Corporate FD Holders Facing Tough Times; appeal to govt.

Moneylife Digital Team 17 February 2016

Investor Interest

Moneylife Foundation has sent a memorandum to Arun Jaitley, highlighting how high profile companies like Helios Matheson and Jayprakash Associates have left their FD holders in a lurch

Tens of thousands of investors, including senior citizens, are stuck with fixed deposits in companies that are neither refunding their principal nor paying interest. Many of these investors have run from pillar to post, complaining to the company and agencies like the ministry of corporate affairs (MCA), company law board (CLB), economic offences wing (EOW) and the Securities & Exchange Board of India (SEBI). The complaints have fallen on deaf ears. One of the most egregious cases is that of Chennai-based Helios and Matheson Information Technologies Ltd (H&M). According to a status report submitted to the Madras High Court, H&M has collected Rs55.25 crore from 6,540 depositors from across the country. In January 2016, the Madras High Court ordered the liquidation of H&M and appointed an official liquidator. The hard-hitting court order noted that the company had siphoned off funds, ‘appears unreliable’ and ‘cannot be believed any further’. It has also directed an investigation by the serious frauds investigation office (SFIO). Moneylife has carried many reports related to H&M, highlighting, among other things, that, despite the company reporting good numbers, it has not been able to pay fixed deposit-holders. As per the reported numbers, the company has a track record of uninterrupted profits (60 straight quarters). At present, H&M continues to be traded on the stock exchanges without providing any comprehensive data, as required under the listing agreement of bourses, or facing any action from the regulators.

Many of the companies that have defaulted on corporate deposits claim to be diversified industrial conglomerates. Stories like that of H&M, along with stories of other corporate defaults, highlight a deep rot in our regulatory and enforcement structure. They show that companies can get away with fake disclosures even as the grievance redress system of companies defaulting on fixed deposits remains either slow or non-existent. There is no fear of punitive action by the government.

People who have invested in FDs, but have not yet got their money back, are facing major hardships. Many of them are senior citizens and need money for their sustenance and medical expenses. Many of them send repeated reminders to companies and complain to regulatory agencies, with little success. Some of them are homemakers who have no other source of income. This is in stark contrast to the promoters of these defaulting companies who continue to flaunt their wealth.

Many people choose corporate FDs, lured by a slightly higher interest rate than available on bank FDs. Chasing high returns of company FDs can expose you to the risk of losing your principal if you don’t check the credibility and rating of the company and the instrument. It is simply not worth investing in a company FD only because the return is high. In fact, it should sound a warning bell since it means that the company is unable to raise resources from anywhere at lower rates, because its finances are weak. Some companies, from reputed groups like Jaypee and Yash Birla group have also defaulted. Companies like realty major Unitech, which was once a reputed large-cap company, have also not been able to pay their depositors. Thus, putting blind faith in a corporate group that is considered to be reputed may not work.

At the request of many aggrieved seniors, Moneylife Foundation launched an online survey to collate information from investors with complaints about their FDs. Some 1,138 investors responded to our survey. They have filed a total of 1,596 complaints that have not got any redress. Unsurprisingly, 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.

The survey found that a majority of the aggrieved depositors choose to complain to the company itself, which is pointless. The CLB, MCA, EOW and SEBI are the regulatory agencies with whom they should seek to get their grievance redressed.

The survey found that a mere 2% of the complaints made to the companies were redressed. A whopping 83% were unresolved, while others did not complain. Repeated phone calls, e-mails and sometimes even personal visits and pleading to these companies have not yielded any results. Many companies and their officers do not revert to the depositors. Some of the companies give repeated extensions for the due date of principal and interest, but they are not repaid even after the extension date elapses.

The plight of many of these complainants is pitiable. A few of them are handicapped. Some of the senior citizens sent their medical bills to the company to make it aware of their state of affairs. Here is a sample of complaints from aggrieved depositors:

Prem Swaroop Bhatnagar from New Delhi raised a complaint with reference to deposits of H&M to EOW, Chennai, in December 2014. He raised complaints to MCA, ROC and CLB in April 2014. However, he has not received any response from them till date.
Parag Raje from Thane, who is handicapped, lame and bedridden, complained in May 2015 regarding non-payment of FD principal and interest relating to Elder Pharmaceuticals Ltd.
Arvind Singh Rana from Delhi has not received FD interest as well as principal from Unitech Ltd. He has made several phone calls to its office and sent several e-mails. However, none of them elicited a response. He is wondering why the company is not maintaining transparency with the investors.
Nutan Shrivastava, holds two FDs of Plethico Pharmaceuticals Ltd which are overdue. The company has made no attempt to reach out to the investors to inform them of the reasons for the delay, nor about when the payments will be made. She needs the money urgently, for a family exigency and needs to know when she will be paid her rightful dues.
Ahsa C Paradeshi has an FD with Zenith Birla (I) Ltd. She has made repeated complaints and sent several emails, undertaken endless correspondence and followed up with reminder letters and made telephone calls to the office of Zenith Birla (I) Ltd. However, no one has given any answer regarding the repayment of the FD.

See the Memorandum sent by Moneylife Foundation to Mr Arun Jaitley, the Minister of Finance and Corporate Affairs…

NOTE: We at Moneylife request all readers not to share their mobile numbers here. This is a public platform and your mobile number/s may be misused. Kindly do not post your mobile number/s.

Comments

User

Hiral Vyas

7 years ago

My email address is [email protected]. Kindly add me in your group.

Hiral Vyas

7 years ago

What to do? Won't it return back. There is 12 to 15 lacs investment in Helious and mathson of my family. Anybody have any updates regarding this. Please share.

allan fernandes

7 years ago

Any latest updates on Helios and Matheson deposit repayment. The company has defaulted to payment to many investors all over India. Please ads me to your group, my email add.: [email protected]

allan fernandes

7 years ago

Pls add me to group. I am investor of Helios, Neesa, Ankur Drugs, Jyothi Structures and not one of them have paid back the principal amount on maturity dates.

Xavier Fernandes

7 years ago

My mother and myself also have Unitech and Helios FD's. Please can you update us on any developments. Thanks

Nikunj

7 years ago

Hi,

I have Helios n Matheson FD which was mature on 2015

Amount: Rs. 40,000/-(Principal Amount)

Any ways to get money back

Please mail me or call me for the update

[email protected]
Cell: 09833379498

Piyush Singhania

7 years ago

Please add me 8961376361 as I also fd in the default companies

Sriram Ranganathan

7 years ago

Does anyone have an update on the Elder Pharma liquidation process? Will the FD holders get any dividend out of the liquidation process? After all the company had a lot of assets that could be sold. Also, has SFIO concluded the case against Elder Pharma's Directors?

Harish T

7 years ago

Dear All, Is there any update on the Helios Matheson FD. Please add me to the whatsapp group or email id group for any update. 9789011822/[email protected]

Thanks
Harish

Juliet Pais

8 years ago

When is Unitech going to repay deposits. What stand has the government/Ministry of Finance taken. I am a senior citizen and need money
Urgently to pay medical bills

SHAH SHREYANSH

8 years ago

I have also invested in Helios and Matheson company around 1.25 lac. Facing similar problem. Hard earned money lost. We are hopeless. No body to help. Filled complaint in chennai clb, ministry of corporate affairs, pmo India. Each working as post office, justice system is faulty so they are taking advantage.

Sandip Patil

8 years ago

Have you got any response from Shri Arun Jaitley, MoF for your memorandum dated 10/02/2016? I had also sent a message through Twitter for non refund of FD maturity amount and interest by Unitech but there is not even acknowledgment. I believe Govt is deaf in this matter. Is PM aware of the difficulties faces by common men? Pl make some MPs from the opposition to raise this issue in the Parliament. Media is also silenced by these defaulters.

Jayashree swaminathan

8 years ago

ALL FDs of Jayprakash Associates have been returned to the FD holders with interest. this is for information. if any one has not received pls call up Jaiprakash associates.

Ravi Krish

Replied to Jayashree swaminathan comment 7 years ago

I have received my matured FD along with interest thereon from Jaypee Limited. Thanks Moneylife for their efforts. Am sure without Moneylife push to the Minister as well as to various govt agencies, such as, MCA, CLB, etc., we would have received our hard-earned money back.

Sucheta Dalal

Replied to Ravi Krish comment 7 years ago

Thank you Mr Krish for informing us about it. We did indeed put a lot of effort . Our trustee Mr T S Krishnamurthy also spoke to the comapny secretary who assured him of payments after which we sent a list of all those who had written to us. best

Hemant Gupta

Replied to Jayashree swaminathan comment 8 years ago

I HAVE GET PRINCIPAL AMOUNT BUT NOT GET DIFFRENCE INTREST AMOUNT

Jayashree swaminathan

Replied to Hemant Gupta comment 8 years ago

your FD would have been non-cumulative interest..... so you would not have received it... call up the company and ask

Hemant Gupta

8 years ago

sanket joshi

8 years ago

can you please add my number to the whatsup group. My number is 9820684254.
I have deposited is most of company fd stated above and not received any money back even after 3 years of maturity.

Zinobia

Replied to sanket joshi comment 8 years ago

Sure Adding

Punit Kothari

Replied to Zinobia comment 5 years ago

Kindly add me for Unitech fd. No- 8766030958

Srikanth Matrubai

Replied to Zinobia comment 8 years ago

Please add my number too 9972520155.
My aunt and uncle's 8 lakhs is stuck in various FDs including this..
Please

Aravind Guruvayur Krishnan

Replied to Zinobia comment 8 years ago

Dear Sir, I am also affected by non receipt of FD proceeds from Unitech, kindly add my number 9962986220 & 9962199954

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