Translate

BSE-NSE Ticker

Wednesday, July 9, 2014

Sai InfoSystems’ Rs1,400 crore fraud: Another Satyam?

Sunil Kakkad, the chief of Sai InfoSystem, which was platinum sponsor of Vibrant Gujarat summit, is absconding. Employees are not paid salaries for the past nine months while lenders have issued notice against the promoters. However, there is no substantial action from investigation agencies

Gujarat-based Sai InfoSystem India Ltd (SIS), which claim to be an IT company worth Rs2,000 crore is alleged to have defrauded several banks. The company has not even paid salaries to its about 1,400 employees in the past nine months besides not paying any taxes, insurance and provident fund deductions to the government.

Sunil Kakkad, chairman and managing director of Sai InfoSystem, who allegedly committed a Rs1,400 crore fraud is reportedly missing along with his family from 28 June 2013. This company, which was the platinum sponsor of the high-profile Vibrant Gujarat Summit is turning out to be a Satyam-like case, where the promoters, currying favour with politicians, have deliberately duped the employees, lenders and even the government. While details have been reported in the media, it is another surprising case where government investigation agencies seem to be dragging their feet over action against the promoters.

Sai Infosystems borrowed Rs1,035 crore as loan from seven lenders. Of this Rs794.32 crore came from five banks, State Bank of India (SBI), State Bank of Bikaner and Jaipur (SBBJ), Industrial Development Bank of India (IDBI), Bank of Baroda (BoB) and Allahabad Bank. Atrium Infocom, a unit of SIS borrowed another Rs97.20 crore from SBI and Vijaya Bank while another group entity, Click Telecom, obtained a loan of Rs144.16 crore from SBI, Vijaya Bank and Canara Bank.

SBI has issued a public notice warning people against dealing with SIS, its associates or in its assets. Employees have also registered a first information report (FIR) against the directors of the company at Vastrapur Police Station in Ahmadabad under section 114, 409 and 418 of IPC. This has led to the arrest of Samir Kakkad, brother of SIS’s CMD Sunil Kakkad. The company’s assets have been seized by the lenders.

One senior official who used to work at SIS said, “Police registered FIR only after two months of follow ups and sending legal notice to Commissioner of Police with copy to Chief Minister’s office.”

Employee grievances
Employees of SIS, who have not been paid their salaries for over nine months, want the company to be wound up in order to recover their dues of Rs21crore. What makes the matter worse is SIS had been deducting amounts for medical insurance and provident fund (PF) from salaries but apparently not credited it to the government. However, the company balance sheet shows these amounts as deposited with the government. In addition, company has allegedly not paid taxes such as VAT, customs and excise duty.

SIS has offices in Mumbai, Delhi, Punjab, Rajasthan, Kolkota, Bangalore, Kerala, Hyderabad, Jammu and many small suburbs. The employees have written letters to various ministers including Gujarat chief minister Narendra Modi and several senior bureaucrats of Government of India, to draw their attention towards ongoing fraud but it has not evoked any response.

One senior official of SIS stated, “We, the employees (current and ex), are approaching various courts at different levels. We have tried our best, but we have not been able to reach chief minister of Gujarat. While, we have managed to reach his assistant Vijay Nehra, there has not seen any support from the chief minister’s office or any other administrative or regulatory teams”

SIS has a debt in excess of Rs1,035 crore. The company gets many big projects as it was under-quoting in bids which resulted in large losses. SIS had won the Mumbai City Surveillance Project, which included deploying 6,000 internet protocol IP cameras for a bid of Rs700 crore against the second nearest bid of Rs1,000 crore by AGC Networks. SIS had also won a contract from the Department of Post for digitisation of several processes.
For this, SIS had bid Rs1,500 crore, while the second bidder quoted Rs2,200 crore.

However, according to the auditor’s report of FY 2011-2012, SIS is a profit making company which has turnover of Rs1,618.97 crore, networth of Rs475.90 crore and net profit of Rs113.18 crore.

While describing the current situation of company, another senior official said, “The company is financially paralyzed, we had approached and requested the consortium of banks; lead by SBI, to support the employee representatives in running the operations, but they are supporting. There are a new set of creditors who are representing themselves as SIS and collecting pending payments with assistance from the bank officials. The set of creditors who have become new directors and are heading SIS Board, include Prakash Mishra, Amit Majumdar, Wincient Christian and some former employees who were close to CMD’s family.”

No comments:

Economic Event Calendar

Economic Calendar >> Add to your site

Best Mutual Funds

Recent Posts

Search This Blog

IPO's Calendar

Market Screener

Industry Research Reports

NSE BSE Tiker

Custom Pivot Calculator

Popular Posts

Market & MF Screener

Company Research Reports