CLSA India Pack - Opto Circuits. Ranbaxy
Opto Circuits-Initiating Coverage: Opto Circuits is a medical electronics company with established strengths in sensors and patient monitoring devices. The Eurocor acquisition in Germany has given the company a foothold in cardiac stents with c.100% segmental growth expectations. The company has grown sales at a cagr of 38% in last 4 years with 50% ROAE and we estimate c.45% 3-year cagr in EPS. At 17.0xFY09CL, we find the valuations attractive and initiate coverage with a BUY rating and a price target of Rs555
Ranbaxy: Long term earnings visibility for Ranbaxy continues to improve with Valtrex settlement and USPTO refusal to grant a reissue patent for Lipitor to Pfizer. Ranbaxy has outperformed the market by 10% in the last one month and short term upsides from current levels will be limited given concerns on short term profitability because of rupee appreciation and potential pricing related negative newsflow in Romania. However, high reported EPS in CY09/10 (Rs30+/Rs80+) as well newsflow on R&D demerger and other Para IV opportunities (20 FTFs) will result in longer term outperformance
India Morning Headlines
q Reliance Industries is planning 3 more SEZs in Navi Mumbai. (FE)
q BPCL & Videocon Industries has acquired a stake in Brazilian oil exploration company EnCana Brasil for US$165m. (ET)
q DoT has issued a show cause notice to Bharti Airtel for offering services within 10km of the international border area. It has sought explanation from the company on why penalty should not be imposed and why license should not be terminated. (BS)
q UB has offered to buy 20% more stake in Deccan Aviation.(BS)
q Dr. Reddy's has got the final approval from USFDA for Zantac, a 150mg OTC tablet. (BS)
q SAIL has earmarked an investment Rs123bn for the merger of Nilachal Ispat Nigam. (BS)
q M&M has reportedly decided not to bid for Jaguar & Land Rover. (ET)
q The GSM subscriber base has touched 147.7m mark with an addition of 5.9m subscribers in Aug-07. (FE)
q Latest TAM survey has revealed that Zee's channel share stood at 28.5% compared with 30.7% for Star TV. between 26 Aug and 1 Sep 2007. (BS)
q Government is likely to provide soft loans from Sugar Dev. Fund to bail out the sugar industry. (ET)
q Infrastructure sector growth in July has dipped to 6.3% v/s 10.9% in corresponding period last year. (BS)
q Helios & Matheson is targeting a US$50-100m all cash buyout in Europe. The company is reportedly in talks with two companies in Brussels & Paris. (ET)
q Aban Offshore has reportedly said that it will purchase a semi-submersible rig from Bulford Dolphin for US$211m.(BS)
q Power Grid IPO was subscribed 64.2 times. (BS)
q PNB will partner with AIG for its credit card business. (BS)
q Philip Morris might buy out 36% stake from KK Modi group in Godfrey Philips India. (ET)
Regards,
N. Krishnan
+91-22-6650-5070
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The promoters of Helios & Matheson have a criminal record.
THIS IS A COURT ORDER WHERE HONORABLE MAGISTRATE CONFIRMS THAT HE FINDS SUFFICIENT GROUNDS FOR PROCEEDING AGAINST H&M & OTHERS FOR CHEATING, FABRICATING & FORGING OF DOCUMENTS ETC.
IN THE COURT OF THE ADDL.CHIEF METROPOLITAN MAGAISTRATE
47TH COURT, ESPLANADE,MUMBAI.
CASE NO.177/MIS/2006
..COMPLAINANT
VS
State Bank of Mauritius, Helios & Matheson & Ors.
V.Ramachandrian / G.K Muralikrishna..ACCUSED
ORDER BELOW THE COMPLAINT:
1 Heard the Advocate Sabnis for the complainant.
2 The record is seen. It appears that the complainant and the accused No.4 were the share holder of Vmoksha Technologies Ltd and the agreement was reached between this company and accused no.5 Helios and Matheson Information Technology Ltd. For selling of the shares. It appears that thereafter the account was opend in the bank by committing forgery and the application for loan was made in the name of the company of the complainant and the loan so obtained was transferred in the name of accused no.5. An attempt was made to show that the payment of the share was made thus by obtaining the loan in the name of the company of the complainant.
3 I find sufficient grounds for proceeding against all the accused persons for the offence U/sec. 120B, 420 read with 120B, 465 r.w. 120B, 467 r.w. 120B, 465 r.w.120B, 467 r.w.471 r.w.120B and 403 r.w.511 r.w.120B of Indian Penal Code on payment process fees.
4 Issue summons accordingly. Returnable on 20/4/2007. The list of witnesses is given.
(M.Y.Mankar)
Addl.Chief Metropolitan Magistrate,
47th Court, Esplanade, Mumbai
47th Court, Esplanade, Mumbai
Sabnis
Chambers of Shri Mahesh Jethmalani
THIS IS A COPY OF THE REPORT SENT BY THE RESERVE BANK OF INDIA - MUMBAI WHICH HAS BEEN FORWARDED TO THE ENFORCEMENT DIRECTORATE FOR VIOLATIONS UNDER FEMA ACT AS WELL AS FOR FORGERY / FABRICATION OF DOCUMENTS
FOREIGN EXCHANGE DEPARTMENT
(FID)
Complaint against State Bank of Mauritius, H&M
& others
A complaint was received by our Department of Banking Supervision
1. It was agreed between these two companies that H&M will acquire the 100%
Shares of VMoksha Technologies Pvt. Ltd. (India) held by VMoksha Technologies – Mauritius (VTM) for a consideration of US$15 mn. It was also agreed that the transaction will be completed within 120 days i.e, before 09.9.2005 and the consideration will be first transferred to VMoksha Technologies
2. H&M immediately issued a press release stating that their company had acquired VMoksha Technologies in a complete cash deal of US$ 19 mn which resulted in to increase in share price of H&M on the Stock Exchanges around Rs. 100 to Rs. 500 in a period of 3 to 4 months.
3. Subsequently instead of crediting the acquisition proceeds to the account of VMoksha Technologies maintained with HSBC Bank, the proceeds were credited to VMoksha Technologies account with State Bank of Mauritius at its Mauritius Branch. It was then observed that this account was purportedly opened in a fraudulent manner by Shri Pawan Kumar – the then CEO & Chairman of VMoksha Technologies with the help of two person’s i.e., Chairman & MD of Helios & Matheson.
4. Shri Pawan Kumar also applied for a loan of US$ 13.5 mn with State Bank of Mauritius – at Port louis branch at Mauritius. This amount of loan was immediately sanctioned by the bank against personal guarantees of two persons i.e, Chairman & M.D of H&M (A FEMA Violation).
5. However, the issue relating to State Bank of Mauritius – Port Louis branch sanctioning loan to VMoksha technologies Mauritius against a personal guarantee of two resident Indians i.e, Chairman & M.D of H&M, it was advised by Mumbai branch of State Bank of Mauritius that through inadvertence, RBI’s prior approval for such guarantee was not obtained.
Getting curiouser - Sucheta Dalal Business Journalist
Indian Express
19 Feb, 2006
Helios & Matheson’s (H&M) $19 million cash deal to acquire vMoksha, which had sent its share price soaring past Rs 225 last year, is getting curiouser. H&M omitted to tell stock exchanges that the deal has gone sour after Rajeev Sawhney, vMoksha’s founder, raised several serious issues and objections. Early this year, Pawan Kumar (former chief of DSQ Software) who was vMoksha’s other partner sold his stake to Sawhney and stepped into Ramesh Vangal’s shoes at Scandent Solutions. Only last week, H&M informed stock exchanges that it had initiated arbitration proceedings regarding the vMoksha deal. While investors continue to remain clueless about details, Rajeev Sawhney has contested H&M’s claims. His letter, copied to regulators and stock exchanges, indicates that H&M’s efforts to invoke arbitration began only on February 10, 2006, after the failed deal became public. Investigations in this case are likely to revolve around a $13.5 million loan taken by vMoksha on the sole authorisation of its former chief, Pawan Kumar, from State Bank of Mauritius. The money was transferred to H&M, allegedly against allotment of preference shares to vMoksha’s promoters. The loan was allegedly taken without Rajeev Sawhney’s knowledge or consent, but curiously enough, backed by the personal guarantees of H&M’s Chairman and its Managing Director. Sawhney has sent all documents and objections to various regulators and contends that there is no case for arbitration since the deal has lapsed. This raises serious questions about the nature of the ‘‘all cash’’ vMoksha deal and the information provided to H&M’s public shareholders. Stock exchange officials say that they are awaiting answers from the H&M management. This case could turn into a test of the efficacy of the recently tightened Clause 49 of the Listing Agreement of stock exchanges. Corporate India will be watching to see how capital market regulator and the bourses treat serious disclosure lapses and whether there are any consequences to wrong or incomplete disclosure.
Market savvy
The brewing battle between Helios & Matheson (H&M) and Rajeev Sawhney over vMoksha has brought to light several interesting facets of its operation, through a due diligence report by Pricewaterhouse Coopers (PWC). We learn that H&M started life in 1991 as a money changing company named Express Financial Exchange Pvt Ltd. It changed its name and switched to software development in time to catch the dotcom boom in 1999, raised public money, got listed and quickly set up several international subsidiaries. Yet, PWC says it could obtain only sketchy details about its contracts and income recognition.
The report further says that 82 per cent of the promoter shareholding (3.6 million shares of G. Annapurna and Padmaja) is pledged with Bank of India, UTI Bank and State Bank of Mauritius and five of its top 10 shareholders are brokerage firms; the public shareholding is 36 per cent. PWC says that the company had 77 requests for duplicate shares (duplicate share certificates have been issued to its fifth-largest shareholder Astral Ventures) and it failed to get a direct confirmation of ownership by different parties as registered by the two depositories, NSDL and CDSL.
Check more
Check more on H&M Sucheta- Check the H&M promoters backgrounds especially how in earlier venture-Ficidies India- they defauled on loans to banks such as SBI &Grindlays and gave the slip to several suppliers and employees .Decrees were also passed in courts against them at that time You should begin an investigation of H&M’s reported financials especially its cash flows - which give pointers to the real picture of how the company is managing its numbers .Such a high level of bank&other borrowings and huge levels of capitalised intangible assets for a company -which reports having conistent and good profits/margins- seems to indicate the numbers are cooked up
This column itself raises a lot of pertinent questions about the deal itself and the transparency of both parties
H&M started as a NBFC-Express FInancial exchange Ltd in1991 and after 8 years changed tracks to IT in 1999 and came out with an IPO .Even at that time several artciles incl in FE raised issues about the quality of iis disclosures and numbers. —————————- http://www.valuenotes.com/dhan/99oct26.asp?ArtCd=3078&Cat=C&Id=693 and http://www.expressindia.com/fe/daily/20000108/fns08064.html —————
The H&M story continued from 1999 till 2005- they had a good run with the nos prsented by them-but how far these are correct is anybodys guess Especially in 2004 and 05 with news of such”cash” deals which now turn out to be not deals or not “cash” deals at all Seems they have not learnt form their past and are repeating their past over &over again Anyhow this time atleast some investors in the H&M scrip have benefited if they booked profits when prices were high —————————————————
– Narayan K
Press Release
Breaking News
Re: Helios & Matheson Information Technology Ltd - Chennai Listed on BSE / NSE/MSE ‘HELMAT’532347
Dear Sir,
The ENFORCEMENT DIRECTORATE Chennai office have just conducted raids with a large team of officials at the Registered office and Corporate Headquarters of Helios & Matheson Information Technology Ltd – Chennai at the following location:
Corporate & group headquarters
Helios & Matheson Information Technology Ltd
Ganga griha, No 9, (old #6-d),
Nungambakkam High Road
Chennai 600 034 Tamilnadu India
Registered office
Helios & Matheson Information Technology Ltd
Adwave towers
No 9 South Boag road ,T.Nagar,
Chennai 600017 Tamilnadu India
The raid’s started at around 10:30 A.M this morning March 12, 2008 on instructions / report received from The Reserve Bank of India – Mumbai that the company Helios & Matheson InformationTechnology Ltd – Chennai were involved in Money Laundering, forgery, fabrication of document for availing loan in Foreign Currency and providing personal guarantees in view of which committing ‘FEMA’ Violation.
The Registered office was so small that there was hardly any space for the officials to even enter. The Corporate Head quarters at Gangagriha building have hardly 1000 – 1500 sq feet of space.
As a shareholder on having gone to the company’s corporate office this morning I was refused entry as the raids by the ENFORCEMENT DIRECTORATE were in progress and was asked to return only after 3-4 days.
One of the officials informed me that the raid’s will continue all day as they will be sealing the entire documents, Data etc from the office premises of Helios & Matheson Information Technology Ltd – Chennai and a thorough interrogation is in progress of Chairman V.Ramachandrian as well as G.K Muralikrishna the Managing Director on whom the ENFORCEMENT DIRECTORATE had warrants against.
I had received a letter from The Reserve Bank of India dated October 30, 2007 confirming that they have referred the case to the ENFORCEMENT DIRECTORATE in Chennai, so this seems to be the result what The Reserve Bank of India had written to me. (A copy of the letter is enclosed)
I hope now this company can be brought to the books by other Regulatory Authorities also.
Regards
Rajiv Shallender
___________________________________________________________________________________
Breaking News
The ENFORCEMENT DIRECTORATE Chennai office conducted raids on 12 March 2008 with a large team of officials at the Registered office and Corporate Headquarters of Helios & Matheson Information Technology Ltd – Chennai at the following location:
Corporate & group headquarters
Helios & Matheson Information Technology Ltd
Ganga griha, No 9, (old #6-d),
Nungambakkam High Road
Chennai 600 034 Tamilnadu India
Registered office
Helios & Matheson Information Technology Ltd
Adwave towers
No 9 South Boag road ,T.Nagar,
Chennai 600017 Tamilnadu India
The raid’s started at around 10:30 A.M on March 12, 2008 on instructions / report received from The Reserve Bank of India – Mumbai that the company Helios & Matheson InformationTechnology Ltd – Chennai were involved in Money Laundering, forgery, fabrication of document for availing loan in Foreign Currency and providing personal guarantees in view of which committing ‘FEMA’ Violation.
One of the officials informed me that the raid’s continued the whole day and they confiscated numerous amount of documents, Data etc from the office premises of Helios & Matheson Information Technology Ltd – Chennai and a thorough interrogation is in progress of Chairman V.Ramachandrian as well as G.K Muralikrishna the Managing Director on whom the ENFORCEMENT DIRECTORATE had warrants against.
The following offices of the Enforcement Directorate Chennai conducted raids on Helios & Matheson on 12th March 2008 and are still further thoroughly interrogating Mr.V Ramachandrian Chairman and G.K Muralikrishna - Managing Director of H&M at the following locations / offices of the Enforcement Directorate in Chennai.
Mr. Mohan Doss
Deputy Director
Enforcement Directorate
IV Block, ‘Shastri Bhavan’
Chennai – 600006
Ph 28278266
To
Mr. N.M Chidamambaram
Asst Director
Directorate of Enforcement
IV Block, ‘Shastri Bhavan’
Haddows Road
Chennai – 600006
Ph - 28271446
Mr.P.V.Balasubramani
Enforcement Officer,
Directorate of Enforcement
IV Block, ‘Shastri Bhavan’
Chennai – 600006
Ph 9841149251
28278266 Ext 218
T. Saravanan
Enforcement Officer,
Directorate of Enforcement
IV Block, ‘Shastri Bhavan’
Chennai – 600006
Ph 9445112133
The Managing Director of Helios & Matheson Mr. G.K Muralikrishna who has also been summoned by the Enforcement Directorate is trying his level best to obstruct the findings of ED Department by getting influence put on them through his brother in law who is in the
Police / CBI.
Any one can call the Enforcement Directorate offices and confirm the same from them. The share price has collapsed to Rs 57 only.
Helios & Matheson Information Technology Ltd – Chennai Listed on BSE/ NSE ‘HELMAT ‘532347′
The following is on the Money Control website:
You are here : Moneycontrol MMB Stocks Helios and Mat
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View by > Latest Thread | Messages 3 queries on Helios and Mat
Penny Stock (4)
Tracked by (1)
Posted by : Guest at 19-Mar-08 12:41
Price : BSE: Rs 58.75 ( 1.64 % ), NSE: Rs. 58.55 ( 1.47 % ) when posted
Dear friends, sell this share as soon as possible. Many negative cues are coming for helios. Within 4 months this will trade in the range of 4 to 10 rs. Anyone trying to invest feeling that the…
legal action (30)
Tracked by (0)
Posted by : Guest at 13-Mar-08 18:09
Price : BSE: Rs 68.20 ( -5.47 % ), NSE: Rs. 68.45 ( -5.33 % ) when posted
My dear friend you are right this is definately a Helios representative who wants to push your message down and cover up the facts from all investors. So i am putting your message back here…….
Findings (6)
Tracked by (0)
Posted by : Guest at 12-Mar-08 10:02
Price : BSE: Rs 75.85 ( 4.19 % ), NSE: Rs. 77.50 ( 2.92 % ) when posted
Congratulations to all, we have caught the Helios rep red handed. Now he is reading a clause from the report, which means there is a Rbi report.We have caught him which means there is a Court or…
H&M north america -net loss- 8000 (9)
Tracked by (0)
Posted by : Guest at 04-Mar-08 13:50
Price : BSE: Rs 79.00 ( -8.14 % ), NSE: Rs. 80.50 ( -6.23 % ) when posted
And here my dear friends, its started to sink again. My first target of 60 is on the way. we can see it in a short period. Happy investing!…
Very good stock to buy on current level (3)
Tracked by (0)
Posted by : Guest at 28-Feb-08 09:14
Price : BSE: Rs 91.70 ( -0.65 % ), NSE: Rs. 91.50 ( -1.35 % ) when posted
I think this company is a fake one. SEBI should take charge and act to safe guard the investors….
Good Fundamental (4)
Tracked by (0)
Posted by : Guest at 26-Feb-08 12:04
Price : BSE: Rs 92.80 ( 1.70 % ), NSE: Rs. 92.50 ( 1.37 % ) when posted
This Is a Court Order where Honorable Magistrate Confirms that he finds sufficient grounds for proceeding against H&M & others for cheating, fabricating & forging of documents etc. In the co…
What is PE of this stock (14)
Tracked by (0)
Posted by : Guest at 22-Feb-08 11:31
Price : BSE: Rs 93.65 ( 0.27 % ), NSE: Rs. 93.65 ( -0.48 % ) when posted
This Is a Copy Of The Report Sent By The Reserve Bank Of India - Mumbai Which Has Been Forwarded To The Enforcement Directorate For Violations Under Fema Act As Well As For Forgery / Fabrication …
Mental Lost (8)
Tracked by (0)
Posted by : Guest at 21-Feb-08 13:02
Price : BSE: Rs 94.00 ( 2.34 % ), NSE: Rs. 93.65 ( 1.52 % ) when posted
I do not understand if the truth has come out why are you trying to support the company….Who is VMoksha?? why do you talk about it always..This is a report from a Regulatory Authority RBI and i…
Helious - very good buy (2)
Tracked by (0)
Posted by : Guest at 21-Feb-08 11:15
Price : BSE: Rs 93.85 ( 2.18 % ), NSE: Rs. 93.30 ( 1.14 % ) when posted
I think this is really very very bad news, We have been misguided by Leo and Shoa all these months. I dont know what other proof we need after seeing the court order and The Reserve Bank Report. …
The stock has collapsed to Rs 56 as per below today
Helios and Mat
click here for options
• 19, 15:55 Last Price Change Volume
• BSE
• Rs.56.40
• -1.40 -2.42%
• 93460
• NSE
• Rs.56.55
• -1.15 -1.99% 94377
•
Fax: 28234298 Tel: 28272676
www.mca.gav.in 2827665
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
SHASTRI BHAVAN, II FLOOR, 26.. HADDOWS ROAD, CHENNAI. – 600-006
No.20443/IPC/ROC/2007, Dated:
To
The Regional Director (SR),
Ministry of Corporate Affairs,
Chennai-600-006.
Sir,
Sub:- Technical Scrutiny of Balance Sheet of M/s.Helois & Matheson
Information Technology Ltd. – Report u/s 234 (6) of the Companies
Act, 1956 (the Act) – Fast Tract – Reg.
Ref:- 1. Directorate’s letter No.2/M-9751/2006 dated 11.6.2007 & 28.06.07
2. This office letter of even no. dated 8.8.2007 & 14.09.2007.
———–
With reference to the above subject. I am to state that vide this office letter second cited, this office has sent a report to the Directorate in the matter of complaint received fro Sri Rajeev Sawheny of M/s. Vmoksha Technologies Pvt Ltd., attracting the provisions of Sec.372A(3), 77 and involving diversion/ transfer of funds between M/s. Helios & Matheson Information Technology Ltd. & M/s. Vmoksha, Mauritius. A copy of the said report is enclosed for ready reference. Further as reported therein, the technical scrutiny of Balance sheet as at 31.3.2006 has been taken up and information/clarification arising out Technical Scrutiny has been called for from the subject company u/s.234(1) of the Companies Act,1956 vide this office letter dated 27.9.2007. The Company vide its letter dated 23.10.2007 has sought 15days time to submit their reply in the matter and subsequently submitted their reply on 7.11.2007. A copy of the same is forwarded herewith. The report in terms of Section 234(6) of the Act read with Section 234(1) and (7) of the Act is as under :-
(1) It is seem from significant Accounting Policies & Notes on accounts of the Balance sheet as at 31.3.2006 of the Company, i) The Company signed a definitive” Share Purchase Agreement” (SPA) to acquire 100% equity in three Vmoksha entities on 11.05.2005. As per para 2.2.1 pf the said agreement the subject company shall pay a total consideration of Rs.62.5164 Crores at the rate of Rs.1887.77 per share for the purchase of entire shareholding of 3,31,165 equity shares of Rs.100/- each in the Vmoksha India held by the sellers - Vmoksha Mauritius Mr.Tapan Garg and Mrs.Madhuri Garg. Ii) The Company entered into another agreement viz. “Subscription Agreement” on 11.5.2005 and as per paras 2.1 & 2.2. of the said agreement, the subject company will issue and allot to the investors i.e. Vmoksha .Mauritius and others 84.05.520 Redeemable Preference shares of Rs.10/- each at a premium of Rs.65/- per share. It is further stated in para 2.2 that the subscription price shall be paid by wire transfer by the Investors o M/sHelios & Matheson simultaneously on receipt of wire transfer funds from H & M under Share Purchase Agreement iii) Escrow Agreement dated 11.5.2005 was entered to provide safeguard to all the parties concerned Copies of there agreements are enclosed with the reply of the Company.
As stated above, the company has entered into share subscription agreement on 11.5.2005 and the said agreement at para 2.1 & 2.2 stipulated that the company will issue and allot to the investors viz., Vmoksha, Mauritius and others 8405520 redeemable preference shares of Rs.10/- each at a premium of Rs.65/- per shares. The funds to the extent of Rs.63.03 crores for allotment for the said preference shares from Vmoksha was received on 28.6.2005. The perusal of the company’s document relating to MOA reveal that as on 11.5.2005 as well as 28.6.2005 the company’s MOA contained authorized share capital of Rs.15crores consisting of 1500000 of equity shares of Rs. 10/- each only. Therefore, it is clear that as on date of execution of the share subscription agreement as well as date of receipt of the money for the said redeemable preference shares, company’s MOA does not contain any Authorized capital of the nature of preference share capital.
In the EGM held on 20.7.2005, the company has passed the following resolutions :-
(1) Increase in authorized share capital of the company.
(2) Alteration of MOA of the company.
(3) Alteration of AOA of the company.
(4) Issue of redeemable preference shares.
(5) Raising of additional long term resources through issue of FCCBs/GDRs.
The Notice dated 20.6.2005 and explanatory statement to the said notice of the EGM is enclosed herewith. The resolution are reproduced hereunder :-
Increase in Authorised Share Capital of the Company
1. To consider and if thought fit, to pass with or without modification(s) the following resolution as an Ordinary Resolution
“RESOLVED THAT PURSHAT TO Sec.94 and other applicable provision, if any, the Companies Act, 1956, the Authorised Share Capital of the company be increased from 15,00,00,000/-(Rupees fifteen crores only) divided in to 1,50,00,000(One Crore fifty laksh only) Equity Shares of Rs.10/-(Rupees ten only) each to Rs.25,00,00,000/-(Rupees Twenty only) divided into 1,50,00,000(one crore fifty lakhs) Equity shares of Rs.10 (rupees ten only) each and 1,00,00,000(one crore only) redeemable preference shares of Rs. 10 (rupees ten only) each with power to increase or reduce, consolidate, sub-divide the capital in accordance with Companies Act. 1956.”
Alteration of Memorandum of Association of the Company
2. To consider and thought fit to pass with or without modifications (s) the following resolution as an Ordinary Resolution
“RESOLVED THAT the existing clause 29(11) of the Memorandum of Association of Company be deleted and substituted with the new clause.
29(II). The Authorised Share Capital of the Company is Rs.25,00,00,000/-(Rupees twenty five crores only) divided into 1,50,00,000(One crore fifty lakhs) Equity Shares of Rs.10/-(Rupees Ten) each and 1,00,00,000(one Crore only) redeemable preference shares of Rs.10/-(Rupees ten) each with power to increase or to reduce the capital and to consolidate, sub-divide the shares and shares of higher or lower denomination and to attach there to respectively preferential, deferred, qualified or other special rights, privileged and conditions attached there to as may be determined by in accordance with the Articles of Association of the company and to vary, modify or abrogate any such rights privileges or conditions or restrictions in such a manner as may for the time being, be permitted by the Articles of Association of the company or the legislative provision for the being inforce in that behalf.
Alteration of Article of Association of the Company
3. To consider and if thought fit. To pass with or without modifications(s), the
Following resolutions as a Special Resolution.
RESOLVED THAT The existing clause 16If) of the Articled of Association of the Company be deleted and substituted with the following new clause
16(f) The Authorised Share Capital of the Company is Rs.25,00,00,000/-(Rupees twenty five crores only) divided into 1,50,00,000(One Crore fifty lakhs only) Equity shares of Rs.10/-(Rupees Ten only) each and 1,00,00,000(one crore only) redeemable Preference Shares of Rs.10/-(Rupees Ten only) each with power to increase or reduce the capital and to consolidate or sub divide the Shares and issue shares of higher or lower denomination in accordance with the provisions of the Companies Act,1956.”
Issue of Redeemable Preference Shares
4) To consider and if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution
“RESOLVED THAT 1,00,00,000 Redeemable Preference Shares of Rs.10/- each forming part of the Authorised Share Capital of the company can be issued at par / premium / discount and allotted to any person or persons, in one or more branches and on such terms as to dividend, preferential payment and redemption as the Board of Directors (hereinafter referred to as the “Board”, which term shall include any committee(s) which the Board may constitute to exercise the powers of the Board including the powers conferred by this resolution) may deem fit and that the provisions of Section 81 of the Companies Act,1956 shall not apply to the aforesaid issue and that such shares need not be offered to the existing Shareholders of the Company.”
RESOLVED FURTHER THAT the board of Directors or a Committee thereof be and is herby authorized to do all acts and deeds as may be necessary, usual, proper and expedient to give effect to this Resolution including listing of securities in the Stock Exchanges. If necessary.”
Raising of additional long term resources through issue of FCCBs/GDRs, etc.,
5. To consider and if thought fit, to pass with or without modifications(s), the following Resolutions as a Special Resolution.
RESOLVED THAT, in accordance with the provisions of section 81(1A) and all other applicable provisions, if any of the Companies Act, 1956 (including any statutory modification(s) or re-enactment thereof) and relevant provisions of the Memorandum of Association and Articles of Association of the company………………………
Explanatory statement to the above resolution is reproduced below:-
Item1 to 3
The present Authorised Share Capital of the Company is Rs.15 crore consisting of 1,50,00,000 equity Shares of Rs.10/- each. To enable the Company to expand its activities for seeking the emerging opportunities for growth , it is considered necessary to increase the share capital of the company to Rs.25crore consisting of 1,50,00,000/-Equity Shares of Rs.10/- each and 1,00,00,000 redeemable preference Shares of Rs.10/- each. Such increase in the authorised capital requires alteration Capital Clause of the Memorandum of Association and Articles of Association. Hence the items no. 1 to 3 placed before the meeting for approval
None of the directors are interested or concerned in the items of business
Item no.4
Inorder to meet the fund requirement it is proposed to offer/issue and allot redeemable non-convertible preference shares. For making preferential allotment, the approval of shareholders is necessary. It is propose to issue about 85 lakhs shares of Rs.10/- each at par/premium/discount to private corporate bodies and individuals on non-converatable basis as Board may fix and determine. For this purpose, the Board may be authorized to take necessary steps as may be required to give effect to this resolution. Hence the item is placed before the meeting for approval. None of the directors are interested or concerned in the item of business.
Item no.5
The company has been examining various growth opportunities from time in line to its objectives of becoming globally competitive. While it is envisaged that the internal generation of funds would partially finance the proposed investments it is thought prudent at this stage for the company to raise a part of fund requirement through the issue of securities in the domestic/international market as set out in the accompanying Notice.
It is therefore proposed to issue appropriate securities for an amount not exceeding the equivalent of US $ 100 Million in one or more branches in such form on such terms and timing and in such manner at such price or prices and at such time as may be considered appropriate by the Board of Directors to the various categories of investors in the domestic/international market as set out in the accompanying Notice.
Your company will work out the mode of financing and utilization plants in consultation with advisers, lead managers and other agencies as may be required subject to the approval of Government of India, Reserve Bank of India, Securities Exchange Board of India, and other authorities wherever applicable. While the fund raising programme may be through a mix of debt/Equity related instruments as may be appropriate, approval of the members of the company is being sought the extent that any part of the abovementioned fund raising plan includes issue of Ordinary (Equity) Shares. Section 81 of the Companies Act, 1956 provides inter alia that whenever it is proposed to increase the subscribed Capital of a company by issue and allotment of further shares. Such further shares shall be offered to the persons who on the date of the offer are holders of the Ordinary Shares of the Company, in proportions o the capital paid up on that date unless the members in a general decide otherwise by way of a Special Resolution. The listing agreement executed by the company with various stock exchanges also contains similar provision in this regard. The securities issued pursuant to this resolution may be listed on stock Exchanges whether in India or abroad as decided by the Board. While no specific instrument has been identified at this stage that may be issued by the company pursuant to the resolution the ordinary(Equity) shares if any allotted on conversion of securities or exercise of warrants shall rank parapassu in all respect interse with the then existing ordinary equity shares of the company.
Your directors recommend the acceptance of the proposed resolution in the best interest of the company. None of the directors are interested or concerned in the business.
From the above issues, following conclusions can be drawn:-
(1) The MOA has not authorized to receive any money for preferred shares as on the date of execution of share subscription agreement as well as date of receipt of money.
(2) AOA also does not contain the amended authorized capital.
Therefore, the execution of the share subscription agreement on 11.5.2005 and receipt of money on 28.6.2005 was without any authority in the MOA and therefore ultra virus the MOA and beyond the authority of the company as well as Board of Directors in terms of Section 291 of the Act and such ultra virus act of MOA cannot be regularized by the general Body or by the directors.
The intimation relating to increase in authorized capital in form 5 was filled in the ROC office on 11.8.2005. As such, authorized capital is deemed to have been increased u/s 97 only on 11.8.2005. A copy of form 5 is enclosed as Annexure ……..A……………….. Therefore, till 11.8.2005, the company was not authorized to received any money on preference share capital.
Further, resolution No.4 & 5 relating to issue of preference shares u/s 81 and 81(1A) were not passed prior to the execution of share subscription agreement or the receipt of money and therefore execution of share subscription agreement on 11.5.2005 was beyond the competence of the Board of Directors.
(2) Voilation of Section 628 and 173 of the Act.
As stated in para 1 above , the company ahs passed resolution No.4 & 5 u/s 81 and 81(1A)of the Act for issue of preference shares. The perusal of the resolution as well as explanatory statement u/s 173 of the Act reveal that though they had entered into share subscription agreement on 11.5.2005 and para 2.1 and 2.2 of the agreement provides that company will issue and allot to investors, ie., Vmoksha, Mauritius and others to the extent of 8405520 redeemable preference shares of Rs.10/- each at a premium of Rs.65/-, the company has failed to give the full disclosure of (i) this material document (ii) the material facts that were already decided vide this agreement dated 11.5.2005 and (iii) pre-decided premium of Rs.65/- in the explanatory statement contained in the notice dated 20.6.2005. As the company omitted to disclose the said material document facts contained in the material document and the premium amount of Rs.65/- per share knowing it to be material, knowingly in the resolution as well as the explanatory statement in the notice dated 20.6.2005 to the EGM held on 20.7.2005, the company and the directors violated the provisions of section628 and 173 of the Act. A copy of the notice dated 20.6.2005 containing the said resolution as well as the explanatory statement is enclosed as Annexure… B
(3) Voilation of Section 372A(3) of the Act:-
As per the Balance Sheet. The Schedule “G” contained the item “Advances” for investment of shares in Vmoksha entities for Rs.65.03 crores. The perusal of the paper reveal that the said money was received in terms of share purchase agreement dated 11.5.2005 (one different from that of share subscription agreement referred above). Though the above advance was made on 30.6.2005, the company could not get any shares allotted.
From Vmoksha till date. Therefore, the said advance attract provisions of section 372A of the Act as loans and therefore it further attracts provisions of section 372A (3) of the Act. Explanation provided under the subsection 10(a) for share application money is specifically mentioned, this means that share application money included under “loans and advances” for relevant purpose for meaning provisions of section 372A of the Act. T. In the instant case, the company has clearly shown it as an ‘advance’ but could not get shares allotted for more than two years, it is definitely a ‘loan’. As the shares were not allotted for more than 2years, because of different reasons, the shares now cannot be allotted against the said advance from the retrospective date of advance, i.e..30.6.2005, it attracts the provisions of sections 372A of the Act as loans without charging interest. As the company could not get any interest from the said advance, it has violated Section 372A (3) of the Act.
4. Regarding para 6 relating to receipt of subscription money from M/s Vmoksha on28.6.2055 and the transfer of money to M/s. Vmoksha, Mauritius on 30.6.2005 for acquisition through the agreements entered on same day, the company was called upon to offer explanation as to how the same can be considered to be a desirable practice and prudent business activity and more particularly when the directors of the subject company have given personal guarantee for the loan taken by Vmoksha for payment of subscription of redeemable preference shares. To this the company has submitted that the personal guarantee was given by the Directors of the Company only to facilitate the process of the transaction as advised by the Escow Agent Ms/.Price Waterhouse Coopers and that there is no undesirability or imprudence in their Directors giving such guarantee. They have added that the company was not affected in any manner and the expectation of revenue there from has been given in clauses 6.1(a) (b)(c)(d) of the Share Purchase Agreement.
However in view of the internecine quarrel amongst the promoters if Vmoksha Group, the obligations/conditions under the abovesaid agreement were getting delayed and hence the subject company initiated arbitration proceedings before the Hon’ble High Court which is now pending before the Sole Arbitrator. As such, there appears to be a diversion/transfer of funds between the abovesaid companies and the guarantee given by the Directors shows that they have got vested interest in the transactions.
5.In para 7 of this office letter, it is stated that the movement of funds the two companies had taken place within 2days variation but intention of such transactions was made on one & same day i.e 11.5.2005. The company stated that as per the agreements, the payment were made simultaneously by wire transfer and the time gap is only due to the Banking channel and the consideration for acquisition was being paid and the same was being invested in accordance with law as advised by M/s.Price Waterhouse Coopers is tenable. It appears that the funds granted/received is having nexus for funding for subscribing its shares which attracts the provisions of Sec.77 of the Act.
Further the contention of the Compnay that the delay is due to Banking channel cannot be accepted since books has to be maintained on accrual basis as per Sec.209(3) (b) of the Act.
Further all the above arrangements had taken place between a variation of two days in the movement of funds and therefore the funds granted/received is having indirect nexus for funding for subscription its own shares which may attract the provisions of Sec.77 of the Act. However, this requires further examination.
6. As regards para 8 regarding Investment abroad. Company has forwarded approval obtained from foreign investment Promotion Board (FIPB) for infusion of additional foreign investment by issuance of Redeemable preference shares for the purpose of Foreign Collaboration for Software development. But it appears that the arrangement is not in the nature of foreign collaboration but only an investment for acquisition but only an investment for acquisition of shares in Vmoksha entities and for Vmoksha acquiring preference shares in the Company. The Transfer of funds from India to abroad and from abroad to for which no shares are allowed may attract the provisions of FEMA in the matter. Hence this may be reported to the concerned authorities viz., FIPB and RBI.
7.In respect of para 9 relating to difference in the amounts payable to Vmoksha viz., Rs.65.03 Crores in the Balance sheet and Rs.62.5164 Crores stated in page 59 of Balance sheet, Company’s reply stating that the amount started in the Balance sheet is inclusive of the amounts payable to Escrow Agents & Board of Advisors. However, this issue requires further examination.
8. As called for in para10, company has forwarded a copy of the valuation report in respect of Investment in Vmoksha entities. However, the correction of valuation requires further probe.
9. Regarding para16, Compnay has stated that the Arbitration proceeding are still pending before the Arbitral Tribunal Hon’ble Mr.Justice K.Venkataswamy.
10. About Fluctuation in share prices of the Company as observed in para 17, the company has clarified that this is due increase in profits and announcement of Bonus shares during 2005. However, such an abnormal increase from Rs.147/- to Rs.428/- per share was only Rs .795.89 Lakhs. Bonus shares were issued on 28.9.2005. Therefore, this issue requires deep probe as well as reference to SEBI.
11. As required in para 23, Company has finished the details of Unsecured loans for the last three year which included amount of unsecured loan from friends and associates and has referred the report of the Auditors that the provisions of Sec.58A and 58AAof the Act and the Rules made there under have been complied. In this connection, it is seen from the records of the Company that the company has not filed the return of Deposits as required under Rule 10 of deposit Rules. However, this issue requires further examination.
12. In respect of payment of rent as per para 30. It is submitted that the same is not disclosed separately as required under part ii –CL.x of Sch. VI. Company’s reply in this regard is not satisfactory. Hence Company has violated the Sec.211 r/w.Sch. VI-Part II Cl(x) of the Act.
13. Regarding para 31 relating to payment made to M/s.Price Water House Coopers, the Company has given the details as under as “consultancy charges” paid in relation to the agreement relating the share subscription and share purchase agent:-
Price Water Coopers India P.Ltd, Bangalore - Rs.16,530,000.
Mr.B.K.Syngal - Rs.826,500
Mr.B.M Srinivasa Rao - Rs. 826,500
Mr.S.Ishwar - Rs. 826,500
Mr.Suresh Talwar - Rs. 826,500
Total - Rs.19,836,000
Above payment of huge money as Escrow Agents is not at all justified and is not commensurate with any outcome i.e the company neither could get shares nor allot shares.
II. Complaint:-
In respect of allegations made by Sri.Rajeev Sawheny, the findings were already reported vide this office report dated 14.9.2007 report dated 14.9.2007 report in terms of section 234(1) and (7) of the act. The major findings were:-
i) On a perusal of the reply of the company, it is seen that the company has receives a sum of Rs. 63.04 Crores on 28.06.2005 towards advance received for subscription of redeemable preference shares and the consideration for acquisition of equity shares of Vmoksha, Mauritius was transferred / paid by the Company on 30.6.2005 ie., subsequent to the receipt of advance for subscription. As such, it cannot be said to be a desired practice and prudent business activity. Particularly where the guarantee was given to the State Bank of Mauritius by the Chairman & Managing Director of the company towards loan obtained by M/s Vmoksha for making payment towards subscription of Redeemable preference shares.
ii) Further it is seen that the conditions stipulated under the Share Purchase Agreement were not completed with in the stipulated time. Under the circumstances, the advance paid for investment in shares of Vmoksha entities is still lying with them and no interest is charges on the said advance. Hence the provisions of Sec.372A(3) of the Act are contravened.
iii) Further all the arrangement have been committed on one and the same day, although there was 2days variation in the movement of funds. Therefore the fund granted/received is having indirect nexes for funding for subscripting its own share which may attract the provisions of Sec.77 of the Act.
iv) In this connection it is seen that the company has taken approval of the foreign Investment Promotion Board (FIPB). Ministry of Finance vide their letter dated 30.6.2005 for infusion of additional foreign investment by issuance of Rs.78.00 Lakh Redeemable Preference shares for the purpose of foreign Collaboration, for software development proposes to act as a holding company to make downstream investment in other ventures/activities. However, it appears that the arrangement is not in the nature of foreign collaboration, but only an investment for acquisition of shares in Vmoksha entities and for Vmoksha acquiring preference shares in the company
v) As regards the transfer of funds from India to abroad and also from abroad to India, a kind of acquisition/allotting of shares as investment which may attract the provisions of FEMA in the matter.
vi) In Clause 2.2.4 of the Share Purchase Agreement, It is stated that the Company Helios & Matheson shall pay on amount of Rs.1.50 Crores to Price Waterhouse Coopers Private Lt., the financial advisors to the sellers (Vmoksha) This amount is not refundable even if the transaction is not completed. Particularly when the agreement is not materialized, and they are the financial advisors to Vmoksha, the above substantiated payment is not justified.
vii) There is no material /information available regarding involvement of M/s.DSQ Software Limited in this company.
In view of the above ,there appears to be diversion/transfer of funds among the two entities. This office is also receiving complaints forwarded from Enforcement Directorate, Shastri Bhavan, Chennai, Reserve Bank of India, Mumbai and also from the Ministry copies of which are enclosed. Scrutiny of the Balance Sheet as at 31.3.2006 has also brought out serious issues disclosing unsatisfactory state of affairs of the company requiring for further investigation under section 235 of the Act.
Copy of this office letter dated 27.9.2007 and the reply of the Company dated 7.11.2007 are forwarded herewith. Copy of the Balance Sheet was already forwarded to the Directorate along with this office report dated 14.9.2007.
Yours Faithfully,
(B.N. HARISH)
REGISTRAR OF COMPANIES.
TAMILNADU, CHENNAI
Encl: as above.