Finally, Helios Matheson, Exposed Several Times by Moneylife, Gets Delisted
Helios and Matheson Information Technology, exposed several times by Moneylife for its dubious operations and failure to pay term deposit holders is at last being delisted from the Indian stock exchanges. Shockingly, while its public presence in India is all but dead with the delisting, its offshoot is alive and kicking in US stock exchange, Nasdaq. 
 
H&M is one of the seven companies to be will be delisted by the National Stock Exchange (NSE) because they are under liquidation. The others are Brandhouse Retail of the S Kumar group, Elder Pharmaceuticals, First Leasing Company India, a one time pioneer of Indian leasing, Glodyne Technoserve, Tulip Telecom and Varun Industries. 
 
The NSE is also delisting 11 companies because they have been delisted by BSE on 11th May as part of a group of 200 companies whose shares have remained suspended for six months. These are Agro Dutch Industries Limited, Broadcast Initiatives Limited, Crest Animation Studios Limited, KDL Biotech Limited, Kemrock Industries and Exports Limited, Kingfisher Airlines Limited, Lumax Automotive Systems Limited, Nissan Copper Limited, Plethico Pharmaceuticals Limited, Shri Aster Silicates Limited, Surya Pharmaceuticals Limited.
 
It is interesting that H&M has attracted the attention of stock exchanges only now despite tens of thousand complaints piling up in every possible forum from shareholders, employees who have not been paid and most tragically, from senior citizens who were systematically lured to invest in its fixed deposits by agents based on its published financials and the high credit rating it enjoyed until the end of 2014.
 
In fact, H&M posted exceptional numbers, year after year, right until December 2014 quarter, even after it has stopped repaying depositors since June 2014. In a survey conducted by Moneylife Foundation, H&M topped the list of companies with the highest number of complaints by fixed deposit holders against it. Depositors, lured with high interest rates, said that cheques issued to them had bounced because of 'insufficient funds'. This clearly indicated that the financial results of the company were being manipulated. But the exchanges remained largely unconcerned. (Read Moneylife 2015 )
 
Shockingly, H&M shares continued to hold firm (after a minor decline of 12% on 22nd January 2015), even when employees were tweeting about not being paid their salaries and unpaid creditors and depositors were filing a winding up petition. It seems clear that the stock was being continuously manipulated, despite issues with H&M being reported and brought to the attention of the regulator multiple times since 2006 when it made a controversial acquisition of vMoksha. Since then, it has also been punished by the regulator in 2011, but apparently not seriously enough to bother the company. Even the fact that its former chairman was arrested by the Economic Offences Wing of Chennai made no difference and the company got off the hook very quickly. 
 
H&M had collected Rs.55.25 crore from 6,540 depositors from across the country. Out of this, 1046 depositors filed complaints against the company before the Economic Offences Wing (EOW) for default on deposits worth Rs.46.04 crore and interest of Rs.72.81 lakh. There are several cases filed across India by depositors against H&M.
 
In a particular judgement on invesor complaint, the Madras High Court said, "Promises are like crying babies in a theatre, they should be carried out at once." The court was also of the opinion that a vast amount may have been stashed away. Further, despite several proceedings against H&M in various courts, the company sold its two properties, but failed to deposit entire proceedings in the Court. As per the status report submitted by EOW before the HC, the company sold two properties for Rs.11 crore and Rs.15 crore, but deposited only Rs.1 crore and Rs.5 crore, respectively in the Court. The court declared that H&M was commercially insolvent and was unable to clear its dues. In the the opinion of the Court, H&M had siphoned off funds, was unreliable and it cannot be believed any further.
 
After Moneylife Foundation took up the issue of unpaid depositors with the Ministry of Company Affairs, it was told in April 2016, in response to an RTI application that the Serious Frauds Investigation Office (SFIO) . Nothing came of that either. 
 
On 21st January 2016, an official liquidator was appointed to take over the affairs and to prevent the company from further siphoning of funds collected from investors. Here are the previous articles written by Sucheta Dalal although neither the market regulator, nor the exchanges paid any attention to the H&M scam for a very long time.
 
 
 
 
 
As per the regulations, the delisted company, its whole-time directors, promoters and group firm would be debarred from accessing the securities market for 10 years from the date of compulsory delisting. Based on per the fair value determined by the independent valuer appointed by BSE, the shares for the public shareholders will be purchased by the promoters of these companies. Further, as advised by SEBI, these companies will be moved to the dissemination board of the exchange for five years.
 
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    COMMENTS

    lalit

    11 months ago

    moneylife had taken up the matter 2 years ago with FM Mr arun Jaitley,anyoutcome of the same.

    jaideep shirali

    1 year ago

    Delisting is not the solution, that is in fact the easiest way out for both the companies and SEBI itself. If SEBI has armed itself with so many powers, it should set out legislation that triggers warnings prior to delisting, not wait for things to go bad. If liquidation is the solution, that should be done immediately and the promoters should neither be allowed to approach the stock exchanges or even banks for finance. Otherwise, these promoters will soon float a new company, list it and start the loot all over again.

    MOHAN

    2 years ago

    what about Hybrid financial services (formerly known as Mafatlal financial services ) Daewoo motors,Iota chemiculture,Athena financiaal services .what sebi or company law board is doing about these companies?

    lalit

    2 years ago

    Now no hope of getting fd amount

    ROC goes fishing for companies with more than 2 subsidiaries
    The country had witnessed a barrage of show cause notices sent to companies last year seeking evidence on their CSR expenditure, reporting, disclosure etc., though the Ministry’s stand on such notices and replies thereof is not yet known. After CSR, the Ministry of Corporate Affairs (MCA) now seems to have shifted its surveillance to the layers of Indian companies and has recently started issuing show cause notices to the companies. As claimed in such a notice, the basis of the same is the annual returns filed by the companies. What matters most at this time is that, when most of the companies in the country are busy with convening the ensuing AGMs, the preparation/ documentation of bulky reports, aligning themselves with the recent amendments made in the corporate laws, such as the Companies (Amendment) Act, 2017 or the Listing Regulations, the show cause notice is posing as an additional burden. 
     
    A quick recap of the relevant provisions
    MCA vide its notification dated 20th September, 2017 introduced the Companies (Restriction on Number of Layers), Rules 2017 under the proviso to section 2(87) of the Companies Act, 2013. The Rule was brought into effect for the purpose of restricting the maximum number of layers a company can hold based on the prescriptive power provided under the said proviso. 
     
    In terms of the said Rules, companies are restricted from having more than two layers of subsidiaries except one layer of wholly owned subsidiary(ies) which has been excluded from such a limit. Further, companies have been allowed to acquire (which shall include a new incorporation too) a company incorporated outside India with subsidiaries beyond two layers as per the laws of such country. 
     
    What was the compliance requirement?
    The Rules required the companies having more than two layers of subsidiaries to comply with the following:
    • Filing of a return in Form CRL-1 with the concerned Registrar within one hundred and fifty days of the commencement of this Rule;
    • Not to have any additional layers over and above the existing ones; and
    • Not to increase the number of layers (in excess of 2) in case of subsequent reduction of layers by companies having more than two layers post enforcement of the Rules.
     
    The Rules further provide that a contravention shall attract punishment on the company and every officer of the company who is in default by way of fine, which may extend to ten thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.
     
    The show cause notice
    It has been noticed that the Registrars of Companies (ROC) have recently started sending notices to the companies, basis the data extracted from the annual return. However, what is now being witnessed from this act is something, which questions the sense of understanding of the provisions, as the very basis of considering/ alleging a company as defaulter can not only be the number of subsidiaries which it may have but the same should actually be the number of layers of such subsidiaries. It seems that the notice is only concerned about the former. Further, since the restriction on layers is for vertical propagations and not for horizontal propagations, a company may have as many number of subsidiaries horizontally. However, considering the show cause notices which are being sent based on the very fact of having two or more subsidiaries, the same shows lack of clarity of the provisions. 
     
    Conclusion
    As discussed above, as the very basis of the notice seems unclear, the companies may draft and send relevant replies stating their stand along with the group structure for better clarity.
     
    The author is Principal Manager, Vinod Kothari & Company
     
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    COMMENTS

    Ramesh Bajaj

    1 year ago

    The ROC can and should do much more. Very often ,shareholders in Small Privately limited companies get away with illegalities they do, because the shareholder cannot afford litigation

    Deposit Rs 1,000 cr by June 15, SC tells Jaiprakash Associates
    The Supreme Court on Wednesday directed Jaiprakash Associates Ltd (JAL) to deposit Rs 1,000 crore with its registry by June 15, to pay back to the home buyers who have opted for refund.
     
    A bench of Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud asked the real estate firm that on submitting Rs 1,000 crore, the liquidation proceedings against Jaypee Infratech Ltd (JIL), a subsidiary of holding company Jaiprakash Associates, would remain stayed.
     
    However, failure to deposit the amount would result in the start of insolvency proceedings against JIL, said the bench.
     
    JIL is facing insolvency proceedings.
     
    Earlier, the court had directed Jaiprakash Associates to deposit Rs 2,000 crore with its registry.
     
    JAL has deposited Rs 750 crore with the apex court registry so far.
     
    The counsel appearing for JAL asked the apex court that its resolution plan for revival of Jaypee, which the home buyers are opposed to, should be considered afresh by lending banks or the Committee of Creditors (CoC).
     
    He said JAL had proposed to offer 2,000 equity shares of JIL to each home buyer as part of its Rs 10,000 crore proposal to revive it.
     
    JAL had sought a direction for restraining the National Company Law Tribunal (NLCT) at Allahabad from proceeding further with the insolvency proceedings.
     
    Earlier, the bench had sought from JAL details of its housing projects in the country and said that the home buyers should either get their houses or their money back.
     
    The court was hearing the pleas of home buyers contending that people had booked flats and were now paying instalments.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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