The CLB directed Zenith Birla India to repay its fixed deposit holders with interest in eight weeks. Yash Birla Group’s financial transactions are also being probed by various investigative agencies
The Company Law Board (CLB) has asked Zenith Birla (India) Ltd to pay the dues of 579 fixed deposit (FD) holders along with the interest before 21 April 2014. In case the company fails to make any payment, the CLB has advised depositors to approach the Registrar of Companies (RoC) to initiate prosecution against the company and its principal officer and managing director.
In an order issued on 14th February, the CLB said, “The amount due to the applicants/ fixed deposit holders, who are senior citizens or any of their family member is suffering from any acute illness, on production of such proof, shall be paid the principal amount plus agreed rate of interest before 20 March 2014. The other applicants / FD holders who do not fall in this category, shall be paid their respective amount i.e. principal amount and agreed rate of interest before 21 April 2014.”
According to an affidavit filed Vimal Dubey, company secretary, Zenith Birla, 55 applicants or FD holders, have been already paid their dues leaving 505 investor whose amount is to be repaid by the company. “Expressing the financial crunch faced by the company, he (Vimal Dubey) sought eight weeks more time to enable the respondent company to make repayments to 'the respective applicants /FD holders herein. However, the Company did not dispute the claims of 505 applicants/ FD holders as stated above,” the CLB stated in its order.
You can access Zenith Birla India Ltd CLB order of 14 February 2014 here.
As reported by Moneylife, the Yash Birla Group is facing a financial crisis and has defaulted on payment to its FD holders. Moneylife has received many complaints from agitated readers and senior citizens who have not been able to get their corporate FD maturity amounts from Yash Birla Group of companies. We wrote a detailed article on How to get your money back from Yash Birla group companies and suggested depositors to file online complaint with Ministry of Corporate Affairs and Company Law Board (CLB).
Speaking to Moneylife, Deviprakash Seksaria, a depositor, who attended the CLB hearing, said, “After waiting for over four months for my Rs1 lakh FD, the judge conveniently decided to grant four weeks more to pay senior citizens and eight weeks for ordinary mortals like me. The Judge said that if we do not receive payment by 28 April 2014, we should then approach the RoC. Where did this additional two weeks creep in? In what way, can I be prioritized lower for refund as long as it is only FD?”
He was not satisfied with CLB’s decision and further said, “Many depositors informed that though they were to get their money as per the last order, company has not paid them than what importance does the order hold?”
Earlier also, CLB passed an order against Zenith Birla on 8 November 2013 to pay its dues to its deposit holders through demand draft (DD) on or before 9 December 2013. But several depositors approached CLB and complained that company has not paid their dues yet. Again, CLB passed order on 23 January 2014 and directed depositors to approach the RoC on 3 February 2014. CLB asks RoC to file appropriate legal proceedings before competent authority for non-compliance of the order as provided in the Companies Act as early as possible in accordance with the law.
Zenith Birla India is not alone, earlier CLB passed an order against Yash Birla group’s other units, Birla Power Solution, Birla Shloka Edutech, Birla Cotsyn to repay its depositors under section 58A (9) of the Companies Act, 1956. Even after passing orders by CLB, several investors still have not received their money back from Yash Birla Group of companies. While several depositors who got their corporate fixed deposits’ principle amount, did not get their interest amount yet.
According to a report from Business Standard, the economic offences wing (EOW) of the Mumbai police has sent notices to the authorities concerned for freezing of the immovable assets of Birla Power Solutions worth Rs214 crore, in connection with a FD and inter-corporate deposits scam, the company had run. On Monday, Yash Birla appeared before the EOW in connection with the case.
“The company had made 11 transactions with the amount obtained through this scheme and diverted the money to other group companies. The police found Rs106 crore had been transferred to Birla Surya as equity; Rs16 crore to Birla Shloka Edutech, with which land was purchased in Oshiwara (a Mumbai suburb); Rs10 crore was transferred to Zenith Birla, used as margin money for letters of credit. Also, Rs29.26 crore was diverted to Birla Energy Infra, Birla Cotsyn and Birla Ahuja,” the newspaper report says quoting officials from the EOW.
Last week, income tax (I-T) officials questioned Yash Birla as part of the investigation into alleged tax evasion involving his companies, says a report from the Times of India. In January, the I-T department raided premises belonging to Birla and found several undeclared foreign accounts with a balance of crores of rupees, the report added.
Yash Birla is known for its lavish lifestyle and Page3 parties instead of his business moves, which shows the careless attitude of the group. People had invested in his companies on goodwill of ‘Birla Family’. Moneylife earlier reported, “Yash Birla Group companies in deep trouble?” We found that, Yash Birla Group companies have been struggling with many issues like liquidity crunch, non-payment of loans, negative cash flows etc. Its most of the companies are giving negative returns to the investors and its share prices are not even in double digits. The promoter’s stake in Birla Power Solutions is only 1.08% and in Zenith Birla India its 7.34%. It shows that the promoter himself lost faith in his company. During December 2013 quarter Zenith Birla India reported a net loss of Rs18.72 crore despite sales of Rs23 crore.
Moneylife earlier also wrote, Yash Birla mourning over a property, investors over their FDs in his companies when he lost his private retreat near Kedarnath.
For the uptrend to continue, Nifty should keep itself above 6,085
The Indian benchmarks spurted Tuesday morning, headed higher and maintained the rise till the close. This is in line with what we mentioned in Monday’s closing report. We had mentioned that the NSE Nifty has to stay above 6,050 for maintaining the upward trend. Today, the index could manage keeping itself above the level and closed in the positive for the third consecutive session.
The BSE 30-share Sensex opened at 20,458 and immediately hit a low of 20,436 while the Nifty opened at 6,071 and hit a low of 6,067. Near the end of the session, Sensex hit a high of 20,685 and closed at 20,634 (up 170 points or 0.83%) while Nifty hit a high of 6,142 and closed at 6,127 (up 54 points or 0.89%). This is the highest gain on the Nifty since 15 January 2014. The NSE recorded a volume of 44.88 crore shares.
Finance minister P Chidambaram today said that Reserve Bank of India (RBI) must be a balance between price stability and growth. RBI Governor Raghuram Rajan has maintained in recent public comments that keeping inflation under control is necessary to promote growth and rejected views of a trade-off between the two.
India’s fiscal position remains weak and a cut in spending to meet the budget gap estimate this year will probably hurt growth, Moody’s Investors Service said.
The Lok Sabha on Tuesday passed the controversial Telangana Bill amidst stiff protests from central ministers and Congress MPs from Seemandhra.
In his first public interaction with CII at its National Council Meeting in New Delhi on Monday, 17 February 2014, Arvind Kejriwal, leader of the Aam Aadmi Party and former chief minister of Delhi said that the key issue is of "governance". The need of the hour, he said, is "honest and efficient governance" which has been lacking all these years, and due to which even though India was led by the best economists in the recent past, the country's growth has faltered. Kejriwal also said that "we want to end inspector and license raj and corruption".
US stock markets remained closed on Monday for a holiday.
Except for Shanghai Composite (down 0.77%) and KLSE Composite (down 0.12%) all the other Asian indices closed in the green. Nikkei 225 was the top gainer which rose 3.13%.
China's central bank sold repurchase contracts for the first time since June, draining funds from the banking system and driving money-market rates higher.
The Bank of Japan is widely expected to keep its policy unchanged in its monetary policy today. Japan's central bank pledged to expand the monetary base by 60 trillion to 70 trillion yen ($686 billion) per year. It doubled a core part of a growth lending program to 7 trillion yen and increased the scale of a lending facility.
European indices were trading mostly in the red. US Futures were trading flat.
German investor confidence fell for a second month in February. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 55.7 from 61.7 in January, after reaching a seven-year high of 62 in December.
UK inflation cooled in January, slowing to below the Bank of England’s 2% target for the first time since November 2009. Consumer prices rose an annual 1.9 %, down from 2% in December, the Office for National Statistics said today in London.
Significantly, there was no live telecast by Lok Sabha TV for 90 minutes during a clause by clause consideration of the bill before its passage
The Lok Sabha on Tuesday passed the Telangana Bill that would divide Andhra Pradesh in two parts amid din and strong protests by members from the Seemandhra region, including Ministers.
The Andhra Pradesh Reorganisation Bill, 2014 was adopted by voice vote along with several official amendments, with the main Opposition Bharatiya Janata Party (BJP) coming on board.
Moving the Bill for consideration and passage, Home Minister Sushilkumar Shinde said the Centre will give a special financial package to Seemandhra, residual part of Andhra Pradesh, to address the grievances of the people of that region.
A number of amendments moved by AIMIM member Asaduddin Owaisi and Trinamool Congress member Sougata Roy were negated.
Significantly, there was no live telecast by Lok Sabha TV for 90 minutes during a clause by clause consideration of the bill before its passage.
Many members protested at the way the bill was passed in the din, saying it was against the democratic norms and a “black day” in the country’s democracy.
The Bill was passed after a very brief discussion in which only Leader of the Opposition Sushma Swaraj and Minister Jaipal Reddy, a pro-Telangana leader from Andhra Pradesh, spoke.