Five Core Electronics Launched IPO in May 2018. Now Promoters Are Untraceable, Company Defunct
Last year in May, Kolkata-based Five Core Electronics Ltd had filed an initial public offering (IPO) to raise Rs46.66-crore at a price of Rs140 per share. Claiming a 177% subscription for the IPO, on the small and medium enterprise (SME) platform of National Stock Exchange (NSE), the company promoters and directors threw a big party
However, one year down the line, Five Core Electronics is in doldrums, with its promoters becoming untraceable and a raid by the department of revenue intelligence (DRI) on the company premises. There are no manufacturing activities and the factory and registered office of Five Core Electronics are closed.
On 27 April 2019, Aditya Agarwal, independent director of Five Core Electronics, filed a complaint with the secretary in the ministry of corporate affairs (MCA), reporting 'unethical behaviour' of the company management. He says, "Amarjit Singh Kalra, managing director of the company and other directors, Surinder Kaur Kalra and Jagjit Kaur Kalra are not available in the office in past two months. All key managerial personnel excluding Mr Kalra, have claimed to have tendered their resignations from the company."
"As per the information given to me, critical officers and employees have resigned. It has been noted that presently no production or manufacturing activities are carried out in the factory premises of the company and the factory and registered office of the company are closed," Mr Agarwal says.
Mr Agarwal and Neeraj Sharma, the other independent director of Five Core Electronics, called for a board meeting on 27 April 2019. For this meeting, they invited Amitabh Singh, chief financial officer (formerly as he claimed), Saurabh Kumar Jain, company secretary (formerly as he claimed), Mohit Singhal, secretarial auditor and the company's merchant bankers, Anand Lakhotia and Deepak Sharma, who is director of Sarthi Capital Advisors Pvt Ltd.
During the board meeting, it was decided to file a complaint with MCA against the Kalras. The board also decided to appoint a forensic auditor and a general manager, but since the registered office and factory of Five Core Electronics were closed and records were not available, the appointments were deferred.
According to statements given by Mr Jain and Mr Singh, the Kalras had told them that from 15 February 2019, they would be visiting the US for 10-12 days on a private trip.
Within a fortnight, on 27 February 2019, the DRI carried out a search on Five Core Electronics and its group entities and seized certain documents.
From its peak at Rs145.50 on 21 May 2018, the shares of Five Core Electronics have tumbled to Rs33.35 as on 26 April 2019.
Ratings agency CRISIL on 31 May 2018 had affirmed its ratings of Five Core Electronics to 'BBB-' while revising its outlook to positive from stable for the company's Rs91 crore bank loan facilities. This rating was valid till 31 March 2019.