Ad Here  
April
May
June
July
August
September
 
 
Hyundai to focus on SUVs and AMT variants Titan Company – sales recovery to kick in V-Guard launches app-enabled water heater system Singur minus Nano – victory or folly? LVB posts 31 per cent growth in Q1 net profit Hindalco – re-rating Last stages TVS Srichakra plans capacity expansion Hyundai India achieves 7 mn production at Chennai factory Sundram Fasteners rejigs international TN government keen on revival of operations at Nokia complex Kone India eyes further growth in elevator market E.I.D Parry (India) Ltd: another sweet year Daimler grows sales and share in India Welcome focus to improve rural India... Emami – a new growth mantra Wabco launches safety system Nissan exit shouldn’t affect ALL Housing demand revival L&T bags the Mumbai Trans-harbour link order Maruti – for young buyers Ponni Sugars (Erode) Ltd: not so sweet 2012-13 TI Cycles plans retail expansion to drive sales for premium bicycles Smartphone onslaught by Chinese brands Chinese smart phones flourish in small towns too! Daimler’s truck exports from Chennai cross 5000 units Tata Motors bets on new launches Eyes strong growth in 2016-17 PSU non-life firms seek to protect share Dish TV – subscriber additions encouraging New India Assurance posts impressive show He excels in the nuts and bolts of entrepreneurship ITC – steep excise hike When small is not so beautiful… L&T profit up by 11 per cent AL secures orders for 3600 buses Aurobindo Pharmacy: good turnaround CAPITAL NOTES AL introduces Guru & Partner Tata gets 4-star rating for Zest Preparing for the next growth curve Record two-wheeler sales Tata Motors aims to be among the Top 3 global CV & PV firm The gainers and the losers Tata Motors joins compact SUV bandwagon with Nexon The unexpected exit From the toughest to the best year Ode to Ratan Tata Are they really independent? Sivasankaran enters taxi space to take on Uber and Ola Is this a generation gap? Back in growth mode L & T’s floating dock for navy TVS Automobile invests Rs.75 crore in start-up firms Bajaj Finserv – Q1: fare well Toyota and Suzuki to introduce EVs in India by 2020 Right to privacy – now it’s fundamental! Land wars L & T set bigger ambitions in defence business Shriram Life clocks more than Rs.1000 crore premium in 2015-16 PPP model for infrastructure development 29 per cent jump in TCS revenues It takes two to tango ITC chairman calls for policy impetus to transform agriculture RoC in the dock... Solar installations exceed 2015 capacity in five months Increasing market share IOB on turnaround path Tata Motors charts investments in PV and CV businesses Vellayan is back, after 150 days Forging industry worried over lower supply of steel and its price A niche in FMCG business... Consolidating leadership position in smartphones Smooth sailing of SAIL AL wins Deming prize again Michelin to double Chennai capacity Carnival Films acquiring 3000 screens pan India M & M unveils driverless technology for tractors Tata Steel, ThyssenKrupp sign MoU to merge European units Gamesa to set up a plant in Nellore HPCL plans Rs.61,000 crore capex over 5-years A welcome initiative-even critics are recognised Yamaha unveils scooter boutique Rane targets Rs.5500 crore topline by 2018-19 Mercedes-Benz sales continue to zoom
 
Last stages
A pioneering company goes up in smoke

In 1973, a thirty something Citibank officer, Faroukh Irani, teamed up with Chennai’s money bag, A C Muthiah, to found India’s first ever leasing company.  Muthiah had a bigger equity stake but Irani was the business’s boss.

In 1988, the company began its walk into trouble. First, it forked out Rs 170 crore to depositors when Mercantile Credit Corporation (MCC), a Muthiah company, faced financial trouble. This was never reported to the banks.  Next, there were issues with a Singapore-based subsidiary. Trouble accentuated thereafter following an over reliance on short-term funding and a wanton asset-liability mismatch. Worse still, the 1990s diversification forays into mutual funds, consumer credit profiling, etc., floundered.  Two IIM dons who joined the mutual fund left, unhappy with Irani’s policy of breathing down their neck.

When the financials really went for a toss, the RBI directed the company to cease transacting any business and barred it from disposing its assets, incurring new liabilities or declaring dividends. Meanwhile, State Bank of India probed Irani of suspicious dealings with funds of the company. He apparently admitted to a Rs 1000 crore hole in the balance sheet with liabilities outstripping assets by that amount.  Soon the company placed its books under both special audit and forensic audit. When the preliminary report was out, Irani refused to play ball.  Along the way, the company’s statutory auditors, Sarathy and Balu, resigned after stating that audit reports issued by them regarding the financial statements of fiscal 2013 should not be relied upon. Sundaram and Srinivasan, Chartered Accountants, were appointed by the Board to conduct the special audit of the company for the last five years. The company wanted to submit revised financial statements for 2013. The Board decided to take civil and criminal action against persons whom the forensic audit may identify. Irani submitted his resignation and so did Muthiah.

While Irani accused Muthiah of forging his signatures, Muthiah says the company’s woes happened right under Irani’s nose. Irani claims that he is a whistleblower and has nothing to benefit from the malpractice, as his shareholding is less than 0.3 per cent. He further claims that the accounts have been tampered with without his knowledge.

ICICI Bank has now filed a petition for winding up of the company.

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com