Lok Sabha Question No. 256 (STARRED), answered on 2016-12-02
Subject: Vanishing Companies
Ministry: CORPORATE AFFAIRS
Asked by: CHANDRAKANT BHAURAO KHAIRE

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

ANSWERED ON FRIDAY, THE 02ND DECEMBER, 2016

## LOK SABHA STARRED QUESTION NO. 256 [AGRAHAYANA 11, 1938 (SAKA)]

## VANISHING COMPANIES

## QUESTION

*256.  SHRI CHANDRAKANT KHAIRE:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether  the  Government  is  aware  of  companies  collecting  money from investors and vanish;
- (b) if  so,  the  details  thereof  along  with  the  number  of  fraud  cases indulged  in  by  vanishing  companies  reported,  number  of  investors cheated,  amount  involved,  during  the  last  three  years  and  current year, State/ UT-wise;
- (c) whether the names of such companies have been listed on various Stock Exchanges and if so, the details thereof, Company-wise;
- (d) the  details  of  existing  guidelines  laid  down  to  save  investors  from such fraudulant companies; and

(e) the other steps taken/being taken by the Government to protect the investors from such vanishing companies?

## ANSWER

## THE MINISTER OF CORPORATE AFFAIRS                   (SHRI ARUN JAITLEY)

(a) to (e) A statement is laid on the Table of the House.

## *******

## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF THE

## STARRED QUESTION NO. 256 FOR ANSWER IN LOK SABHA ON 02-12-2016

## (a) to (d):

Illegal  collection  of  money  by  companies  resorting  to  'Chits',  'Ponzi'  or 'money circulation schemes' are covered under the Prize Chits and Money Circulation  Schemes  (Banning)  Act,  1978  and  Chit  Funds  Act,  1982, implementation of which vests in the State Governments. 238 companies were initially identified by the Ministry of Corporate Affairs as 'vanishing companies' which raised money through public issues, out of which 160 companies have since been deleted from the list as these companies were subsequently traced. Presently, only 78 companies remain. The identification  and  monitoring  of  companies  categorised  as  'Vanishing Companies' is done by a Central Monitoring Committee and the Regional Task Forces constituted by the Government. This Committee has specified following  criteria  for  identifying  companies  which  have  come  out  with public issues as 'vanishing companies':

-  failed to file returns with Registrar of Companies (ROC) for a period of two years and;
-  failed  to  file  returns  with  Stock  Exchange  (SE)  for  a  period  of  two years (if it continues to be a listed company) and;
-  it  is  not  maintaining  its  registered  office  of  the  company  at  the address notified with the Registrar of Companies/ Stock Exchange and;
-  none of its directors are traceable.

The Ministry of Corporate Affairs has also ordered investigation under the relevant provisions of Companies Act, 1956 and 2013 into the affairs of 185 companies through Serious Fraud Investigation Office (SFIO) during the last three years and current year (up to 31-10-2016). These companies were allegedly  involved  in  Chit  Fund/  MLM/  Ponzi  activities  in  un-authorised collection of funds from public. Details of State-wise 'vanishing companies' and  State-wise  number  of  companies  where  investigations  have  been ordered through SFIO during the last three years and current year (up to 3110-2016) are indicated in Annexure-A and B, respectively.

- (e) Companies Act, 2013 contains various provisions to protect investors.  Views  of  all  stakeholders  including  professionals,  financial institutions, banking sector, CII etc. were invited and taken into consideration before enactment of the Companies Act, 2013. The provisions for protection of investors, as under the Companies Act, 2013, inter alia, include:
- i) Enhanced  disclosure  norms  so  that  investors  get  all relevant information from companies;

ii) 'Fraud' defined for the first time as a substantive offence, and cover many  dubious  activities  which  were  not  specifically  covered  under  the Companies Act, 1956; iii) Serious Fraud Investigation Office (SFIO) has been granted statutory status with adequate powers. iv) Auditors' accountability and independence enhanced through provisions  which  inter  alia  include  rotation  of  auditors,  etc.  This  would improve objectivity of audit and provide better insights to the investors.

*******

## Annexure - A

## ANNEXURE REFERRED TO IN REPLY TO PART (a) to (d) OF THE STARRED QUESTION NO. 256 FOR ANSWER IN LOK SABHA ON 02.12.2016

## State-wise list of 'Vanishing Companies' and issue size

|   S. No. | Name of the Vanishing Company            | State          |   Issue size (Rs. in crore) |
|----------|------------------------------------------|----------------|-----------------------------|
|        1 | Aashi Industries Ltd.                    | Gujarat        |                        5.52 |
|        2 | Bhavna Steel Cast Ltd.                   | Gujarat        |                        2.1  |
|        3 | Genuine Commodities Development Co. Ltd. | Gujarat        |                        2.68 |
|        4 | Growth Agro Industries Ltd.              | Gujarat        |                        5.4  |
|        5 | Kesar Greenfield International Ltd.      | Gujarat        |                        5.69 |
|        6 | Lyons Industrial Enterprises Ltd         | Gujarat        |                        6.37 |
|        7 | Manav Pharma Ltd.                        | Gujarat        |                        5.3  |
|        8 | Marine Cargo Company Ltd.                | Gujarat        |                        3.41 |
|        9 | Naturo-Pest Ltd.                         | Gujarat        |                        4.84 |
|       10 | Nishu Fincap Ltd.                        | Gujarat        |                        4.25 |
|       11 | Pur Opale Creations Ltd                  | Gujarat        |                        6.78 |
|       12 | Protech Circuit Breakers Ltd.            | Gujarat        |                        2    |
|       13 | Protech Switchgears Ltd.                 | Gujarat        |                        2    |
|       14 | Shree Yaax Pharma & Cosmetics Ltd.       | Gujarat        |                        6.06 |
|       15 | Spil Finance Ltd.                        | Gujarat        |                        5.7  |
|       16 | Sushil Packagings (India) Ltd.           | Gujarat        |                        4.52 |
|       17 | Top Line Shoes Ltd                       | Gujarat        |                        7.8  |
|       18 | Adithya Alkaloids Pvt. Ltd.              | Andhra Pradesh |                        3.55 |
|       19 | Canara Credit Ltd.                       | Andhra Pradesh |                        2.49 |
|       20 | Daisy Systems Limited                    | Andhra Pradesh |                        1.31 |
|       21 | Imap Technologies Pvt. Limited           | Andhra Pradesh |                        1.8  |
|       22 | Kamakshi Housing Finance Ltd.            | Andhra Pradesh |                        5.71 |
|       23 | Deccan Petrolium Ltd.                    | Andhra Pradesh |                        4.57 |
|       24 | Orpine Systems Limited                   | Andhra Pradesh |                        2.71 |
|       25 | Raam Tyres Ltd.                          | Andhra Pradesh |                        9.59 |
|       26 | Sequelsoft India Limited                 | Andhra Pradesh |                        6    |

|   27. | Sibar Media & Entertainment Limited      | Andhra Pradesh   |   3.50 |
|-------|------------------------------------------|------------------|--------|
|    28 | Sibar Software Services (India) Ltd      | Andhra Pradesh   |   3.5  |
|    29 | Swal Computers Ltd                       | Andhra Pradesh   |   2.6  |
|    30 | Visie Cyber Tech Ltd.                    | Andhra Pradesh   |   1.4  |
|    31 | Ambuja Zinc Ltd.                         | Bihar            |   2.14 |
|    32 | Bodh Gaya Ceramics Ltd.                  | Bihar            |   0.49 |
|    33 | Cilson Organics Ltd.                     | Bihar            |   8    |
|    34 | Shree Vaishnavi Dyeing and Printing Ltd. | Bihar            |   3.24 |
|    35 | Carewell Hygiene Products Ltd            | Chandigarh       |   2.49 |
|    36 | Sukhchain Cements Ltd.                   | Chandigarh       |   3.65 |
|    37 | Kedia Infotech Ltd                       | Delhi            |   4.98 |
|    38 | Hoffland Investments Ltd.                | Delhi            |   2.9  |
|    39 | Simplex Holdings Ltd                     | Delhi            |   2.27 |
|    40 | Star Electronics Ltd.                    | Delhi            |   2.47 |
|    41 | Zed Investments Ltd.                     | Delhi            |   2.8  |
|    42 | Flora Wall Coverings Ltd.                | Karnataka        |   5.82 |
|    43 | Ocean Knits Limited                      | Karnataka        |   2.61 |
|    44 | Hi-Tech Drugs Ltd.                       | Madhya Pradesh   |   3.23 |
|    45 | Madhyavart Exxoil Ltd.                   | Madhya Pradesh   |   2.3  |
|    46 | Rajadhiraj Industries Ltd.               | Madhya Pradesh   |   2.5  |
|    47 | South Asian Mushrooms Ltd.               | Madhya Pradesh   |   6.1  |
|    48 | Sterling Kalk Sand Bricks Ltd.           | Madhya Pradesh   |   4.44 |
|    49 | Caldyn Aircon Ltd.                       | Maharashtra      |   4.45 |
|    50 | Global Exhibitions Ltd.                  | Maharashtra      |   4.45 |
|    51 | Hitesh Textile Mills Ltd.                | Maharashtra      |   7.48 |
|    52 | Ichalkaranji Soya Ltd.                   | Maharashtra      |   2    |
|    53 | Pashupati Cables Ltd.                    | Maharashtra      |  11.95 |
|    54 | Realtime Finlease Ltd.                   | Maharashtra      |   3.75 |
|    55 | Rusoday & Company Ltd.                   | Maharashtra      |   0.94 |
|    56 | Sparkle Foods Ltd.                       | Maharashtra      |   5    |
|    57 | Vipul Securities Ltd.                    | Maharashtra      |   3    |
|    58 | Universal Vita Alimentare Ltd.           | Orissa           |   1.8  |
|    59 | Hallmark Drugs and Chemicals Ltd.        | Punjab           |   7    |
|    60 | Amigo Exports Ltd.                       | Tamil Nadu       |   3.3  |

|   61. | Crestworld Marine Ltd.                    | Tamil Nadu    |   4.38 |
|-------|-------------------------------------------|---------------|--------|
|    62 | Ma Capital Market Services Ltd.           | Tamil Nadu    |   1.44 |
|    63 | Nagarjuna Jiyo Industries Ltd.            | Tamil Nadu    |   2.73 |
|    64 | Novel Finance (India) Ltd.                | Tamil Nadu    |   1.5  |
|    65 | Panggo Exports Ltd.                       | Tamil Nadu    |   2.47 |
|    66 | Saigruha Finances and Engineering Limited | Tamil Nadu    |   4.05 |
|    67 | Shyam Prints & Publishers Ltd.            | Tamil Nadu    |   2.25 |
|    68 | AVR Securities Ltd.                       | Tamil Nadu    |   2.47 |
|    69 | Global Blooms (India) Ltd.                | Tamil Nadu    |   2.1  |
|    70 | Rizvi Exports Ltd.                        | Uttar Pradesh |   3.65 |
|    71 | Shefali Papers Ltd.                       | Uttar Pradesh |   2.57 |
|    72 | Siddhartha Pharmachem Ltd.                | Uttar Pradesh |  12    |
|    73 | Vidiani Agrotech Industries Ltd.          | Uttar Pradesh |   2.8  |
|    74 | Asian Vegpro Industries Ltd.              | West Bengal   |   7.09 |
|    75 | Kiev Finance Ltd.                         | West Bengal   |  12    |
|    76 | Oriental Remedies and Herbals Ltd.        | West Bengal   |   1.88 |
|    77 | SSK Fiscal Services Ltd.                  | West Bengal   |   2    |
|    78 | Saket Extrusions Ltd.                     | West Bengal   |   2.13 |

*******

## Annexure - B

## ANNEXURE REFERRED TO IN REPLY TO PART (a) to (d) OF THE STARRED QUESTION NO. 256 FOR ANSWER IN LOK SABHA ON 02.12.2016

## State-wise and year-wise details of investigations ordered during the last three years and current year (up to 31.10.2016) into the affairs of companies involved in chit fund/ ponzi/ MLM activities

2013-14

| S. No.   | State         |   No. of Companies ordered for Investigation |
|----------|---------------|----------------------------------------------|
| 1        | West Bengal   |                                           57 |
| 2        | Assam         |                                           01 |
| 3        | Uttar Pradesh |                                           05 |
| Total    | Total         |                                           63 |

2014-15

| S. No.   | State       |   No. of Companies ordered for Investigation |
|----------|-------------|----------------------------------------------|
| 1        | West Bengal |                                           29 |
| 2        | Jharkhand   |                                           02 |
| 3        | Bihar       |                                           02 |
| 4        | Orissa      |                                           18 |
| Total    | Total       |                                           51 |

2015-16

|   S. No. | State       |   No. of Companies ordered for Investigation |
|----------|-------------|----------------------------------------------|
|        1 | West Bengal |                                           26 |
|        2 | Orissa      |                                           08 |
|        3 | Maharashtra |                                           05 |
|        4 | Punjab      |                                           01 |
|        5 | Rajasthan   |                                           01 |
|        6 | Assam       |                                           06 |

| Total   | 47   |
|---------|------|

2016-17

| S. No.   | State       |   No. of Companies ordered for Investigation |
|----------|-------------|----------------------------------------------|
| 1.       | Maharashtra |                                           01 |
| 2.       | West Bengal |                                           19 |
| 3.       | Orissa      |                                           01 |
| 4.       | Assam       |                                           03 |
| Total    | Total       |                                           24 |

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