The Hindu Business Line : Serious Fraud Office probe — Irregularities detected in Vatsa Corporation

THE Serious Fraud Investigation Office (SFIO), under the Ministry of Company Affairs, has recently submitted a report on the second major probe undertaken by it on the Mumbai-based Vatsa Corporation Ltd (VCL). Early this year, the SFIO had submitted its report on the maker of Matiz, Daewoo Motors India Ltd.

According to sources, the SFIO has detected a wide range of irregularities, while investigating into affairs of Vatsa Corporation.

The company is stated to have started with a very small share capital and ultimately went up to a paid-up capital of around Rs 5,000 crore with an authorised capital of Rs 50,000 crore.

"This is the magnitude of how this company came into being and the matter comes under SFIO lens," sources said.

Vatsa started with financial investments and rapidly expanded into many areas. Vatsa Music, a listed company, in 1998, invited fixed deposits from the public at 15-16 per cent, but the Reserve Bank of India had issued a warning against investing in its fixed deposits. A year later, the company started defaulting on payments.

Two of the group companies — Vatsa Music and Vatsa Education — were listed on the Bombay Stock Exchange. Both are virtually defunct today.

SFIO, which started its investigations on Vatsa Corporation around June this year, was given six months time to submit its report.

The Ministry will now examine the investigation report before taking any action, sources said.

Further, SFIO has also all restarted work on two other companies — Design Auto System Ltd and Biotech Bonanza Ltd — referred to it in December 2003, as the stay on these two cases have just been vacated by the Indore High Court.

Other cases under SFIO lens: Two other companies that the SFIO has been examining are DSQ Software Ltd, which got a stay from Madras High Court and Ispat Industries Ltd, which got a stay from Calcutta High Court. So far, six cases have been referred to the SFIO and it has completed investigations in two.

Official sources indicated that the Ministry is also set to refer the investigations into the Ketan Parekh Group of companies to the SFIO.

The Union Government had recently received the Company Law Board nod to widen its scope of investigations in 16 Ketan Parekh Group companies.

Office in Mumbai: The SFIO, a multi-disciplinary team set up in October 2003, as a sequel to the recommendations of the Joint Parliamentary Committee on the lines of Serious Fraud office of Britain, is now in the process of setting up another office in Mumbai.