One example of pitiable investor awareness is the story of DLF’s minority shareholders, who were slated to receive what can only be described as a jackpot deal after they fought for their rights. DLF’s plan to re-list its shares in 2006 was stymied after it attempted to deprive 1,100 minority shareholders (who had held on to their shares, when these were delisted approximately four years ago) the massive profits arising out of its capital restructuring. These shareholders moved court and also petitioned the regulator and the media, which forced the company to include them in the restructuring bonanza.

We now discover that barely 280 investors availed of the company’s massive debenture-to-bonus share offer that gave each minority shareholder a minimum of 31,328 share (face value Rs two) valued at a minimum of Rs 1.56 crore even before the IPO opens. If the issue trades at a premium on listing, the valuation could be significantly higher. Surely, a savvier or better-advised company would have done its homework and evaluated the cost of taking 280 minority investors along, or buying them out before the restructuring with a lucrative offer. That so many minority investors missed this bonanza again reflects poor investor awareness in India, it also shows that DLF could have avoided much of the damage to its reputation with smarter planning and an honest effort to contact its investors.

On the eve of DLF’s IPO, some of the same arrogance is on display again. It appears that DLF’s distributors and brokers are doling out as much as 3 per cent in cash kick backs to investors in their effort to lure them into subscribing. The commissions range from Rs 50 to Rs 225 per form. At the same time there is an attempt to whip up frenzy and create an active grey market in the scrip. In addition, DLF hopes to rope in more retail investors by permitting them to apply for partly paid up shares, but this too has a catch. Those who are lured by cash incentives on application forms and the option of paying only Rs 27,000 per application for shares worth Rs one lakh need to be aware that part-paid shares cannot be sold on listing.

... contd.