Tax defaulters' list also include violators in securities market

Companies have been pulled up for market manipulation, listing agreement violations and disappearing altogether

A list of income tax defaulters put up on the department's website, reportedly the first time such a list has been put up in the public domain, has 18 names.

Many of these have also been named earlier as violators in the securities market, according to a Business Standard analysis of a database. Information from watchoutinvestors.com, an exchange-sponsored portal which offers data on entities pulled up by various regulators, shows multiple violations by more than one defaulter.

Blue Information Technology has had action taken against it by the Securities and Exchange Board of India (Sebi) in three different cases. This includes falsely increasing turnover, declaring of a false dividend and manipulative trading activities. It has also been pulled up by the ministry of corporate affairs (MCA), the BSE and the National Securities Depository (NSDL). MCA pulled it up for having defaulted in filing annual financial statements, and NSDL for not dematerialising its securities. BSE compulsorily delisted it in July 2004.

Another company called Icon Biopharma and Healthcare does not show any violations. These come up if one looks into the company by its earlier name of Moon Drugs. BSE pulled it up for not complying with the listing agreement, not filing the shareholding pattern and not sending the required corporate governance report. It has been included in a list of companies not traceable at their last known address, according to BSE.

The tax department faces the same problem. Ten of its 18 on the list are untraceable, including Blue Information Technology and Icon Biopharma and Healthcare.

Sebi has pulled up Somani Cement for issuing and dematerialising shares in excess of its paid-up capital, not paying an imposed penalty and for misleading corporate announcements. The company was also charged with offloading unlisted shares in the market through connected persons, and market manipulation. Separately, the BSE and National Stock Exchange have said it has not complied with the listing agreement or given a required corporate governance report.

The depositories have both noted the company had high pending demat requests. The company could not be reached at the phone number provided on the exchange website. No email address was available.

Shriram Subramanian, managing director of InGovern Research Services, said investors can try to identify certain indicators that a company might be a poor investment. “Related party transactions and promoter selling can be signs that investors could look at. Also, if institutional investors have sold out en masse in a short period of time, it is a red flag for retail investors,” he said.

Virendra Jain, founder of Sebi-registered investor association Midas Touch, suggested investors keep away from lesser-known companies which come to the market for the first time, and invest in established ones instead. He has previously deal with the so-called vanishing companies scam, where companies raised money through Initial Public Offers and could then be no longer found at their official address. Nor could their officials be traced. “Blue-chips are fine…(Investors could look to invest) largely in the secondary market,” he said.

Besides these firms which were charged with securities market violations, a number of others have been pulled up at other fora. Protech Intrade was found to be a defaulter of dues at the Debt Recovery Tribunal. Kunvar Ajay Food defaulted in payment of customs and excise duties. Both companies are untraceable, according to the tax department.