The Kochhar family and the mystery of the two Credentials: Who's at fault?

The Kochhar family’s finance company, Credential Finance, appears to have a dual identity, according to records on the Registrar of Companies (RoC) website. There are two companies with the same name, but with different identification numbers. What’s surprising is that two companies cannot have the same name according to the Companies Act. 

Deepak Kochhar said it is because of a merger between two firms, and the original firm not being deleted from records, in reply to a query by Business Standard. According to experts, errors with similar company names typically used to happen when registrar details were maintained manually. 

Kochhar’s firms have been in the news recently. This was after allegations that one of his firms, NuPower Renewables, received capital in exchange for loans given by ICICI Bank to its borrower Videocon group. His wife Chanda Kochhar is the bank’s managing director and chief executive officer. All three parties involved have denied impropriety. 

Credential Finance though does not appear to be in active use. Its registration is unusual because the firm appears twice in the RoC database, but different identification numbers. Every company has a corporate identity number (CIN). Credential Finance has two — U65944MH1992PTC065966 and U99999MH1985PLC035149 — filings show.

Business Standard looked through its records and found that one company had limited records, while the other had financials only till 2013-14.
 

Credential’s financials (for the firm with CIN ending 5149) recorded a loss of Rs 1,093 million in 2013-14. This is the last year for which financials are available on the RoC website. It had a loss of Rs 618 million in the previous year. For this firm, the balance sheet had total assets of Rs 273.7 million, with trade receivables of Rs 240.7 million. Shareholders’ capital amounted to Rs 271.5 million on the liabilities side. The firm did not have any employees during the year, records show. Directors include Ganesh Jagannath Kakani and Chandrashekhar Pandurang Saptarshi.

Snapshot

• Two companies with the same name
• Credential Finance is a Kochhar family firm
• Registrar of Companies records show two firms with exactly the same name
• Two companies cannot have the same name as a matter of practice
• Experts suggest that manual operations in the old days could have led to the issue
• Kochhar said that one company was merged with the other, but the original firm's identification number was not deleted 

The other firm (with CIN ending 5966) does not have annual return filings. It did have some incorporation documents. They show that it was originally called Vikvin Finance, incorporated in March 1992. It then changed its name to Credential Investments & Finance, and again to Credential Finance, as per a fresh certificate of incorporation from 1994.

Deepak Kochhar said that a merger between the two companies had resulted in the creation of two CINs. There was originally one company called Credential Finance, with a certain identification number. “This company merged into another company in 1996 having its own CIN,” he said. He added that the merged entity was renamed Credential Finance. “Therefore, RoC shows two Credential Finance, each with a different CIN, when they ought to have deleted the first CIN after the merger,” he said.

Experts said instances of two firms with the same name are not accepted in the system, now that all records are electronic and online.  "Company names were checked manually in the old days. The process was more prone to errors. Today, it is not possible since such names are rejected during filing," said Ankit Singhi, partner at advisory firm Corporate Professionals.