‘Non-Existent’ Tata, RIL And SBI Firms Among Entities Struck Off By Government
Eight firms linked to India’s largest conglomerate, the richest man and the biggest bank were among more than 2 lakh companies struck off by the government after its crackdown on suspected shell entities.
There’s a catch though: These companies no longer exist as they were merged with other group subsidiaries years ago. Among the deregistered entities are five from the Tata Group, one from Mukesh Ambani’s Reliance Industries Ltd. and two subsidiaries of the State Bank of India.
The Ministry of Corporate Affairs’ July 28 notification said the 2.09 lakh firms were struck off under Section 248 of the Companies Act, 2013. It gives the government power to deregister entities that didn’t commence business within a year of incorporation, or haven’t carried out any business for two straight years without classifying themselves as ‘dormant’.
Yet, what raises questions about the government’s record-keeping is that the list of deregistered companies includes two erstwhile subsidiaries of a public-sector bank and a Tata Group firm that has transformed into what is now called Tata Global Beverages Ltd. – a listed company and the world's second-largest maker of branded tea.
If the approval to strike off companies was given without any verification, then the bureaucracy should be held accountable, TP Ostwal, chartered accountant and managing partner at TP Ostwal & Associates LLP, told BloombergQuint. It shows the bureaucracy is irresponsible because there’s no accountability, he said.
Emails to the ministry on the apparent errors in identifying the companies remained unanswered. The action had come after the scrutiny that followed last year’s demonetisation when Prime Minister Narendra Modi invalidated 86 percent of the currency in circulation to unearth unaccounted wealth.
A Reliance Industries Subsidiary
Reliance Logistics Pvt. Ltd., a Mumbai-based wholly owned subsidiary of Reliance Industries Ltd., was struck off by the Registrar of Companies.
The firm was incorporated in 2000 as Reliance Logisticx Pvt. Ltd., the RoC records accessed by BloombergQuint show. Its name was later changed to Reliance Logistics, according to RoC data.
In 2003, the company was merged with Ahmedabad-based Vimal Fabrics, an RIL executive said on condition of anonymity. Later, Vimal Fabrics changed its name to Reliance Logistics. Its headquarters was also shifted from Ahmedabad to Mumbai, the executive said.
BloombergQuint could not independently verify that as no documents were available on the RoC website.
However, a 2009 RoC filing by the name of Reliance Logistics, headquartered in Mumbai, said the company held its last AGM in August 2008.
As records of RoC were not updated after the merger, a notice for striking off the company was issued, an RIL spokesperson told BloombergQuint. “The company has taken up the matter with RoC to address this issue,” the spokesperson said.
Two SBI Subsidiaries
Two entities of State Bank of India are on the list of deregistered entities.
The first one, State Bank of India Commercial and International Bank, merged with the parent through a gazette notification in 2011, according to information on the SBI website. Founded in 1993, it was formerly known as Bank of Credit and Commercial International, according to Bloomberg data.
SBI Gilts Ltd. is the other subsidiary of the country’s largest bank that was struck off. It merged with the Reserve Bank of India-promoted Discount and Finance House of India to create SBI DFHI Ltd. in 2004, according to SBI’s website. The central bank had created the merged entity to support primary auction of government securities, and provide liquidity to the secondary market in G-secs, said the SBI website.
Queries sent to SBI didn’t elicit a response and calls made to the bank’s spokesperson remained unanswered.
Five Tata Entities
Four companies—Tata Hydroelectric Agencies, Tata Nifco Fastners, Tata Fertilizers, Tata Finlay – with offices at the iconic Bombay House, the group headquarters – were also deregistered. Rallis Industrial Chemicals Ltd. is the fifth group entity that was struck off.
Tata Fertiliser & Rallis Industrial Chemicals
A Tata Sons spokesperson told BloombergQuint that Tata Fertiliser was merged with parent Tata Chemicals Ltd. in Sept. 1989.
Rallis Industrial Chemicals was merged with Ralchem Ltd. in 2000, the spokesperson said. Ralchem was later merged with Rallis India Ltd. in 2003. Rallis India is a subsidiary of Tata Chemicals.
Queries sent to Tata Chemicals remained unanswered.
Tata Finlay’s registered office was shifted from Mumbai to West Bengal on Feb. 3, 1981, a Tata Global spokesperson said. It was renamed Tata Tea Ltd. effective Feb. 28, 1983. Nearly three-and-a-half decades later, Tata Tea was rechristened Tata Global Beverages Ltd. on July 2, 2010, the spokesperson said, adding that the company has been regular in all filings.
Tata Hydro Electric Agencies
Tata Hydro Electric Agencies was the managing agent for Tata Power, the Tata Sons spokesperson told BloombergQuint.
The Tata Power board in a meeting held on Dec. 5, 1969 decided to change the structure, the spokesperson said. Effective April 3, 1970, managing agents were replaced by a managing director and a joint managing director, the company said.
“The updation (of records) in those times was intimation as there was no website update provision then. The appropriate action by the (authority) concerned in 1970 itself should have meant the name should have been struck off by DCA (the Department of Corporate Affairs),” said Tata Power in response to BloombergQuint’s emailed queries on why the ministry’s records were not updated.
Tata Nifco Fasteners
Tata Nifco Fasteners was a joint venture between Tata AutoComp Systems and NIFCO Inc., Japan, said the Tata Sons spokesperson. Tata Nifco was liquidated vide the order of the Bombay High Court dated Nov. 9, 2011, the spokesperson added.