Plea in court to wind up SPIC unit at Guindy

CHENNAI: The Sakthi Hi-Tech Construction Private Limited
on Moore Street has moved the Madras High Court with a plea
 to order the winding up of SPIC Petro Chemicals Limited in Guindy.

Consequently, the company petition from Sakthi Hi-Tech prayed
for a direction to the official liquidator to take over the
 management and administration of SPIC as a provisional liquidator.

According to Sanjay Dodeja, counsel for petitioner company, SPIC
placed various purchase orders with the petitioner company for
fabrication and erection of SS tanks and other materials in 1995 and 1996.
 Accordingly, petitioner company supplied, erected and executed substantial
 parts of the purchase orders as early as in 1996, but SPIC did not perform
its obligation and defaulted in payment of Rs 96 lakh.

SPIC was also entangled in litigation in respect of the project.

By an order, the Madras High Court had also restrained SPIC from
 proceeding further with the project. The dues remained unsettled
 till date. SPIC had also taken various loans and credit facilities
 from several banks, financial institutions and individuals by mortgaging
and hypothecating its movable and immovable property.

Thus, SPIC was neck-deep in debt.

The promoter of SPIC had also entered into an agreement to sell
some of his personal property to True Value Homes for Rs 120 crore
 as premium price for a property of 60 grounds in Kotturpuram.

Auction Sale of Properties by Banks - 2nd week of December 2009

SFIO and Its Investigations in the last 3 Yrs

In last three year 37 cases referred to SFI and
investigation completed in only 9 cases


In all, 37 cases were referred to the Serious Fraud Investigation Office
(SFIO) during the last three years i.e. during the years 2006-07,
2007-08 and 2008-09. Out of these 37 cases, investigations
in respect of 9 cases have been completed.

Number of people in respect of other six companies will be
known only after launching prosecutions. In respect of the
remaining 28 cases, investigations are under progress.

An elaborate regulatory framework is in place to deal with such incidents.

This framework provides for statutory disclosures about the affairs

ofcompanies intended to inform the stakeholder the truth about the

state of affairs of companies. To facilitate making of such disclosures

by companies , and for stakeholders and regulatory agencies to easily

access and view them, Government has set up an electronic registry

with round the clock access through internet.

The Government has powers of inspection of the books of accounts

of companies and also to investigate their affairs, if need be, under the

Companies Act, 1956. In addition, the Act provides for appointment

of independent, statutory auditors to audit the accounts and report to

the shareholders. Such audited accounts are also displayed on the

electronic registry for general viewing.

While the reporting requirements are regulated under the

Companies Act, 1956, the conduct of auditors is regulated

under the Chartered Accountants Act, 1949. In addition,

for listed companies, compliance with these statutory requirements

is required to be certified by a company secretary in practice,

who in turn is regulatedunder the Company Secretaries Act, 1980.

Government has amended the Chartered Accountants Act, 1949

and the Company Secretaries Act, 1980 in 2006 to provide for

a more effective disciplinary mechanism to deal with cases

of misconduct by Chartered Accountants, Company Secretaries

respectively. In 2006,the Government has notified Accounting

Standards to enable accounts of companies to be drawn up and

disclosed on the basis of fair, transparent and internationally

accepted principles. Government proposes to re-introduceCompanies

Bill, 2008 as the Companies Bill, 2009 which seeks to make more

stringent provisions in cases of frauds by companies,

their directors and auditors, etc.

Morepen Laboratories Ltd. (MLL)
MLL created equity through fraudulently rotating funds siphoned

out of the company. Money was siphoned from the company to

promoters’ personalaccounts . Higher net worth of the company

was shown through rotation of funds, fictitious investments and

fictitious debtors. Company indulged in overvaluation of stocks to

book higher profits and obtained more loan from banks by hypothecation of stocks.

Shonkh Technologies Ltd.
The promoters in this case were found to have caused wrongful

loss to the company by allotting shares at arbitrary rates of premium

to Directors and their relatives. They were also found guilty of

falsification of accounts by creation of false equity through rotation

of cheques and by showing fictitious sales to inflate revenue and profit.

Shonkh Technologies International Ltd.
The Directors of the Company were found to have violated various

 provisions of Companies Act including preparation of

Annual Reports in a manner not reflecting true and fair view

of the operations of the Company.

JVG Hotels Limited, JVG Publications Ltd. , JVG Techno IndiaLtd. , JVG Holdings Ltd
These four companies are part of JVG Group of 13 companies referred to SFIO f

or Investigation. The main promoter is Shri Vijay Kumar Sharma.

There are allegations of siphoning off funds invested by the public in

 JVG Finance Limited, which was a non-banking finance company,

and some of thesecompanies were used for this purpose.

Leafin India Limited
The funds of the Company were siphoned off by creation of

lease agreements in respect of non-existent assets and lease

rentals were paid thereon. There was an attempt to defraud

the exchequer.

Stock Holding Corporation of India Limited (SHCIL)
There was fraudulent issue of shares of the company and books

of accounts were falsified. The management was found guilty

of the offence of criminal breach of trust in transferring tangible

assets of the company. The officials of the company intentionally

gave false evidence on oath during investigation.

Company wise list of 70 cases handled by SFIO with Present status of investigation

Nov 24, 2009

Serious Fraud Investigation Office (SFIO) has handled 70 cases
since its creation.

Company-wise list of these 70 cases along
with their status is given below.

In reply to an unstarred question in the Lok Sabha today,
Minister of Corporate Affairs,
Shri Salman Khurshid said that generally, the cases
 referred to the SFIO for investigation
are characterized by having substantial involvement
of public interest either in terms of
monetary misappropriation or in terms of
persons affected, and are complex and having
inter-departmental and multi-disciplinary ramifications.

However, the exact amount of funds in
eachinvestigation has not been quantified.

Investigation cases handled by SFIO since its inception and their present status:

S/No.	Name of Company	Present status of investigation
1	Daewoo Motors India Ltd.	Complete, prosecutions filed
2	DSQ Software Ltd	Complete, prosecutions filed
3	Design Auto Systems Ltd.	Complete, prosecutions filed
4	Bonanza Biotech Ltd.	Complete, prosecutions filed
5	Vatsa Corporation Ltd.	Complete, prosecutions filed
6	Triumph International Finance India Ltd	Complete, prosecutions filed
7	N H Securities Ltd	Complete, prosecutions filed
8	K N P Securities Pvt Ltd	Complete, prosecutions filed
9	V N Parekh Securities Pvt Ltd	Complete, prosecutions filed
10	Panther Fincap and Management Services Ltd.	Complete, prosecutions filed
11	Pather Investrade Ltd	Complete, prosecutions filed
12	Panther Industrial Products Ltd.	Complete, prosecutions filed
13	Triumph Securities Pvt Ltd.	Complete, prosecutions filed
14	Luminant Investrade Pvt Ltd.	Complete, prosecutions filed
15	Classic Credit Ltd	Complete, prosecutions filed
16	Saimangal Investrade Ltd.	Complete, prosecutions filed
17	Classic Shares and Stock Broking Services Ltd	Complete, prosecutions filed
18	Goldfish Computers Pvt Ltd.	Complete, prosecutions filed
19	Nakshatra Software Pvt Ltd.	Complete, prosecutions filed
20	Chitrakoot Computers Pvt Ltd.	Complete, prosecutions filed
21	Manmandir Estate Development Pvt Ltd.	Complete, prosecutions filed
22	Mardia Chemicals Ltd.	Complete, prosecutions filed
23	Soundcraft Industries Ltd	Complete, prosecutions filed
24	Adam Comsof Ltd.	Complete, prosecutions filed
25	Kolar Biotech Ltd	Complete, prosecutions filed
26	Usha India Ltd	Complete, prosecutions filed
27	Malvika Steel Ltd	Complete, prosecutions filed
28	Koshika Telecom Ltd	Complete, prosecutions filed
29	Information Tech of India Ltd.	Under progress
30	Shonkh Technologies International Limited	Complete, prosecution filed
31	Shonkh Technologies Ltd	Complete, prosecution filed
32	Morepan Laboratories Ltd	Complete, prosecution filed
33	JVG Industries Limited	Report submitted, prosecutions yet to be filed
34	JVG Publication Limited	Report submitted, prosecutions yet to be filed
35	JVG Hotels Limited	Report submitted, prosecutions yet to be filed
36	JVG Steels Limited	Report submitted, prosecutions yet to be filed
37	JVG Techno India Limited	Report submitted, prosecutions yet to be filed
38	JVG Holdings Limited	Report submitted, prosecutions yet to be filed
39	JVG Farm Fresh Limited	Report submitted, prosecutions yet to be filed
40	JVG Housing Finance Ltd	Report submitted, prosecutions yet to be filed
41	JVG Overseas Limited	Report submitted, prosecutions yet to be filed
42	JVG Finance Ltd	Under progress
43	JVG Leasing Limited	Report submitted, prosecutions yet to be filed
44	JVG Securities Ltd	Report submitted, prosecutions yet to be filed
45	JVG Departmental Stores Ltd.	Report submitted, prosecutions yet to be filed
46	SHCIL Services Ltd	Complete, instructions issued to file prosecutions
47	Systems America (India) Ltd	Under progress
48	Krishi Export Commercial Corporation Ltd	Report submitted, prosecutions yet to be filed
49	Leafin India Ltd	Report submitted, prosecutions yet to be filed
50	AVI Telecom Ltd	Under progress
51	AVI Petroleum Ltd	Under progress
52	AVI Packaging (India) Ltd.	Under progress
53	A&R Oil Mills Ltd.	Under progress
54	Rishi Spinners Ltd.	Under progress
55	Rishi Financial Services Ltd.	Under progress
56	Rishi Oil & Fats Ltd (in Liqn)	Under progress
57	AVI Shoes Ltd (in Liqn)	Under progress
58	Zenet Software Ltd	Under progress
59	Sugandh Estate & Investments Pvt Ltd.	Under progress
60	Amathi Investments Ltd.	Under progress
61	Welvet Financial Advisors Pvt Ltd.	Under progress
62	PSG Developers & Engineers Ltd.	Under progress
63	Nicco UCO Alliance Credit Ltd.	Under progress
64	Kuber Mutual Benefits Ltd	Under progress
65	Elder Pharmaceuticals Ltd	Report submitted, prosecutions yet to be filed
66	Satyam Computer Services Ltd.	Report submitted, instructions issued for filing prosecutions on pure company law violations.
67	Megacity (Bangalore) Developers & Bldgs Ltd.	Under progress
68	AVI Industries Ltd (in Liqn)	Under progress
69	Sesa Goa Ltd	Under progress
70	Sesa Industries Ltd.	Under progress

Shri Salman Khurshid informed the House that a sum of Rs. 17,52,42,000/-

has been spent to run SFIO since its creation till October, 2009.

EXPERIAN....UK credit information major to expand to India

By PTI , London

Business and credit information major Experian has
 formed a joint venture with seven Indian
  banks and financial institutions to establish a credit
 bureau in India that will advise financial institutions
 and retail businesses about lending to consumers.

Nottingham-based Experian will hold a 49 per cent stake
 in the joint venture, Experian Credit Information Company
 of India, while the other 51 per cent will be shared between
 Axis Bank, Federal Bank, Indian Bank, Magma Fincorp,
Punjab National Bank, Sundaram Finance and Union Bank of India.

Experian is one of only a few companies to have been granted
a provisional licence to operate a credit bureau in India.

It will now apply to the Reserve Bank of India for a final licence.

Richard Fiddis, Managing Director of the strategic markets
division at Experian, said: "Along with our joint venture partners,
we are excited about the creation of the new Experian
Credit Information Company in India.

"With more than 40 years of experience, we operate 15 consumer
and 13 business credit bureaux globally and have played an active
 role in helping shape industry best practice."









.

Banks go slow on credit push fearing bad loans

By Abhishek Anand  , New Delhi



  Despite lacklustre credit growth during the present financial year,
banks are reluctant to goout of their way to
push increased credit flow to companies
 because they fear that it might result in increase in bad debts.
 A few banks that Financial Chronicle spoke with are of the view
that trying innovative ways to push credit growth could result in
compromising on quality of loan, which in turn may result in higher
non-performing asset (NPAs) for banks.

“Pushing artificially for credit off-take, may result in higher
non-performing assets,” A C Mahajan, chairman and managing director,
Canara Bank, said.

At the same time, Mahajan is optimistic of improvement in credit
demand going forward. “We are witnessing some improvement in credit
demand and are of the view the situation would improve further in
coming months,” he said.

Other bankers agreed with Mahajan. S Raman, executive director,
Union Bank of India, said, “We are not going to try too many things
to push up credit demand because that may result in deterioration of
the quality of assets for the bank. In fact, we have already reduced
credit disbursement target from 25 per cent to 18 per cent.

The first two quarters have witnessed very low credit off-take.”

C M Khurana, general manager, Oriental Bank of Commerce, said he
is hoping for higher credit pick-up in the days to come.
“As far as lending to companies is concerned, we are expecting
improved demand going forward,” Khurana said.

He said the bank’s retail credit was growing at a healthy pace.
 “Housing loans clocked a year-on-year growth of 28 per cent and
education loans at more than 30 per cent,” Khurana said.

According to the latest RBI data, for fortnight ended November 6,
 credit expansion by all banks put together increased by 9.07 per cent
at Rs 2,873,062 crore, compared with Rs 2,612,401 crore in the
corresponding fortnight a year ago. This is lower from the credit
off-take during the past financial year, where the credit grew at
a staggering 29 per cent year-on-year.

Source: Financial Chronicle

Banks find DRT a better recovery mechanism

Borrowers often do not honour commitment reached in Lok Adalats.

S.Bridget Leena

Chennai, Nov. 20 Lok Adalats have not proved to be a good means
of effecting recoveries from bad loans, statistics show. The ‘public courts’
have accounted for only 5 to 8 per cent of delinquent loans recovered in
the last couple of years. Also, as the Chairman and Managing Director of
Indian Bank, Mr M.S. Sundara Rajan, observes, borrowers often do not
honour the commitment reached in Lok Adalats.

However, banks have found the mechanism of Debts Recovery
Tribunal and the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest (SARFAESI) Act,
more helpful. SARFAESI empowers banks to recover their
non-performing assets without the intervention of the Court.

A borrower aggrieved by the action of the bank can file an appeal
with DRT and then with the Debt Recovery Appellate Tribunal (DRAT),
but not with any civil court. The borrower has to deposit 50 per cent of
the dues before an appeal with DRAT.

Many bankers have told Business Line that it is easier to
recover small-ticket bad loans, of around Rs 1 crore,
because they are typically backed by securities and borrowers
come forward to negotiate.

On the other hand, the large borrowers are seen to have
sufficient ‘muscle’ and succeed in stalling the recovery process.
In addition to DRTs and the SARFAESI, the 11 registered
asset reconstruction companies that buy off the bad loans from
banks and make the recovery by themselves, seem to have
found favour with banks.


The total amount of financial assets acquired by
these 11 entities rose 25 per cent in the year July 2008-June 2009.
At the end of the period, the total assets with them stood at Rs 51,542 crore.

Source:The Busines line

Vishal Retail has received in-principle approval for corporate debt restructuring.

  
 Nov 23, 2009
According to reports, the corporate debt restructuring cell of
Reserve Bank of India (RBI) has approved Vishal Retail's
proposal for debt recast. The terms of the debt restructuring will
reportedly be finalised over the next 60 days.

The Delhi-based retailer is saddled with a mounting debt
burden of Rs 730 crore. The State Bank of India is one
the main lenders to the retail chain with a loan of Rs 170 crore.
The company has 13 lenders in all including HSBC and 
HDFC Bank, ING Vysya Bank, UCO Bank and Bank of India.

One of the conditions for the corporate debt restructuring 
(CDR) proposal is that the company has to get in an investor
on board. RC Agarwal, the promoter, holds a 62.30% stake 
in the company (As on September 2009).

The objective of the CDR framework is to ensure a timely and
transparent mechanism for restructuring of the corporate debt
of companies affected by internal or external factors,
outside the purview of Board for Industrial & Financial 
Reconstruction, Debt Recovery Tribunal and other legal proceedings.

Vishal Retail has been going through a tough time over the
last 12-15 months, led by declining sales and slowdown in
demand along with the credit crunch. Recently, Employees
Provident Fund Organisation was reported to have 
claimed Rs 11 crore from the company for provident fund violations.

Meanwhile, the company announced after market hours on
Friday, 20 November 2009, that its board approved the merger
of Vishal Water World with the company.


Vishal Retail sells ready-made apparels (including its own brands)
and a wide range of household merchandise and other consumer
goods such as footwear, toys, watches, toiletries, grocery items,
sports items, crockery, gift and novelties.

Promoters have pledged 20.03 lakh shares
representing 8.95% of the equity capital of the company.
Total promoters shareholding in the company is 62.30% as on September 2009.