In Rs. Crores) they raised via their IPO.

Name of the CompanyIssue Size in Crores (Rs.)
Aditya Alkaloids Ltd3.55
Aashi Industries Ltd. (Formerly Known as Aashi Pharmachem Limited5.52
Ambuja Zinc Ltd.2.14
Amigo Exports Ltd3.3
Asian Vegpro Industries Ltd7.09
AVR Securities Limited2.47
Bhavna Steel Cast Limited2.1
Bodh Gaya Ceramics Ltd0.49
Caldyn Aircon Ltd.4.45
Canara Credit Ltd2.49
Carewell Hygiene Products Ltd.2.49
Chhakri Tyres & Tubes Ltd Or Rhino Tyres Ltd) (Presently Known as Raam Tyres Ltd9.59
Cilson Organics Ltd.8
Citizen Yarns Limited2.2
Crestworld Marines Ltd4.38
Cromakem Limited3
Daisy Systems Limited1.31
Deccan Petroleum Ltd4.57
Flora Wall Coverings Ltd5.82
Frontline Financial Services Ltd.4.43
Genuine Commodities Development Co. Ltd2.68
Girish Hotels Resorts and Health Farms Ltd.2.59
Global Blooms India Ltd2.1
Global Exhibitions Limited. (Formerly Known as Global Network Limited )4.45
Growth Agro Industries Ltd.5.4
Hallmark Drugs & Chemicals Ltd. (Formerly Known as Lifeline Drugs Limited)7
Hi-Tech Drugs Ltd3.23
Hitesh Textile Mills Ltd.7.48
Hoffland Investments Limited (Formerly known as Vadra Investments Limited)2.9
Ichakalanji Soya Ltd2
Imap Technologies Limited1.8
Kamakshi Housing Finance Ltd (Presently Known as Kisha Impex Ltd5.71
Kedia Infotech Ltd (Formerly known as Grives Hotels Ltd.)4.98
Kesar Greenfield International Limited5.69
Kiev Finance Ltd12
Lyons Industrial Estate Enterprises Ltd. (Formerly Known as Lyons Range Finance Ltd.]6.37
Ma Capital Market Services Ltd1.44
Madhyavart Exxoil Limited2.3
Manav Pharma Ltd5.3
Marine Cargo Company Limited3.41
Nagarjuna Jiyo Industries Ltd2.73
Naisargik Agritech ( India) Ltd4.66
Naturo Pest Ltd4.84
Nishu Fincap Ltd (Formerly Known as Medha Finance and Securities Ltd)4.25
Ocean Knits Ltd2.61
Oriental Remedies and Herbals Limited1.88
Orpine Systems Limited2.71
P K Vaduvammal Finance & Investments Ltd (Presently Known as Novel Finance (I) Ltd)1.5
Panggo Exports Ltd2.47
Pashupati Cables Limited11.95
Protech Circuit Breakers Ltd2
Protech Switchgears Limited2
Pur Opale Creations Ltd (Formerly Known as Nuline Glassware ( India) Limited6.78
Rajadhiraj Industries Ltd2.5
Realtime Finlease Ltd3.75
Rizvi Exports Ltd.3.65
Rusoday & Company Limited0.94
Sai Graha Finance & Engineering Ltd4.05
Saket Extrusions Ltd2.13
Sequel Soft India Limited
Shefali Papers Ltd.2.57
Shree Vaishnavi Printing & Dyeing Limited3.24
Shree Yaax Pharma & Cosmetics Ltd6.06
Shreeji Dyechem Ltd1.94
Shri Mahalaxmi Agricultural Developments Co. Ltd5.09
Shyam Printers & Publishers Ltd2.25
Sibar Media & Entertainment Limited3.5
Sibar Software Services ( India) Limited3.5
Siddhartha Pharmachem Ltd.12
Simplex Holdings Ltd.2.27
South Asian Mushrooms Ltd6.1
Sparkle Foods Ltd5
Spil Finance Limited5.7
SSK Fiscal Services Ltd.2
Star Electronics Ltd.2.47
Sterling Kalk Sand Bricks Ltd.4.44
Sukhchain Cements Ltd. ( Formerly Known As Ganapati Cements Private Limited)3.65
Super Domestic Machines Ltd5.55
Sushil Packagings ( India) Ltd4.52
Swal Computers Limited2.6
Tirth Plastics Ltd5.03
Topline Shoes Limited7.8
Universal Vita Alimentare Ltd.1.8
Vidiani Agrotech Industries Ltd.2.80
Vipul Securites Ltd3
Visie Cyber Tech Limited1.4
Zed Investments Ltd.2.8

Source: http://www.mca.gov.in/Ministry/vanishing.html

As you can see, all of these are ultra small sized IPO's where the largest IPO was only 12 crores and the smallest was 49 lakhs. Market Guru's always warn investors to stay away from Penny Stocks. They have the potential to give you triple or even four digit profit % returns but at the same time, your entire investment can go down the drain. The latter is what has happened to the investors who bought shares of these 87 cos.

Happy Investing & Stay away from Penny Stocks!!!

2 comments:

  1. Hi Anand,
    I like your articles and have been addicted of your articles;)
    Pl. keep posting regularly.

    Ashutosh

    ReplyDelete
  2. Hi

    Anand really good post to inform visitors about the reality that exists in ipo industry, sad to know that so many companies have vanished after raising capital from investors.

    Investors on their part should do adequate screening and only then go about investing in any order.

    ReplyDelete

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