Pincon Spirits' Chairman Monoranjan Roy arrested in Rs56 crore scam; Company fails to update SEBI and Exchanges
The Special Operations Group (SOG) of Rajasthan Police had arrested Kolkata-based Monoranjan Roy and his three associates in Rs56-crore investment fraud. Roy is Chairman of Pincon Spirits Ltd, which is a listed entity and holds 33.84% stake in the liquor company. Roy and his associates collected money from investors and siphoned off it into Pincon Spirits, primary investigation shows. However, the company has not yet shared any information, as mandated, with the stock exchanges.
According to a report from Times of India
, Roy and his associates Raghu Shetty, Binay Singh and Hari Singh had raised about Rs56 crore from over 25,000 investors from Rajasthan alone. Apparently, they have also raised around Rs1,600 crore from over three lakh investors from Gujarat, Madhya Pradesh, Bihar, Haryana and Uttar Pradesh through multiple shell companies. Roy had set up multiple shell companies like LRN Finances, ASK Financial Services, Greenage Food Products Ltd, Bengal Pincon Housing Infra Ltd, LRN Universe Private Ltd and Universal Multi-state Credit Co-operative Society to cheat people, the report says.
Quoting Dinesh MN, Inspector General of SOG, the report says, these NBFCs were shell companies, which never fulfilled their objectives stated under the articles of association (AOA). "Roy had set up 11 branches in Rajasthan. The first branch was opened in 2010 in Ajmer. They raised money through 'private placement' in violation of RBI norms, which mandates that only 49 investors can invest in the company. Similarly, debentures were floated at 14% for four years by these shell companies to dupe investors," Dinesh told the newspaper.
The investors' money was siphoned off and moved into the accounts of Pincon Spirits Ltd, a public listed company. "The money of investors was siphoned to the Pincon. However, once the debentures matured, they told investors that their money has been 'reinvested' in another company. The investors were offered fake intensives to justify the 'reinvestment'. But the company in which the money was reinvested was liquidated by them," the report, quoting Sanjay Shrotriya, Superintendent of Police for SOG, says.
According to the investigations carried out by the SOG, Roy and his associates raised Rs56 crore from investors in Rajasthan and returned Rs7 crore in small accounts while siphoning off Rs39 crore. Separately, LRM Finances raised Rs31 crore from investors, out of which Rs7 crore were refunded to investors and rest was illegally routed to Pincon.
As per the annual report for FY2016-17, under long term borrowing there is an outstanding unsecured loan of Rs61.75 crore from the director of Pincon Spirits. Surprisingly, this has been increasing over the past three years but no disclosures have been made about the same under related party transactions.
On Monday, Pincon Spirits closed 10% down at Rs63.5 on BSE, while the Sensex ended the day flat.