1,500 employees in the lurch; ex-CEO says firm facing financial crunch since Aug 2012
Is another Satyam-like scam brewing, this time in Gujarat?
Sunil K. Kakkad, Chairman and Managing Director of the nearly Rs 2,000-crore Sai InfoSystem (India) Ltd, has been “missing” along with his family since June 28, leaving hundreds of the company’s employees, who have not been paid salaries for months, in the lurch. Many senior officials have quit SIS.
Yet, most employees are still hopeful of getting their dues and have not taken recourse to legal remedy. They have neither lodged a police complaint nor gone to the State Labour Department. Indeed, they are even refraining from offering comments. The company has about 1,500 people on its rolls.
But not so, feels the State Bank of India. In a public notice put out in various dailies, SBI said: “The CMD of SIS Group… Shri Sunil S Kakkad, is not contactable and is reported to be missing.”
SBI, which heads a consortium of banks that have, according to sources, lent Rs 1,000-1,200 crore to SIS, warned people against dealing with the assets of SIS and its associate companies.
The SBI notice mentioned the assets of two companies, including immovable properties charged/mortgaged to the consortium as security for the various credit facilities granted. The firms are: Click Telecom Pvt Ltd (associate of SIS), with its registered office at Nariman Point, Mumbai, and Attrium Infocomm Pvt Ltd (a subsidiary of SIS), with its office at Bodakdev, Ahmedabad. Kakkad was a director in both these companies as on March 31, 2013.
Kakkad and SIS have reportedly mortgaged 14 properties, including eight in Gujarat, on which SBI has claimed first right.
The securities charged to the banks include all the current assets owned by the two companies in Ahmedabad, Hyderabad, Bangalore, Kolkata, Cherthala and Parwanoo, all the receivables, plant and machinery and other fixed assets at these places, and immovable properties in Ahmedabad, Gandhinagar and other places.
Founded in 1992 by Kakkad, an electronics and communications engineer and a first generation entrepreneur, SIS emerged one of the fastest growing end-to-end ICT solutions providers and system integrators. It had also diversified into hardware manufacturing, software development and telecom services.
SIS had, in the last couple of years launched, in a tie-up with BSNL, a video calling facility from PCOs, said to be India’s first “see phone”.
The company’s revenues had zoomed four times to Rs 1,500 crore in 2010-11 from Rs 350 crore in 2006-07.
Signs of trouble
Some explanation for where the company lost its way may come from the July 16 blog post by former SIS CEO Naveen Bhasin (http://togetherwecansis. wordpress.com). Bhasin wrote that Kakkad “suddenly disappeared” on June 28 when the company was supposed to disburse salaries and arrears, and that the directors and senior officers had quit.
SIS, he said, was facing a serious financial crunch since August 2012, delaying salaries and other payments at a time when the company had an order book of over Rs 2,500 crore, including a BOOT project worth Rs 1,500 crore from the Department of Posts and another BOOT project of Mumbai CCTV Surveillance for Rs 629 crore. SIS had Letters of Intent for both projects, he said.
Bhasin also maintained that investments made in R&D for these large projects had led to delay in execution of other projects, impacting cash flows.SIS employees across the country are obviously worried and agitated, and some have called for a meeting in Ahmedabad on August 3.
The sudden ‘collapse’ of a seemingly robust company has caught many by surprise, raising once again the Satyam bogey.