Aster Silicates Limited is tapping the capital markets with an IPO which has opened on Thursday the 24th June and closes on Monday the 28th of June 2010. The issue is not being discussed and analysed simply because there are enough irregularities and risks associated with the company, which should make any prospective investor wary of the company.
A sample of the litigations is as follows: – There are as many as 19 criminal complaints pending against the company for cheque bouncing under section 138 and section 141. (The company has subsequently paid by demand draft six of the cases to GAIL. Besides there are two cases of Winding up petitions filed against the company. Besides the promoters and directors in their individual capacity have as many as 18 cases of criminal proceedings under section 138 read with section 141 of the Negotiable Instruments Act filed against them. Very clearly the intent and action of the company and its promoters seems suspect.
Also reproduced from the RHP dated 10th of June 2010 from pages 13 and 14 in verbatim about the doings of the company.
A decree has been passed by the Ahmedabad City Civil Court in the suit filed by Nirma Limited against Gujarat Chromium Chemicals Private Limited ("Gujarat Chromium"), one of the companies which our Promoters, Mr. Mahesh Maheshwari and Mrs. Namrata Maheshwari had promoted and were also the directors of this Company till 2005.
Nirma Limited (“Nirma”) had filed a recovery suit before the City Civil Court, Ahmedabad bearing suit No.4415/2001 in the year 2001 against Gujarat Chromium Chemicals Private Limited (formerly known as Arbuda Sil-Chem Private Limited*) (“Gujarat Chromium”) in relation to its failure to pay an amount of Rs.18,52,379/- to Nirma. The City Civil Court, Ahmedabad passed a decree dated December 14, 2006 in favour of Nirma for an amount of Rs. 18,60,210.05 along with interest @ 9% p.a. from the date of filing the suit. Our Promoter, Mr. Mahesh Maheshwari, was a director when the default was made by Gujarat Chromium in discharging the liability of Nirma and was also a signatory to the cheques issued by Gujarat Chromium, which later were dishonoured leading to the above suit. Our Promoters, Mr. Mahesh Maheshwari and Ms. Namrata Maheshwari have disassociated themselves from Gujarat Chromium in the year 2005. For further details of the litigation, please refer to the Section titled “Outstanding Litigation and Material Developments” beginning on page on 146 of this Red Herring Prospectus.
Our Promoters had promoted Arbuda Sil-chem Private Limited (ASPL) on January 8, 1990 under the Companies Act, 1956 and having its registered office at 1/B, Gitanjali Society, Gordhanwadi Tekra, Kankaria, Maninagar, Ahmedabad. The name of ASPL was changed to Gujarat Chromium Chemicals Private Limited (Gujarat Chromium) on September 23, 1999. Another company by the name of Gujarat Chromium Chemicals Private Limited (GCCPL) was promoted by the (Late) Mr. Amolakhdas Sevaram Sharda, father of Mr. Mahesh Maheshwari incorporated on June 03, 1981 with its registered office at 11/2/1, GIDC Estate, Kadi, District Mehsana, Gujarat. GCCPL was renamed as Gujarat Sil-chem Private Limited (GSPL) on September 10, 1999. Neither Mr. Mahesh Maheshwari, nor Mrs. Namrata Maheshwari are/were directors/promoters of GSPL. The (Late) Mr. Amolakhdas Sevaram Sharda resigned as a director of GSPL in the year 2001 and subsequently in 2003 had sold off all his family’s shareholding in GSPL, and none of them are associated with GSPL in any manner since then.
From the above it is extremely confusing that how two different companies could in the same month and year change their names. Gujarat Chromium Chemicals Private Limited (GCPL) incorporated in June 1981 on 10th September 1999 was renamed as Gujarat Sil-chem Private Limited, while Arbuda Sil-chem Private Limited promoted in January 1990 was renamed on 23rd September 1999 as Gujarat Chromium Chemicals Private Limited.
There is a decree in favour of M/s Nirma Limited to the extent of Rs 18,52,379 passed in June 2006. The company Aster Silictaes Limited has cases filed against it by three other suppliers of caustic soda against it.
Very clearly the intent of the promoter is to confuse people and cheat people. The issue which plans to raise Rs 53.10 crs in a price band of Rs 112-118 has M/s Saffron Capital advisors Private Limited as its Merchant Banker.
At the end of day two of the IPO the issue has ‘managed’ subscription of 66% of its issue size entirely from HNI’s and retail. It appears that like some other issues there is an active grey market present in this issue but it would suffice to say to the intelligent investor that this issue is not for them.
In conclusion I wish to state that this IPO is injurious to the health of investors and one should stay away from such issues.
SEBI disclaimer: – I DO NOT INTEND TO SUBSCRIBE TO THIS ISSUE
