Geodesic has defaulted in repaying its FCCB holders and loans to financial institutions. Sebi, which is trying to continuously make corporate governance norms tougher, is asleep as usual
Geodesic Ltd, the sham internet software and service provider has run up more than Rs1,200 crore of liabilities and defaulted on payment of its Foreign Currency Convertible Bonds (FCCB) and loans. During the June 2013, all the independent directors resigned from the post of directorship and till now the company has not appointed any independent directors on its board, offending the clause 49 of the Listing Agreement. Moreover, its accounting is a mess. Geodesic submitted its year ended June 2013 results, revised year ended June 2012 results with its September and December quarter standalone results to the exchanges altogether on 15 February 2014. This is a scam of large proportions with accounts fudging, siphoning of money and possible hawala transactions involved. And yet, no regulator - the stock exchanges, the ministry of corporate affairs and Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) is bothered.
Moneylife reader and investor, Krishna Raj has filed two complaints with Securities and Exchange Board of India (SEBI) about non-disclosure of its financial results and subsidiary accounts along with non-disclosure of material information on FCCB repayment. SEBI failed to give him satisfactory reply and said that, company is taking necessary steps regarding FCCB repayment issues and company in its annual report 2011-2012 has stated that Ministry of Corporate Affairs (MCA) has granted general exemption to attach various documents in respect of subsidiaries as per section 212(8) of The Companies Act, 1956. Hence the subsidiary companies account is not attached with balance sheet. Investor may ask the company for the full annual report.
Geodesic had raised funds through FCCB during the year 2008, which was due for repayment in January 2013. However the company has not been able to discharge this liability. The FCCB holders through their Trustees; Citibank London, filed a winding up petition against the company for defaulting on the dues. Recently during February 2014, the London Court has given a summary judgment and directed Geodesic to pay Citibank, a sum of US$157 million and US$14.88 million in respect of unpaid default interest upto 07 February 2014. It includes penalty of US$39,266 per day of default interest from 08 February 2014 to the date of payment. It also ordered that the company would also have to pay the cost £1,22,500 of the proceedings excluding Value Added tax (VAT).
The MCA website index of charges shows ICICI bank have Rs130 crore, while Axis Bank have Rs25 crore of charge amount secured against Geodesic. The company has defaulted in repayment of loans to banks to the tune of Rs80.05 crore during the year and some have filed winding up petitions against the company. Barclays and Standard Charted demanded financial charges of Rs35.28 crores towards interest and loss on hedging contracts on a conservative basis. However, company has made counterclaims against both the above banks for excess charges on hedging contracts of Rs93 crore. The company has also disputed amounts claimed by ICICI Bank and HDFC Bank against the hedging contracts.
Geodesic has delayed submitting its year ended June quarter as well as September and December quarter results with the exchanges. During December quarter, company in its regulatory filing said, “The delay in announcing the audited annual results was due to the company’s sales and purchase registers being taken in custody by regulatory authorities in India for inspection. However, these books have been returned to the company during September and October 2013.” Geodesic said it is expected to announce its results by 9 January 2014 which it announced a month later on 15 February 2014. It further mentions that, “The audit and recasting of accounts of the company and foreign subsidiary took a longer time than anticipated because of the cross border regulations and accounting guidelines.”
The Geodesic has done ‘sales returns’ in its accounts and make many other changes in its balance sheet and published revised year ending June 2012 results. The company said in its regulatory filing, “In April 2011, the company has developed a new version of one of their product using current technologies and coding languages with additional features to keep up with the latest changes in technology but the revised version developed certain problems with all the customers. Hence, the company restored the earlier version of the product temporarily so that the business loss to the customers was minimized. However, in spite of all its efforts the company was unable to offer a permanent solution to the problems faced by the customers. In July 2013, the company agreed to reverse all sales made to the customers of the said product from April 2011 to avoid further legal action from the customers. This has been booked as ‘sales returns’ in the respective years in which the sales had taken place. An appropriate part thereof was reversed in the revised accounts for the financial Year ended June 30, 2012 and the balance impact of the said sales returns on the financials for July 2012 to June 2013.”
Geodesic results announcement said that it is facing difficulty in arranging working capital finances, delay in receivables as well as higher debts. During its December 2013 quarter, its net loss increased to Rs37.58 crore from net loss of Rs18.96 crore while its sales stood at Rs8.13 crore compared with Rs100.42 crore a year ago period. In its year ended June 2013, it made net loss of Rs43.13 crore despite sales of Rs172.77 crore. Geodesic share was trading around Rs100 on BSE, during January 2011, which is now trading near Rs3. Its share prices plunged 77% in last one year from Rs12.85 to Rs3.05 as on 25 February 2014.
Mr Krishnaraj alleged, “Lack of enforcement of timely disclosures of material events cripples investor interest, not to mention losses. A foreign investor when asked to consider investing in India told me, what has your regulator done to stop another Satyam? SEBI just needs to look around the level of regulation that even much smaller exchanges like Stock Exchange of Thailand (SET) enforce, to know where we stand.” Moneylife has reported numerous cases of price rigging and accounting shenanigans but the SEBI sees no evil, hears no evil.
SEBI exempts the GoI from an open offer to acquire additional 7.94% stake in UCO Bank through conversion of Rs1,823 crore worth perpetual non-cumulative preference shares
Market regulator Securities and Exchange Board of India (SEBI) has exempted the union government from making an open offer in UCO Bank. The government is raising its stake to 77.2% after buying additional 7.97% stake in the Bank by conversion of perpetual non-cumulative preference shares (PNCPS) worth Rs1823 crore and additional capital infusion of Rs200 crore.
In an order, SEBI’s whole time member Prashant Saran said, "I am of the considered view that this is a fit case to grant exemption under regulation 11 of the Takeover Regulations to the GoI from the obligation to make an open offer under regulation 3(2) of the Takeover Regulations with respect to its proposed increase of shares/ voting rights from 69.26% to 77.20%.
The government proposed to acquire 26.21 crore shares in the state-run lender to increase its stake to 77.20% from 69.26%. The bank has fixed issue price of Rs77.19 per equity share of Rs10.
Earlier on 18 January 2014, UCO Bank had filed an application with the capital market regulator seeking the exemption on behalf of its promoter, the Government of India.
In an order SEBI also said that even after the proposed increase in the shareholding of the government in UCO Bank, the minimum public shareholding would be maintained and there would be no change in the management control in the bank following the proposed transaction.
As per SEBI norms, when any entities who hold 25% or more shareholding in a company are required to make an open offer to acquire additional 5% or more in the company. However, exemptions can be made in certain cases.
The exemption has been granted subject to conditions that the government or the bank would ensure compliance with the statements, disclosures and undertakings made with regard to the transactions, among others.
UCO Bank closed Wednesday marginally down at Rs63.7 on BSE, while the 30-share Sensex ended marginally up at 20,986.
Markets are closed on Thursday on occasion of Maha Shivratri.
SEBI said it found 34 investor grievances pending against Serene Industries in its online complaint redressal system, SCORES as 19 December 2013
Market regulator Securities and Exchange Board of India (SEBI) has slapped a fine of Rs5 lakh on Serene Industries for the company's alleged failure to resolve investor complaints within stipulated time and submit its action taken report (ATR).
SEBI said it found that there were 34 investor grievances pending against Serene Industries in its online complaint redressal system, SCORES as 19 December 2013.
The company was asked by the market regulator to resolve the complaints within a stipulated time and submit the ATR for the same which Serene Industries failed to do.
"...Noticee (Serene Industries) has neither redressed the investor grievances within stipulated time, in spite of being called upon by SEBI repeatedly in writing to do so nor it has submitted the ATR," SEBI said in its order.
Accordingly, SEBI has imposed a "consolidated penalty Rs5 lakh on Serene Industries...For the failure to redress the investor grievances within stipulated time and failure to submit the ATR."
In a separate order, SEBI has disposed of the case against Nath Seeds saying that allegation of non-redressal of investor grievances against the company 'could not be established'.