Paytm Mall hit with Rs 5-10 crore cashback fraud
Paytm Mall on Tuesday said it has been hit by a cashback fraud which could be in the range of Rs 5-10 crore.
 
The fraud was detected through a tool that the company developed in partnership with global professional services firm EY (formerly Ernst and Young), said a Paytm Mall spokesperson.
 
He said Paytm went for a deeper audit after it found that some small sellers were getting large percentage of the cashbacks offered at Paytm Mall.
 
The audit reportedly revealed that a number of employees were colluding with junior employees to earn the cashbacks.
 
"The fraud is in the range of Rs 5-10 crore," the spokesperson told IANS.
 
A brainchild of Paytm Founder and CEO Vijay Shekhar Sharma, the ecommerce platfom's losses have mounted and in the financial year 2018, the company posted a loss of nearly Rs 1,800 crore on revenue of Rs 774 crore.
 
According to Forrester Research, the market share of Paytm Mall almost halved in 2018 -- to 3 per cent from 5.6 per cent in 2017.
 
"Our partnership with E&Y will help benchmark with global best practices as we build a technology driven fraud prevention system to scale our operations," Srinivas Mothey, Senior Vice President - Paytm Mall, said in a statement on Monday. 
 
"Our teams continue to work closely with E&Y to share our learnings and insights. We are committed to building a trusted commerce platform and will take strict action wherever needed," Mothey added. 
 
Over the past few years, Paytm has been bleeding massively in online retail business and there is no respite in sight.
 
Apart from admin, finance and other support functions, the company also has a business operations team which works closely with partnered merchants to plan and execute cashback offers and promotions leaving a scope for collusion. 
 
"The EY partnership will also undertake audit and fraud prevention using both human and Artificial Intelligence (AI)," said Paytm Mall.
 
Paytm Mall is far behind the top two e-commerce players in terms of market share. They have a single-digit share against the top leaders which are commanding over 30 per cent market share.
 
Paytm Mall has so far managed to raise over $650 million from Alibaba, SoftBank and SAIF Partners.
 
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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Chanda Kochhar Money Trail-IV: Ubiquitous Mhatre locked in Kochhar family enterprise
As one goes deeper and deeper into the concentric circle of rot left behind by the Kochhars, the revelations are confounding. La Familia was never of this magnitude and its bedrock couldn't have been open and naked cronyism to this degree. Paper trails always have a missing link. The missing link leads you to the destination, in this case helps connecting the dots.
 
In Brothers Kochhars case, the missing link is Sharad Mhatre. In hot pursuit of the paper trail of family enterprise, IANS has now found that two investment companies, Elegant Investrade Pvt Ltd and Daisy Finvest, were used by the Kochhars to further their business interests. Elegant was incorporated on January 29, 1997 by Ms Savita Naik and Mr Sidharth Jadhav for Rs 20. 
 
Sometime in 1997, it was acquired by Anand Mohan Dalwani, a resident of 6 B Prem Kutir, 177, Backbay Reclamation, Marine Drive, Mumbai-20. The same year, Banque Indo Suez (later known as Calyon Bank), one of the key lenders to Credential Finance Ltd (CFL), filed company petition No 265 of 1997 before the Bombay High Court for winding up of CFL for their failure to repay the loan and the appointment of a liquidator.
 
To cut to the chase, during the pendency of this case, on December 31, 1997, Elegant entered into a deed of assignment with HDFC Bank through which it acquired the rights on the assets pledged by paying Rs 2.75 crore. It remains a mystery as to how a company incorporated with just Rs 20 managed to execute this deed by forking out Rs 2.75 crore. No details are available with RoC (Registrar of Companies) on this turn of good fortune.
 
The provisional liquidator who was appointed by the court on March 7, 2003 and on March 18, 2008 as official liquidator also took over CFL's office at Maker Chambers V. Elegant steps in again at this point and files a company application No 837 of 2008 in company petition No 265 of 1997 seeking direction to the official liquidator to remove the seal of closure of the said office premises. CFL agreed to pay Rs 40 lakh in three instalments to the Banque and paid another Rs 15 lakh on March 2, 2009.
 
On July 24, 2009, the court ordered the official liquidator to release the same office, observing that Elegant was the bona fide purchaser. Elegant is another front of the Kochhars - the shares have changed hands and are now owned by Quality Advisors (Trust).
 
Anand Dalwani with 9999 equity shares of Rs 10 each and Sharad Mhatre with 1 share were replaced by Quality Advisors on October 4, 2016 in the first tranche taking over Dalwani's 9999 shares and on March 31, 2017, the balance 1 share was taken from Mhatre. 
 
Over time, the paid up capital of this company has remained at Rs 1 lakh, but between FY 2003 to FY 2011, the company has shown share application money of Rs 2.60 crore and loans as nil. When new rules kicked in 2011, from FY 2012 onwards Elegant started showing unsecured loans amounting to Rs 8.91 crore in FY12 and Rs 5.65 crore in 2017.
 
As it happens this Sharad Mhatre is on the board of directors of Kochhar companies - Supreme Energy, NuPower Wind Farms, Credential Securities, Credential Capital Services, Daisy Finvest et al. In Daisy Finvest, Sharad Mhatre has been on the board since August 21, 2006. Daisy was typically created on December 20, 1996 by Santosh Jabare and Chandra Prakash Soni with a paid up capital of Rs 20. 
 
In 2004, a Jaipal S Bhatia purchased the company and the authorised capital and paid up capital was ramped up to Rs 1 lakh. In 2006, Daisy found new buyers in Pacific Capital Services Pvt Ltd, 91 per cent owned by Neelam Mahesh Advani, wife of Mahesh Advani, brother of Chanda Kochhar.
 
Between FY March 2004 till March 2010, the company has shown Rs 4.99 crore funds - Rs 1 lakh paid up equity, Rs 4.25 crore share application money and Rs 73.43 lakh unsecured loans. From 2011 onwards the mystery sets in as the share application money evaporates and instead unsecured loans crop up. This ranged between Rs 6.36 crore and Rs 10.62 crore. 
 
Then comes the clincher, in a board meeting on August 31, 2017, a proposal to amalgamate the company with Credential Securities was approved. The road ends with the Kochhars.
 
Credential Securities was incorporated on April 15, 1994 by Deepak and Rajiv Kochhar at an investment of Rs 200. In January 2015 the authorised capital was raised from Rs 25 lakh to about Rs 1.01 crore. On January 12, 2015, the company issued 10 lakh equity shares of Rs 10 each to Dubai-based NRI Jaiprakash Karna. 
 
Subsequently, these shares were transferred to his wife Varuna Karna, Chanda Kochhar's sister. As on March 31, 2017, the accumulated losses of the company were Rs 57.99 lakh, up from Rs 57.37 lakh on March 31, 2015 when Karna made the investment. Incidentally, Jaiprakash Karna also set up two companies, Emsol Innovation and Emjay Enterprises, both based in Chennai.
 
It doesn't end there, this wheel comes full circle with an examination of the Kochhar family's business interests, where the final pitstop uncovers a man called Sharad Shankar Mhatre and his strong linkages with the family and multiple directorships in their companies. One such company is Opel Properties where Mhatre has been a director since June 21, 2006. 
 
Neither Rajiv or Deepak Kochhar are directors in Opel though. Started in July 2003 by Jaipal Ajit Singh Bhatia and Amit Chimanlal Shah with Rs 1 lakh as paid up capital and Rs 2 lakh as authorised capital, the company changed ownership in 2006 with ubiquitous Pacific Capital Services taking over.
 
It is here that the company ownership takes a curious turn since PCSPL is 91 per cent owned by Neelam Mahesh Advani, Chanda Kochhar's sister in law. During 2005 and 2006, Opel's capital jumped to Rs 6.31 crore on March 31, 2006 from just a meagre Rs 1 lakh on March 31, 2005. This remained steadfast for the next seven years. 
 
In FY 2014-15, Opel obtained unsecured loans of Rs 11.29 crore. To trace the origins of the Mhatre-Kochhar connection, one needs to go back to Elegant Investrade Pvt Ltd where Sharad Mhatre is a director. In his application to the company, he has described his profession as service.
 
Elegant Investrade is believed to be a front for the Kochhars. The ownership has changed hands and gone to a trust called Quality Advisors Trust. It is alleged that the assets of NuPower, Kochhar's renewable empire, are held by Pinnacle Energy, a trust whose beneficiaries are Kochhars. This is the modus operandi used by them for wealth succession and retaining a veil of secrecy over their assets.
 
On doing a deeper dive, it is revealed that Mhatre, Director Identification No 00921939,resident of G 1 L Narayan Niwas P.SHB.Palkar Marg, Parel, Mumbai 12, is also a director in NuPower Wind Farms Ltd, Credential Securities Pvt Ltd, Credential Capital Services Pvt Ltd, Daisy Finvest, Pacific Capital Services Pvt Ltd, all seemingly with a Kochhar connect; he is also a director in Nemani Capitals Pvt Ltd, Opel Properties Pvt Ltd with a Chanda Kochhar family connect, Mandeep Software Services Pvt Ltd and Supreme Energy Pvt Ltd.
 
In Nemani Capitals, Mhatre is a director since August 29, 2008 while in Mandeep Software Services, he has been a director since August 26, 2008 along with Neelam Mahesh Advani, Chanda Kochhar's brother Mahesh's wife. Mhatre is also a director in Ruplila Steels; Citius Power and Citius Energy, which have both been struck off in the post DeMo drive against errant shell companies.
 
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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COMMENTS

Ajay Sharma

1 week ago

While this series is very insightful, I hope that Moneylife will provide a big picture view of these complex transactions. Where was the financial wrong doing? What was the point of all of this? How does all of this tie in to ICICI Bank?

Chanda Kochhar Money Trail-III: When obfuscation becomes the signature move
What happens when you bring the fox to guard the henhouse? By structuring a convoluted and intricate matrix of entities - three of them actually - to obfuscate and throw the scent off for future investigators, the Kochhar brothers forgot one simple thing: that paper trails cannot be hidden anymore due to the data mining and compliance work done by ministry of corporate affairs (MCA). Fraud and shellcos or suitcase companies always leave a trail of paper. And so it was with the Kochhars.
 
The trace-back begins with Modern Fashions, which was one of the principal sha­reholders in the two Kochhar Brothers Credential twins, along with ABS Components Pvt Ltd and KG Computers Pvt Ltd which were the other two. ABS, like Modern a shellco, the last return for which was filed in 2005. Like Modern Fashions, it became a victim of DeMo and was struck off post the cash cull exercise by Registrar of Companies (RoC).
 
Credential Finance Ltd's or CFL 1, as IANS has been reporting as part of an investigative series on the Kochhar family, balance sheet on September 30, 2000 shows it made an investment of Rs 1.25 crore in preference shares and Rs 98.13 lakh in equity shares of CFL, which amounts to Rs 2.23 crore invested in CFL. ABS was incorporated by Rajiv Gupta and Rajiv Garg in Delhi on May 19, 1998 with Rs 1,000 as capital. Its registered office was shown like Modern Fashions as B 33, SFS Houses, Sheikh Sarai 1, New Delhi-17.
 
Sometime in 1994, the ownership changed hands to Kochhars. This incidentally is the same year that Chanda Kochhar was elevated to AGM of ICICI Ltd. Majority shareholding of ABS was held by Rajiv Kochhar, 275,100 equity shares of Rs 10 each while balance 275,100 shares are shown as held by Kochhars family/relative. 
 
The jiggery-pokery begins here. Form 20 B filed on April 13, 2006 with RoC for 2004-05 shows that authorised capital is Rs 75 lakh and paid up capital is Rs 55.01 lakh. In April 2006, the only time this company filed its return (online) for two successive years 2003-04 and 2004-05, it declared that its paid up capital was Rs 91.61 lakh which was more than its authorised capital of Rs 75 lakh. Post DeMo, it was struck off at serial number 366, out of a total of 24,945 companies that were knocked out by RoC Delhi on September 1, 2017.
 
Now, we come to the registered office address which again shows discrepancy and divergence. Physical scanned copy of Form 18 shows that with effect from March 20, 2006, ABS R.O. address was changed from 24, School Lane, Opposite Holiday Inn, Barakhamba Road, New Delhi-1, to UB 5 Arunachal Bhawan, Barakhamba Road, New Delhi-1 like Modern Fashions. 
 
IANS visited the address (see pic) and found that this address actually doesn't exist, UB 4 and 7 exist, but UB 5 doesn't, so it clearly means that this address is fictitious, making it a complete suitcase or shellco. Here again, Form 18 filled online gives Sheikh Sarai as the address.
 
KG Computers Pvt Ltd
This company, another shareholder/investor in CFL, was struck off post-DeMo. CFL balancesheet shows that KG Computers made an investment of Rs 8.75 lakh in preference shares and Rs 45.60 lakh in equity shares, making the total investment of Rs 54.35 lakh.
 
KG was incorporated by Rajinder Kumar Garg and Amit Gupta in Delhi on May 19, 1988 with Rs 1,000 capital. Its registered office is shown as Sheikh Sarai, the same as Modern and ABS. The company changes hands in 1994 with the Kochhars stepping in. 
 
Credential Holdings Pvt Ltd, a company incorporated by Rajiv and Deepak Kochhar on September 8, 1994 for Rs 200, owns the majority shareholding in KG Computers.
 
If you think following this Byzantine paper trail is mind-boggling, actually the tent poles and DNA of each are very much similar. Modern, ABS and KG are all shellcos, created for the purpose of obfuscation. KG was struck off at serial number 10,450 out of a total of 24,945 companies that were pole axed by RoC, Delhi on September 1, 2017. KG Computers like its two companions also shows UB 5 Arunachal Bhawan Barakhamba Road, New Delhi-1 as its address. Something that doesn't exist and photographs don't lie.
 
Credential Holdings 
 
Over and above CFL 1 and CFL 2, there is Credential Holdings Pvt Ltd (U67120MH1994PTC080991) with an authorised capital of Rs 5 lakh and a paid up capital of about Rs 1 lakh. The annual return of CFL shows that CHPL had invested Rs 1.25 crore in preference shares and Rs 84.97 lakh in equity shares. Which totals about Rs 2.30 crore from Credential Holdings (CHPL) into CFL. CHPL was incorporated on September 8, 1994 by Deepak and Rajiv Kochhar again with an investment of Rs 200. 
 
Both have shown identical addresses and describe themselves as business executive. In the master data base of MCA, this company remains - active - with its registered office shown as G/8 Maker Chambers V, Mumbai-21.
 
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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COMMENTS

Deepak Narain

1 week ago

All fraudulent. These people deserve to be punished. They should be arrested without bail.

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