1. Good Bye!!!

2. Vanishing Companies
As per the definition stipulated by SEBI:
Any listed company, which raised
money through IPO but, stopped
operations, did not file returns either
with the RoC or SEBI and did not
exist on the registered premises
is termed as vanishing.

3. Case of Vanishing Companies in India
Liberalize the
market
Companies
misused the
funds
No
supervision of
SEBI or DCA
Controller of
Capital
Issues
Investors
allege SEBI
and DCA
Raise money
at fancy
premiums
SEBI
IPO
Promoters
took
advantage

4. Number of vanished companies in 90s
• 1992 to 1998- around 122 companies
'vanished' after making IPO of their equities.
• Over 7000 plantation companies were
vanished in the era of 90s.
• Most of them were located at Maharashtra and
West Bengal.

5. Vanished Plantation Companies
Company
Location
EURO FRESH PRODUCE PRIVATE
LIMITED
Chembur, Mumbai.
APS TEA CO PRIVATE LIMITED
Jalpaiguri, West Bengal.
INVISION PROJECTS PRIVATE
LIMITED
Prabhadevi, Mumbai.
DINESH AGRO PRODUCTS LTD
Pune, Maharashtra.
ASR AGRO LTD
Vishakhapatnam, Andhra Pradesh.
BHAWANIPUR TEA COMPANY
PRIVATE LIMITED
Sonari, Assam.
HARIOM PROTEINS PRIVATE
LIMITED
Ahmedabad, Gujrat.

6. Reasons of vanishing companies
• Failed to file returns with Registrar of
Companies for a period of two years.
• Failed to file returns with Stock Exchange for
a period of two years.
• Not maintaining company’s registered office at
the notified address.
• None of its Directors are traceable.
• Mis-statement & Fraudulent prospectus and
Balance Sheet.

8. What went wrong?
• Inflated figures for cash and bank
balances of INR 5,040 cr. were reflected
as INR 5,361 cr.
• Operating Profit were artificially
boosted from the actual 61 cr. to 649 cr.
• Satyam also showed a fictitious interest
earning of Rs. 376 cr.

9. Need for Manipulation
Show the superior performance of
company.
Drive up the stock values.
Manipulations were like:
 Raising fictitious bills for services that were
never rendered.
 To increase the Cash &bank balance
correspondingly.
 Operating profits were artificially boosted.

10. IMPACT ON INDIAN I.T
INDUSTRY
• More difficult for other Indian IT service
players to win business.
• Hurt the prospects of foreign money
flowing into India.
• Global perception about Indian companies.
• Indian stock market slipped over 7% on 7th
Jan., 09.

11. Effects of Satyam Scam
• “Apparently fearing that he may lose his job, a
23yr old employee of satyam computers
allegedly committed suicide.”
• US banks cancelled credit cards of most of the
US based Satyam employees.

12. Need to save Satyam
• To maintain stability and to bring the
position of market on track.
• To save the bread of 40,000 employees.
• As investors were losing trust and
confidence on other private companies also.

13. Acquisition of Satyam

14. ENRON

15. Andy Fastow’s SPE strategy:

16. TEAK PLANTATIONS

17. ANUBHAV TEAK PLANTATIONS
• Anubhav Group of Companies.
• Established in 1992.
• 91 offices and over 1800 employees.

18. Commencement
• World Wide Fund for Nature.
• Integration from teak to furniture.
• Mobilizing funds from the investors.

19. Problems
• Income= 38 crores;
Net profit= 38 lakh.
• Paid up capital= 36 lakhs;
Borrowings= 2.64crores.
• Loans= 25 crores.

20. Investigation
•
•
•
•
Anubhav had serious liquidity problem.
Blame SEBI and rating agency.
Investors filed complaints.
Company procedures at fault.

21. • CRISIL: more than 300 crores were contributed
by the investors.
• NABARD: The Teak trees were sold at Rs. 15002000.
• MRFD: found that for plantation of these trees
costed only Rs 400.
• The return on investment was seven times more.
• Yield of the trees with a girth of 60 cm and
above, in 15 years, would be about 5.1 cubic feet
per tree.
• SEBI was invited by the ministry of finance.

22. After-effects
•
•
•
•
Criminal case on 13.10.1998.
Transferred to EOW-II Chennai on 22.01.2000.
Natesan was under judicial custody for 8 years.
Bail on 22.03.2007.

23. KINGFISHER AIRLINES
“WELCOME TO AN AIRLINES WITHOUT PASSENGERS”

24. Snapshot of Downfall
Kingfisher airlines could not meet their
expenses.
Total debt of Rs.7000 cr.
Operational loss of Rs.1027 crores over
the last year.

25. BPCL even filed a court case for
recovery on unpaid dues.
Their cheque of Rs. 151 crores bounced.
Landing charges in Bangalore and
Hyderabad airports.

26. No assets that it can sell or mortgage.
The bankers in lieu of converting Rs.750
cr. to equity, got 23% stake in the airline.
Hence the banks lost about 300 cr. in this
transaction.
Kingfisher’s total debt was Rs 8,414 cr.

27. Measures to avoid vanishes
SEBI should appoint their own auditors.
Director Identification Number.
Mandatory for the professionals personally
visit the premises.
The RoCs scrutinize the Balance sheets.

28. Conclusion
• These companies are truly brands. Their walkout had literally shaken up the economy.
• But now SEBI has become much more
cautious and is trying to help the companies
work efficiently.
• Only the plantation companies were left out
without any scope to retain in the market.