Thursday, April 25, 2013

Promoter at large, no trace of depositors’ money on Saradha books

Group took deposits in cash, firms that issued certificates of deposits don’t acknowledge them as liabilities

Kolkata: Over the past few days, Midland Park in Salt Lake sector V, a six-storey building in the heart of Kolkata’s information technology hub, has been thronged by Saradha Group’s commission agents, depositors and employees.

When they turned up at the group’s corporate office on Thursday, hoping to recover their dues—matured deposits or unpaid salaries—from what used to be one of eastern India’s biggest public deposit-taking companies, they found it vandalized.

The building was ransacked on Wednesday night, according to the policemen now guarding the office. “There’s no one here,” one of them told an elderly lady, who broke down on hearing that the executives hadn’t been seen at Midland Park since the end of last week.

A few hours later, chief minister Mamata Banerjee said at the state secretariat, Writers’ Buildings, that the police were trying to get hold of Sudipta Sen, the group’s 54-year-old chairman and managing director, who, according to the administration, is absconding.
“He is believed to be hiding in the north (of India),” Banerjee said, while leaving the state secretariat.

Mint reported in its Wednesday’s edition that Banerjee had ordered Sen’s arrest.

Very little is known about Sen’s family, education or roots.

Not only a “smooth talker”, Sen, who is also the promoter of the closely held group, was “quite a rabble-rouser”, said a former employee of the group, recalling his January 2011 address to at least 12,000 agents at Kolkata’s Netaji Indoor Stadium.

He otherwise kept a low profile in office, and shared a desk with his executive assistant, this person added, asking not to be named.

Sen spoke Bengali with an Assamese accent, according to most accounts, although he mostly spoke English at work.

None of the directors of the Saradha Group could be contacted for comment.

Kunal Ghosh, a Trinamool Congress Rajya Sabha member, was the editor and chief execu tive officer (CEO) of the group’s media venture till about a month ago when he quit. He couldn’t be reached for comment.

Though key Trinamool Congress leaders on Wednesday assured the Saradha Group’s agents that the state government will do everything possible to help people realize their dues, it may not be possible to even determine how much money it ever raised from the public.

The reason: deposits were taken in cash, and the companies that issued certificates of deposits do not acknowledge them as liabilities in their books—a departure from the usual practice of treating public deposits as debt.

The only exception was perhaps Saradha Realty India Ltd, which two years ago, admitted in its books to have received public deposits of Rs.156.74 crore, according to the latest available filings with the Registrar of Companies (RoC).

In line with standard accounting practices, this amount was shown in the firm’s balance sheet for 2010-11 as advances from customers.

The group had at least 100 companies in its fold, show RoC filings. Among those that actively mobilized deposits, according to agents, were Saradha Garden Resort and Hotel Pvt. Ltd, Saradha Construction Co. Pvt. Ltd, Saradha Abasan Pvt. Ltd and Saradha Agro Development Ltd.

Saradha Garden Resort, said a corporate brochure of the group, ran at least three resorts in upper Assam and north Bengal, but its balance sheet for 2011-12 shows the company had no revenue from operations and total liabilities of Rs.8.14 crore, which included long-term loans of Rs.7.4 crore from within the group.

Similarly, Saradha Abasan had no revenue from operations in 2011-12 and current liabilities of Rs.500 on account of unpaid audit fees. This firm, according to the brochure, was developing affordable homes in rural areas in West Bengal and Nagaland.

These two firms had a small paid-up capital of around Rs.1 lakh each and almost no tangible assets.

Only Saradha Agro Development appears to have some operating business—in fiscal 2012, it recorded Rs.8.94 crore in revenue and made a net profit of Rs.17.87 lakh.

This firm, which claims to be selling packaged food products, had bank loans of Rs.11.77 lakh and loans from within the group of Rs.9.82 crore at the end of March 2012. Its total assets were valued at Rs.1.12 crore at cost.

In West Bengal and other north-eastern states, deposit-taking companies typically claim to invest in agriculture, real estate and hotel projects.

As the balance sheets of these companies do not reflect public deposits, it is a “distinct possibility” that the Saradha Group would disown them, calling the receipts issued to depositors as forgeries, according to a leading chartered accountant in Kolkata.

“I am not sure whether he (Sen) can get away with it legally, but clearly it is almost impossible to determine how much he has siphoned off,” he added, asking not to be named.

Several agents confirmed that deposits were only taken in cash.

Meanwhile, Siva Ventures Llc, a Washington-based private equity (PE) investment vehicle of Chennai-based serial investor C. Sivasankaran, is planning to take legal action against the Saradha Group to recover dues of Rs.13-14 crore from its sale of a clutch of television companies two years ago.

In 2010, Sen approached Rathikant Basu, who at that time ran the Tara channels as chairman and CEO of Broadcast Worldwide Ltd, to acquire his and Siva Ventures’ combined 75% stake in the firm.

Though shares were transferred and Sen took over the channels in March 2011, he did not fully pay for them, according to a person familiar with the deal, who did not want to be identified.

Sen defaulted on the staggered payment arrangement that was agreed upon, he said.

A spokesperson for Siva Ventures and Basu refused to comment on the deal.

The Saradha Group had mortgaged a property in West Bengal with Siva Ventures as security, said the person cited above, adding that the US-based PE firm was taking legal steps to liquidate it to recover the dues.
Courtesy:
Manish Basu |  Romita Datta
First Published: Thu, Apr 18 2013. 11 39 PM IST
Updated: Mon, Apr 22 2013. 04 27 PM IST
http://www.livemint.com/Companies/XCytQneVQGArEndRXYAzVN/Promoter-at-large-no-trace-of-depositors-money-on-Saradha.html

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