Cemtrex Inc (CETX)

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CETX I don't know if this blog has been posted

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http://seekingalpha.com/instablog/6460311-unemon1/4962240-india-new-china-stock-scams-cemtrex-inc-warrants-sec-investigation-delisting-cetx-lied

Is India The New China For Stock Scams? CEMTREX Inc Warrants A SEC Investigation And Delisting. CETX Lied About Ownershp In Its Filings.
Feb. 22, 2017 10:23 AM ET|
4 comments |Includes: Cemtrex, Inc. (CETX)

CEMTREX Inc warrants a SEC investigation and Delisting. CETX did and does not own Cemtrex India Private Limited. Why does CETX claim 100% ownership when in fact it is 0%?

(Do not trade on my notes … Assume I am Wrong … do your OWN Due Diligence and act consequently!!) Here's my view on CETX:

Mox Reports did beat me on Timing ... but here is the real Smoking Gun that makes you realize SEC filings of CETX can not be Trusted!

In A few Hours I will publish something about CETX business and the Rob Group Acquisition.

CETX … this is BAD …really Bad! Claiming false Ownership Makes you realize SEC filings cannot be relied Upon! This sounds Like China All Over Again!!

While in its SEC Filings Cemtrex Inc (NASDAQ:CETX) claims 100% ownership in Cemtrex India Private Limited, evidence collected from the Indian Ministry of Corporate Affairs suggests/proves CETX ownership in Cemtrex India Private Limited is (and has been) 0%. Cemtrex India Private Limited is majority owned by Aron Govil personally (the father of Saagar Govil, the current CETX Ch/Pres/CEO/IR)

++ Bonus: the Auditors' Accountant (Oct 3 rd, 2016) for Cemtrex India Private Limited used to be (till Sept 30, 2016) a Director at Ducon Infratechnologies (Indian Listed Company controlled by Aron Govil) and it also used to work at Sandeep Parikh's (Govil Business Partner and Cemtrex India Private Limited 5% Shareholder) Accounting Firm P. Parikh and Associates (License Revoked in 2013). HOW SICK IS THAT?

CETX. might try to say Cemtrex India Private Limited is a marginal Part of the Business? I do not care, to me this evidence shows Co. cannot be trusted. Auditor should Resign and Nasdaq should intervene.

Does CETX really own Cemtrex India Private Limited? Unfortunately this does not Seem the Case!

From 10-Q for the Period ended December 31, 2010 ( page 6):

" The Company has also set up a subsidiary Cemtrex India Pvt. Ltd., located in Mumbai, India to sell emission monitors and related industrial equipment."

From 10-Q for the Period ended December 31, 2010 ( page 6):

"The accompanying consolidated financial statements* include the accounts of Cemtrex, Inc. and its wholly subsidiaries Griffin Filters, LLC and Cemtrex India Pvt. Ltd., (collectively the "Company")."

*How can CETX consolidate something that it does not own? Did they take some accounting lessons from Puda Coal Chairman … Ming Zhao?

From 10-Q for the Period ended December 31, 2010 ( page 17):

"The Company sells air filtration and environmental control products through its subsidiary Griffin Filters Llc and Cemtrex India Pvt. Ltd."

From 10-K/A for the Period ended September 30, 2015 ( page F-9):

From S-1/A Ex 21.1 Filed on November 23, 2016 ( Link):

According to Documents filed with the " MINISTRY OF CORPORATE AFFAIRS (Government of India)", Cemtrex Inc is not the Shareholder of Cemtrex India Private Limited (therefore CETX SEC filings cannot be relied upon). See List of shareholders in 2008 and 2015:

Aron Govil, its Companies and the strange Relationships with the People Auditing the Companies (Including Cemtrex India Private Limited):

Aron Govil Business Partner, Sandeep Parikh(5% owner of Cemtrex India Private Limited), used to work as a Partner/Accountant at the Family Firm P. Parikh & Associates (Padmakant Nanalan Parikh, Sandeep's father). P. Parikh & Associates License Got Revokes in 2013 and Sandeep P. Parikh censured and banned from being an associated person of a Registered Public Accounting Firm ( See PCAOB document Revoking Parikh & Associates registration:

Info in the "Articles of Association" for Cemtrex India Private Limited confirms that Aron Govil Business Partner is the very same Sandeep Parikh Accountant, the son of Padmakant Nanalan Parikh (founder of P. Parikh & Associates).

The Auditor of Cemtrex India Private Limited does however have the very same address of P. Parikh & Associates (whose license got Revoked in 2013) and Sandeep P. Parikh. Just a Coincidence? And the Person Signing for MSP & Co is Gautam Sanghvi, former P. Parikh & Associates employee and Director of one of Aron Govil Companies

Even More interesting is the Fact that guy that signed of the Auditors Consent and Certificate of Cemtrex India Private Limited for MSP & Co Chartered Accountants, Mr. Gautam Sanghvi, was also a Director at Ducon Infratechnologies Limite (A BSE listed company controlled by Aron Govil) and used to work at of P. Parikh & Associates.

From this Ducon Infratechnologies Limited Filing you can see that Gautam Sanghvi email address [e-mail] (of P. Parikh & Associates website).

M S P & Co, the current Cemtrex India Accountant seems to have many things in common with P. Parkih & Associates … No only the Very same Address (as pointed out before).

Other Than Gautam Sanghvi, the partner at M S P & Co signing the correspondence with Cemtrex India Private Limited and using a @ppaikh.com email Assress (See above) … I found also this accountant working for both M S P & Co and P.Parikh & Associates'

Or here another Case:

2 Listed Companies Exposed in one single Blog Post?

Investors should also be looking into at Ducon Infratechnologies (Indian Listed Company controlled by Aron Govil).

In this Blog I already exposed the Relationship between Sandeep Parikh and Aron Govil … … but wait … … would you believe that at Ducon Infratechnologies (Indian Listed Company controlled by Aron Govil) appointed ( 2016 / page 3) P. Parikh & Associates (FRN 107564W), Chartered Accountants (Firm Registration No. 107564W) as the Statutory Auditors of the Company.

I thought PCAOB had revoked P. Parikh & Associates license already in 2013 and I was right. See PCAOB document Revoking Parikh & Associates registration. Same(FRN 107564W).

Company that got its Registration Revoked by the PCAOB in 2013 … … and that was founded by the father of Aron Govil's Business Partner (Sandeep Parikh and Aron Govil have equity interests in common companies [such as Cemtrex India Private Limited] and are directors of Common Companies [such as Cemtrex India Private Limited and/or ARUN GOVIL PRODUCTIONS PRIVATE LIMITED] ). Sandeep Parikh, in the last PCAOB document available was also listed as a Partner of P. Parikh & Associates (see above).So Ducon Infratechnologies (Indian Listed Company controlled by Aron Govil) appointed as Auditor a

A cautions investor would not feel very protected by this fact … … I would just run AWAY!!

Cemtrex Inc ( up 147% in 1 year, was up 220% in Early January 2017) and Ducon Infratechnologies ( up 314% in one year) … … have been pumped hard over the last 2 months … and this has contributed to make the Govil Family very wealthy "on Paper" … … totaling approx. $70.18m

Aron Govil + Saagar Govil Stake in CETX = 4,513,334 Shares at $5.77 = $26.04m

Aron Govil stake in DUCON IS= 47,190,552 Shares at 62.35 INR = $44.14m

It's a bit Unfortunate that this is not going to last … market participants stupidity isn't infinite.

The Facts presented in this short Blog Post would make any cautions investor stay miles away from these 2 Companies and the people involved in them.

With Respect to CETX, the fact that the company claimed 100% ownership in Cemtrex India Private Limited while the reality was/is that they have 0% ownership in it … warrants a Closer Look by Authorities and the Exchange (which … in my opinion … could or should result in Delisting). To me one thing seems sure … SEC filings cannot be relied upon!

PS: Once CETX is over … I suggest Management starts a PR firm. They have been so good at issuing meaningless PR to promote CETX. Look at this Chart:

Disclosure: I am/we are short CETX.
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Comments 4
Ruerd Heeg, Premium Contributor
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I am still trying to find the book value of Cemtrex India. It says this Cemtrex India has been a subsidiary since April 10, 2009. In the 10-K over 2010 (filed in 2010) there is an item "List of subsidiaries". This item refers to a filing from May 22, 2008. In that filing there is no "Cemtrex India". That supports your claim that it does not own Cemtrex India though it was mentioned in the 10-K over 2010 (filed in 2011) as you show in your article. So it could be they have never submitted a filing that they have acquired Cemtrex India. In that case we cannot know the book value of Cemtrex India.

Could it be close to 0? On page F-26 of the 10-K over 2009 it says: "The company also has an office in India to support the engineering & prototype development and operational activities." Which operational activities??? What kind of prototype development???

Probably no book value. The description is also totally different from what the 10-K over 2010 says (as you show in your article). So 3 descriptions for the same subsidiary? Suspicious! The description in the 10-K over 2009 is also very vague. Your 2 descriptions indicate it's a sales office and my description says it is a research office. BTW, according to the 10-K over 2009 the office is 1500 square feet rented for $600 per month.

This Indian subsidiary most likely does not contribute to the results anyway and probably has never done that, at least not meaningfully. In the latest 10-K they do not disclose geographic segment info for the (non-current) assets. Again that makes it unlikely the subsidiary has substantial book value and/or revenue.
08 Mar 2017, 08:29 AM Report Abuse
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UNEMON1
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Author’s reply »
I tend to agree with analysis. But for me the real point here is ... that CETX financials Can not be trusted. I mean ... if they consolidate something they do not own ... how can i be sure of the accuracy of all the other statements made?
08 Mar 2017, 11:01 AM Report Abuse
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Ruerd Heeg, Premium Contributor
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Why would they mention this Indian company they do not own, for so many years?

This Indian subsidiary was (probably) just a cost center, without revenue or profits. They might have paid for staff and rent for 1500 sq feet office space. That would include salaries of maybe 20 people for many years. They might have mentioned the Indian company in the reports to justify the holding paying these costs, although they do not own the subsidiary. I hope the SEC goes after them soon.
08 Mar 2017, 11:19 AM Report Abuse
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UNEMON1
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Well, it looks like they are using Cemtrex india private limited to expand in China. Unfortunately, CETX doe not own that company.

Here you can find a Jointventrue CEMTREX INDIA PRIVATE LIMITED ENTERED LAST WERE WITH Mtg Infra Power Private Limited

http://bit.ly/2mjes7d
08 Mar 2017, 12:00 PM Report Abuse