Another Future Group company, Pantaloon Industries, also bought 98 lakh shares for another Rs8 crore to prevent a further fall of the stock price on debut. But the Future Ventures share is still struggling well below its issue price
Future Ventures India Ltd, the investment company promoted by Future Group's Kishore Biyani, made its debut on the stock exchanges yesterday. On the first day of trading itself, the scrip underperformed and closed 17% below its issue price.
On the Bombay Stock Exchange (BSE), the share made its debut at Rs9.50, and after touching an intra-day low of Rs7.95, it closed at Rs8.30. Around 76 million shares were traded on the stock exchange.
There was panic among retail investors as the scrip underperformed on the opening day itself and this led to heavy selling of the company's shares. In the middle of this chaos, Pantaloon Retail, another company of the Future Group, purchased about 99.55 lakh shares of Future Ventures at Rs8.20.
Interestingly, Pantaloon itself hasn't shown any robust growth in the last quarter. So, given its own weak financials, this move by the company, to buy shares of Future Ventures, raises several doubts. Pantaloon Retail's net profit for the quarter ended 31 December 2010 stood at Rs19.91 crore, up just Rs2.33 crore from Rs17.58 crore in the preceding September 2010 quarter.
Further, Pantaloon Industries, yet another group company, also bought 98.25 lakh shares of Future Ventures yesterday at the price of Rs8.20. The promoters of the group company were prompted to buy Future Ventures shares after witnessing the heavy sell-off on the counter, and this helped the stock recover some upward momentum.
The Future Ventures stock followed the same trend on the National Stock Exchange (NSE) as well. On the NSE the share made its debut at Rs9. It touched an intra-day high of Rs9.65, but closed the day at Rs8.20. Around 174.75 million shares were traded during market hours.
A simple calculation would reveal that Pantaloon's decision to buy the Future Ventures shares cost it around Rs8.16 crore. This appears strange, for the company's net profit in the December 2010 quarter was just Rs19.91 crore. Analysts expect that the stock will slide further. This could see the company suffer losses.
Future Ventures raised Rs750 crore through the initial public offer of shares priced at Rs10 each. The issue was subscribed 1.5 times. The company's shares were mainly subscribed by high net worth individuals, while the quota for institutional and retail investors was under-subscribed.
Moneylife has reported earlier how the Future Ventures prospectus stated that it cannot compare the promise and performance of Galaxy Entertainment, the company it acquired, because it did not have the IPO records of Galaxy which are legal documents. Still, SEBI cleared the Future Ventures prospectus, unaware of this irony. (Read, 'Future Ventures says it does not have IPO documents of a listed company it acquired three years ago'.)
Meanwhile, in trading today, the Future Ventures stock rose to Rs8.60 from yesterday's close of Rs8.30 on the BSE. On the NSE, the stock closed at Rs8.60, up from its previous close of Rs8.20.
If the Nifty closes above 5,560, there could be gains all the way to 5,680. On the lower side, the support will be at 5,430
The Sensex opened today in the positive at 18,573, while the Nifty was at 5,547. However, the market moved sideways through the day with nothing major happening on the domestic from or internationally that would swing it either way. The indices slipped into the red for just about an hour in morning trade, during which period they touched intraday lows of 18,455 and 5,525. In the late afternoon session, the Sensex and the Nifty made highs at 18,622 and 5,575 respectively.
The Sensex closed 72 points up at 18,585 and the Nifty was 24 points up at 5,565. Looking ahead, it the Nifty closes above 5,560, there could be gains all the way to 5,680. On the lower side, the support will be at 5,430. The market is still in its sideways move, but the bearish picture has not faded.
The Sensex had 23 gainers and 7 losers. The major gainer was Hero Honda (3.31% up) followed by DLF (up 2.46%), Tata Motors (1.85% up), SBI (1.78% up), Reliance Infrastructure (rose 1.48%). Major losers were NTPC (down 1.86%), Tata Power (down 1.39%), ONGC (down 1.30%), Larsen & Toubro (down 0.98%).
The Nifty had 34 stocks which gained and 16 stocks that fell.
All the BSE sectoral indices, except for the BSE Consumer Goods Index, were in the positive. BSE Realty rose 1.40%. While the BSE Consumer Goods Index fell 0.03%, the other 11 sectoral indices gained between 0.04% and 1.01%.
The Wholesale Price Index (WPI) data for April is due on 16th May, whereas industrial output data for March is expected on Thursday. According to a poll conducted among economists of 15 leading organisations, the IIP (Index of Industrial Production) is forecast to grow at 3.5% in March.
The India Meteorological Department (IMD) has forecast that the southwest monsoon will be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. It has indicated that there is a very low probability of a deficit in the rainfall (below 90% of LPA) or even excess (above 110% of LPA).
The State Bank of India’s announcement yesterday of a hike in its benchmark prime lending rate by 75 basis points to 9.25%, saw the stock gain 1.78%.
Tata Motors, the country’s largest automaker by revenue, has launched a passenger carrier, ‘Magic Iris’, and a micro truck, ‘Ace Zip’, with an aim to extend its share in the domestic light commercial vehicles market. The Tata Motors stock price rose 1.85%.
Globally, markets were looking for Chinese inflation data figures. China's inflation for April was 5.3%, slightly higher than expected, but lower than the 32-month high of 5.4% in March. But industrial output and loans growth eased much more than expected in April, suggesting slower activity in the world's second-biggest economy. Except for the Shanghai Composite, Hang Seng and Taiwan Weighted, all other Asian indices were in the positive, and rose in the range of 0.39% to 1.28%. The Asian indices which were in the negative slipped in the range of 0.03% to 0.23%. (The Shanghai Composite registered the maximum loss.)
On Tuesday, the US government cut its projection for world oil demand this year by the most in 10 months. India imports a majority of its crude oil requirements and high oil prices have raised concerns about the widening current account deficit. High oil prices raise concerns about a higher oil subsidy bill for the government and its negative impact on the fiscal position.
The progress of this MLM company reminds one of the Home Trade scam, where the company spent huge money on advertising and signing mega celebrities like Sachin Tendulkar and Shah Rukh Khan to gain publicity, before duping several people, including the stars
Many agents of SpeakAsia, the self-proclaimed 'biggest online survey company', have posted comments all over the Internet about the company's 'Gen X Bazaar' event being held in Goa from May 9 to 11 and the special train that was booked to take participants for the programme.
Some agents said, and we quote, "In the entire history of India this has NEVER happened - it's spectacular. SpeakAsia arranging a special train for SpeakAsians only is a BIG news." More about the special train and Goa bash later.
The company or its agents-sorry panellists and distributors-are spending huge money on advertising, social gatherings and trying to buy credibility for its dubious MLM scheme. Over the past few weeks, SpeakAsia or its distributors have published half-page ads in leading dailies and run ad films on TV channels, especially during the ongoing IPL cricket matches. So many more people have started searching for information about the company and its online survey scheme.
The company had also issued a public notice some time back. But despite the notice, many other people are also coming together on the Internet, forming groups and forums to prevent the MLM scheme from spreading further.
Following letters from Moneylife to the Reserve Bank of India (RBI) on the issue, the central bank is said to had discussed it and is contemplating action against the MLM company, according to our sources.
Now to the special train and the Goa bash. There is no doubt that booking a special train for a big bash at a beach resort in Goa was done to attract more eyeballs and so hook more gullible people who might choose to join the MLM scheme. For one, booking a special train is not a big deal and can be done by any one who has the money to pay for it. The Indian Railways charges Rs9 lakh as a minimum registration-cum-security amount and the booking must be done 30 days before the date the train is required.
Also, a special train is nothing so special, as people in and around Mumbai are aware. Every year, hundreds of thousands of of people travel by special trains to Mumbai, to pay tribute to Dr Babasaheb Ambedkar on 6th December. (About 200,000 people visited Chaityabhoomi, the memorial site, on 6 December 2010.)
Some SpeakAsia agents have been gung-ho about the cheap fare by the special train. On the contrary, we learn that each agent had to pay $170 for a ticket in the three-tier AC and they were required to pay from their e-wallet accounts, for which the currency conversion rate is Rs50 a dollar. This means the agents paid Rs8,500 or equivalent for the journey by the special train as against the scheduled fare of about Rs1,450.
Some agents said that the $170 included ticket charges and meals. However, even if one were to take into account the ticket fare from Delhi to Goa and back along with meals, the charge should not have been more than Rs5,000 per person. So, the agents paid at least Rs3,500 of their hard-earned money over and above the actual charges from their e-wallet. This excludes the cost of accommodation.
Now about the event. As SpeakAsia often said, it was a Gen X Bazaar, where people (its agents) would come together to shop products from companies like Levis, IFB, Maruti, Skoda, etc. As is the practise with many manufacturers and service providers, they offer additional discounts for a group. (Check some group buying sites) The same logic applies to the Goa bazaar as well and there was nothing special for the agents.
How the agents would carry the products they bought, back home, is a different story. Except for the Levis jeans (that they could wear or carry in their bags) and automobiles (they would have to drive back in the vehicle and forget the special train ride back), all other products would have to be transported and this would cost more money. (Try offering money from an e-wallet to the 'truckwallah' or any local goods carrier.) In addition, the goods purchased at a discount at the bazaar would likely attract local levies, like octroi, that would have to be paid in real currency.
Some agents were very excited about the entertainment programmes in the evenings. According to the information obtained from some blogs, Bollywood actor Rani Mukherjee and Neha Dhupia and performers like Mika Singh and Abhijeet Sawant were there to entertain the agents. All the names mentioned are commercial artists who do entertainment shows anywhere and everywhere for a fee. Here again, nothing special.
A gathering of people under the pretext of a seminar or a bazaar is not unusual, especially in MLM circles. In fact, all multi-level marketing (MLM) companies have such gatherings at posh locations regularly to keep their flock intact and growing. Remember, how JapanLIFE and GoldQuest or QuestNet used to invite people to functions at five-star hotels?
Just for reference, a few years ago, Home Trade endorsed mega celebrities like Sachin Tendulkar, Hrithik Roshan and Shah Rukh Khan to cover up its meticulously planned financial scam. (Read, Home Trade's 'starry' gameplan.)
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Special report on SpeakAsia by Star News
(Courtesy: Star News)