Five X, a demerged arm of Octant Industries, leaves investors in limbo

The company was demerged 10 months back though it is yet to be listed; SEBI approved the listing after eight months but now BSE is yet to give its nod

The dwindling population of retail investors in India is time and again made to suffer due to wrongdoing by companies. Often, buybacks, delisting & demergers are announced, resulting in a sudden spurt in the share price and then the company defers from actually going through with the announcement, leaving small-time investors mired in losses.

Take the case of Five X Finance and Investment Limited, a demerged arm of Octant Industries, (formerly listed as ‘Octant Interactive’ on the BSE, or Bombay Stock Exchange), which has not yet been listed for more than 10 months now.

Octant Interactive Technologies Ltd demerged its financial division business and vested in Five X Finance and Investment Ltd, with a whopping 80% of its capital as per the demerger agreement, on 7 December 2010. However, the company has still not received approval from the BSE. This has left retail investors in the lurch with a majority of their capital stuck in the unlisted firm.

Moneylife had earlier reported on how the delay in listing of Five X, due to delay in approval by the Securities and Exchange Board of India (SEBI), had left investors trapped in the unlisted company. (See: Post de-merger, Octant Interactive shareholders still await listing of spun-off business ).

Now after eight months, the market regulator has given listing approval to the company. But this time it is the BSE which is yet to give its nod.

In a filing with the BSE, dated 2 September 2011, Octant Industries said,
“The demerged Undertaking/Resulting Company ‘Five X Finance and Investment Ltd’ has revived the approval under 19(2) (b) SC (R) Rules, 1957 from SEBI for listing the company with stock exchanges.”

It added, “Post the approval from SEBI, the company is under the process of obtaining listing approvals with the concerned exchange (BSE).”

Here again, retail investors are at the receiving end of the deal. “Now they are waiting for permission from BSE, but in the past 45 days there is no update or sign from the company regarding permission from the BSE. And we (investors) don’t have any other way as the company is not responding to email from investors as usual, and there is no other way we can contact them and get an update about the listing procedure. It is really a horrible experience as our entire money is stuck in Five X as the ratio was 80% to 20%,” complained an investor who had invested in Five X, who spoke to Moneylife preferring anonymity.

As per the Scheme of Agreement, post the demerger, Octant Interactive Technologies Ltd’s shareholders got 4 shares in Five X Finance and Investment for every 5 shares in Octant Interactive which they held. For every 5 shares of Octant Interactive, the equity holder was to receive 1 share of Octant Industries, each share with face value of Rs10. In other words, the shareholders of Octant Interactive were given 80% of their current holding in Five X Finance and 20% in Octant Industries. This effectively reduced shareholder stake in Octant Industries.

Industry experts say that investors are suffering with the majority of their capital stuck in unlisted firms solely due to delay in SEBI and stock exchange approval.

Interestingly, Octant Industries, which got only 20% capital, was successfully listed on 7 February 2011.   

Five X says that it is awaiting BSE’s approval. When asked about the investors’ money, a company official told Moneylife, “We can’t do anything unless we get listing approval from the BSE.”

An email query to BSE did not solicit any reply till the time of publishing this story.

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    COMMENTS

    Om Prakash Sharma

    8 years ago

    Any update about Five X listing????? Listing is being delayed intentionally by not submitting necessary documents at BSE....It has been really long time 13 months and our all money stuck...How ruthless is this person G.K.Agarwal????? Wish same thing would happen with him in future.

    REPLY

    Om Prakash

    In Reply to Om Prakash Sharma 8 years ago

    Now it has been 13 months and even 4 months later since getting permission from SEBI they have not completed formalities with to list their stock on BSE. Ruthless and shameless peoples (G.K.Agarwal)

    Ramesh Thakur

    8 years ago

    Other Investors whoever have update about Five X lisitng status please inform us.
    http://www.surajconsulting.com

    Ramesh Thakur

    8 years ago

    Dear Jignesh,
    Everyone here is waiting for Five X listing. Please write a letter to BSE regarding permission status for Five X. IT has been 11 months long waiting since delisting. Entire money is stuck into Five X.

    jignesh

    8 years ago

    I JUST REQUEST TO OCTANT.
    PLEASE DO SOMTHING ABOUT FIVEX5 . AND I ALSO REQUEST TO BSE EX. PLS DO SOMTHING ABOUT FIVE X5 . I - WE AND ALL INDIA WAIT TO LISTING FIVEX5

    Ninad Avasare

    8 years ago

    Does it really consume so much time for getting permission for listing from BSE. or he is making delay intentionally???

    Ninad Avasare

    8 years ago

    Whatever these peoples did at moneycontrol to trap new investors prior to merger -demerger is a more horrible story. They had appointed some peoples to advertise this stock with hyper targets to lure peoples and attract them to buy this stock. Many gullible investors are trapped by them and they are eagerly waiting for their money back.

    Ramesh Thakur

    8 years ago

    The way by which these peoples doing same frauds again and again under the name of business restructuring i.e pumping and dumping shares etc...I think these crooks are 100% sure that SEBI wont take any action against them. It seems like they have insider connection with BSE also. As in octant there are few incidents that promoters sold their holding for perticular period and they informed BSE after they have sold upto their target. Such incidents indicates insider connection of promoters with the employees at BSE. There are lot corrupt peoples at BSE. It is high need that BSE sghould come under RTI Act 2005.

    raj

    8 years ago

    Octant was a MASSIVE 2000 percent pump and dump from 10 to 200 then dumped back to 10 again

    all the other 5 companies whose registered offices are in E 109 Crystal Plaza New link Road Andheri have risen a minimum of 100 percent WITHOUT ANY FUNDAMNETALS
    some are at lifetime highs

    Aggarwal is also associated with ACCENTIA TECH SEE
    see http://fraudex-2012.blogspot.com/2011/10...

    by the way since aggarwal comes from a silver trading family HE MAY (i said may not is) be using accentia tech which he seems to be associated with too to launder money since IT companies provide perfect cover for such activities

    Ramesh Thakur

    8 years ago

    hmm....really sad...Whatz SEBI is doing???????? ...how they allowed him 10-12 yrs free for doing such frauds again and again and trapping poor retailers.
    Here in above case(i.e Five X Finance) the extent of damage to retailers is very big ....imagine their 80% wealth is disappeared overnight since 15 dec 2010. And morover to this trouble company is not responding to their emails. Why email ID [email protected] is being provided by company??? Also there is not any much detail available.

    Raj

    8 years ago

    G.K. Agrawal of 40 years age is the main promoter of the company. He is a qualified Chartered Accountant. He belongs to a business family carrying on a Silver Jewellery business for last 30 years
    SOURCE http://www.insight.religaretechnova.com/...

    I think he also uses s the name Raj Kishore Aggarwal

    Mr.Raj Kishore Agrawal Director 305, Krishna- A, Vishal Nagar,Marve Road, Malad (W) Mumbai- 64 Occupation: Business

    For links between the follwoing 5 comapnies First Object Concurrent Infra Octant Industries Accentia Technologies and Socrus BioSciences

    see http://fraudex-2012.blogspot.com/2011/10...

    Rajesh

    8 years ago

    This company is in the grip of a dubious C A caled Giriraj Kishore Aggarwal
    who is /has been associated with atleast 10-12 companies
    currently heis assocciated with 6-8 companies FIve X is just one of these

    There are 6 LISTED companies where Aggarwal is a promoter which have the same registeread address
    E 109 Crystal Plaza New link Road Andheri
    these are rockon Finatech Tilak Finance Banas Finace axon Infotech and Shreenath Commercial and finance
    He was also the ex promoter of Concurrent infra and Octant industries

    Also involved is Firstcall Investment of VLVLShastri

    Ninad Avasare

    8 years ago

    For getting permission from BSE only it is consuming that big time almost 45 days gone but they have not done any significant progress towards BSE listing, as Five X says they have sent listing request at BSE while other says they dont received any formal request from BSE. What is truth?

    Ramesh Thakur

    8 years ago

    Moneylife do you got any response from BSE..Though there is investor grievance cell at BSE but it is not of any use they never picks up phones and never replies to emails what is use of investor grievance cell at BSE????? BSE should be covered by RTI for the welfare of the investors...

    Ramesh Thakur

    8 years ago

    Well though Five X has told that " They have submitted listing request to BSE" . Some sources says that BSE has not received any request from them or they dont have submitted docs properly.

    Dj

    8 years ago

    Pls. help investors by listing this share immediately. Our Hard earned money is stuck in this share.

    Doing business in China: The pros and cons

    The regulatory framework in emerging markets is either bad or nonexistent. In the World Bank’s annual report on the ease of doing business the highest BRIC is China which barely makes it into the top half of countries. Brazil is the only BRIC that makes it into the top half of Transparency International’s corruption index

    We often expect leaders, professionals, and experts to know and understand the facts. The truth as to what is and what isn’t. Otherwise how could we expect them to make wise decisions? It is then both disturbing and profoundly unsettling to realize that they just accept the most common of assumptions as reality without question.
     
    For example, Muhtar Kent, Coke’s chief executive spoke to the Financial Times about China. According to the article Mr Kent said that said “in many respects” it was easier doing business in China, which he likened to a well-managed company. “You have a one-stop-shop in terms of the Chinese foreign investment agency and local governments are fighting for investment with each other.” Fascinating.
     
    What seems to have escaped Mr Kent is a process known to every con artist. In order to convince your mark to open their wallet, you have to gain their trust. You can do this by letting them win a few hands, by making it easy to play the game or promising large quick rewards. What the mark does not understand is that the game is not being played by the normal rules, but by ones that suit the con artist.
     
    Mr Kent feels certain that Coke will make money in China because it is easy to do business. This has been true. In first half of this year, Coke sold more than one billion cases of its products in China which is double its sales five years ago. From Mr Kent’s perspective this market has great potential. What he seems to have ignored is that it has great risks.
     
    Mr Kent’s entire product rests on a brand. Cola-flavoured sugar water is not hard to imitate. So without protection for his intellectual property his product becomes a commodity and the margins disappear.

    In China they pirate intellectual property on a massive scale. Not just high-end Gucci bags, but just about anything that has a brand is being counterfeited. These include Michelin tyres, John Deere combines, Bubble Wrap, Tiffany jewellery, Nike and Timberland footwear, Marlboro cigarettes, Viagra, Colgate toothpaste, Kit Kat chocolates, Tide detergent, GM, Nissan, Ford, Mercedes car parts, mobile telephones, toys, clothing, industrial adhesives and even batteries.

    Mr Kent also seems unconcerned about a country that routinely slanders foreign firms. Dell, General Mills, Lipton Teas, Colgate-Palmolive, and Sony all have been targeted. In one case China banned importing foods made by Schweppes, Unilever and Coke itself. These foods were tainted by an ingredient produced by a Chinese company that was only identified by foreigners.

    It is not just Mr Kent who is making the mistake, but US Federal Reserve Chairman Ben Bernanke as well. Mr Bernanke suggested that the United States could learn from emerging markets. He pointed out that emerging market growth shows “the importance of disciplined fiscal policies, the benefits of open trade, the need to encourage private capital formation while undertaking necessary public investments, the high returns to education and to promoting technological advances, and the importance of a regulatory framework that encourages entrepreneurship and innovation while maintaining financial stability.” The question is exactly which emerging market did he have in mind?
     
    The regulatory framework in emerging markets is either bad or nonexistent. In the World Bank’s annual report on the ease of doing business the highest BRIC is China which barely makes it into the top half of countries. Brazil is the only BRIC that makes it into the top half of Transparency International’s corruption index.
     
    As to public investment, perhaps only China can be said to make any of those. Brazil has the world’s third-largest road network, but 88% of it is dirt. Traffic is a mess in almost any large city in an emerging market.
     
    As to capital formation and entrepreneurship, senior executives are so unhappy about the Indian government’s painfully slow or inconsistent decision-making that they are focusing their investments on Africa or Latin America. China has consistently starved private firms of capital. Russian prime minister Putin suggested that anyone who starts a new business should be rewarded with a medal for bravery because of their willingness to take on the mass of paper work, poor rules and corrupt bureaucrats.
     
    As to education, India’s vaunted outsourcing industry cannot find enough graduates with sufficient skills. As a percentage of gross domestic product (GDP), China spends less on education than Uganda. The once great Russian education system has been totally corrupted. Anything from school places to university degrees are available for a price.
     
    Both Mr Kent and Mr Bernanke are powerful men. Perhaps what they really admire about some emerging markets is that decisions can be carried out without messy debate. But the point of the debate is to find truth, and that is the one thing that they themselves have ignored. Fortunately for investors, stupidity can be very profitable.

    (The writer is president of Emerging Market Strategies and can be contacted at [email protected] or [email protected]).

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    JP Morgan survey finds Indian Investment Confidence slumps to lowest in two years; market expectations high

    The quarterly survey across eight cities finds fall in confidence caused by poor global outlook, high domestic interest rates and inflationary concerns. Still, investors expect Sensex to climb to over 20,000 by year end

    The Indian Investment Confidence Index (ICI) is at its lowest in two years, due to the combined impact of the global economic slowdown, high domestic interest rates and inflationary concerns, according to a survey conducted by JP Morgan Asset Management across eight cities in July. However, a majority of investors and advisors in India expect the benchmark Sensex to trade between 20,000 and 22,000 by the end of this year.

    Interestingly, the retail confidence index although 4.2 points down from the previous quarter, ranked the highest (137.5). The advisor confidence index was a distant second (124.9), whereas corporate confidence was at the lowest (109).

    Christopher Spelman, whole-time director and chief executive officer of JP Morgan Asset Management says, "ICI for the current wave has been impacted by a significant fall in the outlook on the global economy, domestic interest rate hikes and inflationary concerns. Despite this negative news flow, the Indian financial fraternity maintains a positive outlook with a majority of investors and advisors expecting the benchmark index to trade between 20,000 and 22,000 by the end of this year. Another interesting finding is that young investors (age 22 to 25 years) appear highly enthusiastic about investing in mutual funds."

    ICI, which was launched in August 2009, captures the confidence of retail and corporate investors, and financial advisors on the Indian economic and investment environment on a quarterly basis.

    The numbers were calculated on the basis of responses received from 1,623 respondents (retail), 50 corporate treasuries, 269 independent financial advisers (IFAs), 20 banks and 20 national/regional distributors (N/RDs).

    Banking and financial services emerged as the most attractive sector for investment among retail investors and advisors. Investors appear to have turned cautious as preserving capital emerged as a popular strategy among 40% of retail investors surveyed. Further, just 40% of investors were likely to turn "somewhat aggressive" about their investment strategy in the coming six months, as compared with 57% in the previous quarter.

    In corporate treasuries investment activity showed noticeable decline across all instruments. Money market mutual funds remained the most popular debt instrument. It is interesting to note that 50% of corporate treasuries expect to maintain the current investment level in liquid funds ahead of the Reserve Bank of India's regulation on limiting banks' exposure in liquid funds to 10% (effective from January 2012).

    The survey found that IFAs (independent financial advisors) in Mumbai are a despondent lot and their confidence is the lowest this quarter. Easy to understand when one finds that personal networking continues to be the most preferred source of information for investment decision making among retail investors.
     
    Arun Jethmalani, managing director of ValueNotes, the independent market research agency of JP Morgan that conducted the survey, says, "Growing vulnerability of the global economy and uncertainty in the domestic investment environment have taken a toll on investment confidence, dragging the ICI down to its lowest ever. Interestingly, confidence within India Inc. appears to be shaken the most, amidst rising inflationary pressure, poor governance and corruption; even as the advisor community is a little more optimistic about financial investments."

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