The Ministry of Corporate Affairs (MCA) has handed over investigation into alleged fund diversion by struggling retailer Subhiksha to the Serious Fraud Investigation Office (SFIO).
“MCA has ordered a serious fraud enquiry into Subhiksha Trading for alleged falsification of accounts and syphoning of funds,” a top ministry official said.
In 2007, ICICI Ventures, the second biggest shareholder in Subhiksha with a 23 per cent stake, had filed a complaint alleging diversion of funds through more than 100 shell companies.
Last year, the Registrar of Companies (RoC) in Chennai started investigating Subhiksha’s books following complaints by a group of investors and former employees who alleged mismanagement of funds.
“The enquiry has been ordered based on the RoC Chennai report that carried out the technical scrutiny of the company.
The report had also pointed out that Subhiksha had 100 shell companies,” the official said.
The RoC’s scrutiny under Section 209 (A) of the Companies Act included looking into the books of Subhiksha since 2007.
Comments from the company could not be obtained as repeated calls and an e-mail query to Subhiksha President R. Subramanian remained unanswered.
The cash—strapped retailer had undergone a corporate debt restructuring process after being burdened with debt of around Rs. 750 crore.
However, the CDR, which was supposed to be completed by July 31, 2009, never materialised.
Subhiksha’s audited accounts are available only as of April, 2007, as per which it had a turnover of Rs. 840 crore and profit before tax of Rs.18 crore.
Besides, it also had inventories of Rs. 279 crore and secured loans of Rs. 245 crore.