Two shareholders control entire stake in QNET's India franchisee

FY12 Balance Sheet shows networth of Rs.6.53 lakhs

The relatives of two directors in QNET’s franchisee Vihaan Direct Selling (India) Private Ltd hold all its equity capital — 100,000 shares.

Vihaan is the franchisee handling the India operations of QNET, the controversial marketing scheme that allegedly offers individuals an opportunity to make Rs 4-5 crore through direct selling with an investment of less than Rs 2 lakh.

Vihaan’s shareholders either fall under the category of directors or relatives of directors, according to a Business Standard analysis of the filings companies have to maintain with the ministry of corporate affairs. Guhan Ramachandran and Vanka Srinivas Rao are listed as directors of Vihaan, according to documents filed after the company’s annual general meeting on September 29, 2012. However, the documents show they do not hold any shares in the company, suggesting their relatives are the stakeholders.

Earlier, QNET operated in India through Questnet Enterprise India Pvt Ltd. “For various business reasons, QNET decided to award the franchisee to Vihaan,” said Ajay Chanam, official spokesperson, QNET India. He added there was no relation between Questnet Enterprise India and Vihaan.

A CLOSER LOOK AT VIHAAN

• QNET’s operations in India are currently through Vihaan Direct Selling (India) Private Limited
• Two shareholders, relatives of its directors, hold 100% stake in Vihaan
• Vihaan’s latest balance sheet (FY12) shows net worth of Rs 6.33 lakh
• The company business is said to run into hundreds of crores
• QNET declined to comment on the identity of shareholders or talk about current financials

QNET declined to comment on the identity of Vihaan’s shareholders.

Vihaan was incorporated on October 10, 2011, and the last balance sheet it filed pertained to 2011-12. Updated documents would be filed by the end of September, the spokesperson said. Vihaan has a share capital of Rs 10 lakh, according to the last available balance sheet. Its total liabilities stand at Rs 16.98 lakh and it also has current assets in the form of cash and cash equivalents of Rs 16.71 lakh.

The company, said to have conducted business worth hundreds of crores, had a net worth of Rs 6.53 lakh, according to its last balance sheet.

Estimates based on Business Standard’s direct interaction company distributors, as well as on source-based information, suggest the company has collected at least Rs 400 crore so far — it had enrolled about 30,000 investors, most of whom had paid at least Rs 1.5 lakh upfront.

The company said it had 68,000 representatives, but disputed the figures for the amount of money it had collected, suggesting it hadn’t done as much business yet. It then said for this financial year, it was on course to conducing business worth more than the amount stated earlier.

Later, it indicated this was a rough estimate and could be affected by recent issues. The company is being probed by the Economic Offences Wing, following a complaint about the sale of “miraculous products” that can cure cancer and other diseases, according to reports. A person had been arrested in the case and multiple bank accounts frozen, reports had said.

QNET maintained the company wasn’t involved in illegal activities. It, however, declined to comment on Vihaan’s financial details.