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Troubled winemaker’s bank accounts seized by sales tax department for non-payment of dues to employees
India’s oldest winemaker Indage Vintners, we learn, has not been making payments to suppliers and service providers ever since the beginning of this year. In a business that is dependent on a big public profile, the inability to pay its dues was the first indicator of how cash starved it is. Soon afterwards, it stopped paying employees, forcing some of them to approach the police. It was the vision of Indage's founder Shamrao Chougule that brought quality wine and champagne to India and it is his dogged effort that led to the discovery that large parts of Maharashtra have the perfect climate and soil to produce quality wine grapes. However, when it comes to running its operations, the group has always had its sharp peaks and troughs.
Several years ago, the company was pulled out of a financial mess through a generous restructuring of loans. This allowed it to take full advantage of the boom in wine sales that coincided with five years of India's blazing economic growth until 2008.
However, a series of over-zealous international acquisitions that went sour, expensive new brand launches and the prolonged lull in the market following the economic slowdown of 2008 have put the company’s finances in a precarious position again. In May, Indage closed down several regional offices and stopped accepting supplies from its several small wineries. Soon its market position began to decline and its nearest competitors, Sula and Grover began to eat into its market share.
Earlier this week, Indage landed into even more trouble after the West Bengal sales tax department seized its bank accounts for non-payment of dues. Apparently, any balance funds remaining in the account as on September 2009 were remitted to the sales tax department.
Moneylife had been trying to contact the company management for the past few days, but no one was willing to respond to our queries about the state of its finances. Vickram Chougule directed us to speak to his brother Ranjit Chougule, who did not respond to our calls. Earlier, Indage’s senior management had sought to play down employees’ fears saying the financial situation was only a temporary aberration and that the company would soon come out of it.
–Sanket Dhanorkar [email protected]
Disgruntled employees allege IOL Netcom has been withholding salaries since January 2009, allegedly due to cash problems.
All is not well at IOL Netcom Ltd, an IPTV and Internet services company based in Mumbai. An ex-employee of the company complained that his salary has remained unpaid since June 2009. He reveals further that a lot more employees have not been paid their dues since January 2009. Several have left the company due to non-receipt of salaries.
A detailed search at consumer complaints forum website (www.consumercomplaints.in) threw up a whole list of similar complaints from disgruntled employees. They claim that the company has no funds to make the salary payments and that the figures mentioned in the company balance sheet are made up. The company balance sheet shows that the salaries are being paid. The company is also reporting profits for the June quarter, when employees are claiming that it is absolutely cash crunched. The company had reported losses for the past two years. In FY08 its net loss stood at Rs25.57 crore while in FY09 it suffered loss of Rs14.05 crore. The ex-employee also alleges that the company president, Siddhartha Srivastava, is turning a blind eye to the grievances of the employees.
When Moneylife contacted a senior official at IOL Netcom, he said the salaries had remained pending merely due to factors related to recession. He said, "There is nothing much to it. Given the recession, many companies were facing a tough time and we are also passing through that phase. On an overall basis, we are getting into a strategic investment mode where a few weeks from now a strategic investor is taking over. Nobody would have invested if they had no confidence in the company. Everything will work out pretty soon."
What is IOL Netcom and why are its problems newsworthy? It is the same controversial company that made news as owners of a 1% stake in Reliance Infocomm when it was part of Mukesh Ambani's empire. A certain Ashish Deora, a partner of the late Pramod Mahajan's relatives in the same company (then known as IOL Broadband), was under investigation in 2002 after being allotted one crore shares of Reliance Infocomm at a nominal one rupee per share. This was allegedly a quid pro quo for various permissions granted to the company to launch a Wireless in Local Loop (WLL) service, without paying the appropriate fees. However, the said shares were cancelled on the claim that he had not completed the work, but IOL walked away with the expensive fibre optic network that was laid in Mumbai and Delhi.
The company website is apparently in shambles and has been down for quite a while, showing signs of abandonment. The company's services too are fraught with issues. One particular complaint talks of low quality service with connectivity issues and server breakdowns. Notwithstanding the strategic investor claims, the company seems to be in a very bad shape.
- Sucheta Dalal with Sanket Dhanorkar [email protected]