Elder Pharma, embroiled in bribery case, is among the biggest defaulters and the Ministry is doing nothing
Elder Pharmaceuticals Ltd, infamous for its continuous defaults and fraudulent ways to manage the authorities, is again in the news. While the pharma company makes its corporate fixed deposits (FDs) holders run from pillar to post, the Central Bureau of Investigation (CBI) has alleged in a first information report (FIR) that Elder Pharma bribed BK Bansal, the Director General in the Ministry of Corporate Affairs (MCA) to prevent a Serious Fraud Investigation on Elder. CBI has arrested Bansal and a fixer. While Bansal was in custody, his wife and daughter have committed suicide.
The case of Elder Pharma also highlights lethargic attitude and approach from the Ministry officials, especially how they ignore plight of thousands of FD holders and earn quick benefits while shielding the company. Earlier, when Moneylife Foundation sent a memorandum, the plight of over 1,138 aggrieved investors in corporate FD holders to the Ministry, it merely acted like a post office and forwarded the memorandum to SFIO and its regional offices for further probe. (Read: Moneylife Impact: Ministry asks SFIO to look into Helios & Matheson; ROC in 3 other cases
Moneylife Foundation's compilation showed that H&M accounts for the largest number of complaints. Besides H&M, companies, which have a large number of complaints, are: Elder Pharmaceuticals, Jaypee Group, Unitech, Plethico Pharmaceuticals and Bilcare Ltd. The other companies were: Neesa Leisure, Phadnis Infrastructure, Micro Technologies, Jaypee Infratech, Yash Birla group of companies and Omnitech Infosolutions.
According to a report from Indian Express, the CBI is probing the role of Anuj Saxena, the chief operating officer (COO) of the company and television actor in connection with a Rs20-lakh bribery case involving Bansal. "In its FIR against Saxena, the CBI alleges that his company bribed Bansal so that he does not order an Serious Fraud Investigation Office (SFIO) inspection against Elder Pharmaceuticals on charges of illegal collection of Rs175 crore from 24,000 investors. Saxena is believed to be abroad," the report says
In April this year, the Company Law Board (CLB) dismissed an application filed by Elder Pharmaceuticals seeking extension of time for repaying the dues to its FD holders. During the same month, the Bombay High Court granted time till August to Elder Pharma to generate funds for clearing dues of investors.
"If they fail to meet this deadline, the court is likely to appoint liquidators; given that over two dozen winding-up petitions have been filed against the company. Among those who have filed winding-up petitions are Tata Capital Financial Services, which had bought debentures worth Rs15 crore, and a horde of vendors and suppliers, who are owed amounts ranging from a few lakhs to a few crores," says a report from Business Standard
The report from Business Standard raises the more serious question on the cash flow of Elder Pharma and the company's inability to clear its dues. The report says, "In 2014, the company sold two of its divisions comprising 30 brands to Torrent Pharma for Rs2,004 crore. Experts cannot understand why despite this huge cash flow and its substantial assets, the company has not been able to meet its small commitments. Some write-offs and other entries in the company's books have also been questioned by its auditors."
Quoting a qualified opinion of auditor SS Khandelwal & Co, the news report says, "Pursuant to the authorisation of resolution passed by the board of directors, the company has written off trade advances of Rs176 crore and other advances worth Rs855.32 crore made to various parties on current account either during the year or in earlier financial years. We have been informed that there were no stipulations for repayments thereof. Further, the auditor said the reasons for writing off the advances and the other details were not made available to it. The auditor also raised issues on the writing off of capital, trade and other advances of about Rs145 crore."
According to news reports today Bansal's wife Satyabala (57) and daughter Neha (27) allegedly committed suicide by hanging themselves at their Mayur Vihar residence in east Delhi on Tuesday. On 16 July 2016, Bansal was arrested by the CBI in an alleged bribery case. Bansal had demanded Rs50 lakh from Saxena's Elder Pharma. However, the amount was brought down to Rs20 lakh. He was caught red-handed while receiving the second instalment of bribe worth Rs9 lakh from a Delhi hotel along with middleman Vishwadeep Bansal. CBI during its searches at eight locations in connection with the case claimed to have recovered over Rs56 lakh from Bansal, while Rs16 lakh were recovered from the Delhi-based middleman, the report says.