First Leasing Company of India Ltd, which has been looking for an entrepreneur to take over the management of the crisis-ridden company, today said Mumbai-based merchant banker Ashika Capital Ltd had offered its services for an equity sale or strategic partnership to the company.
V Selvaraj, chairman, told shareholders in an annual general meeting today, "Ashika Capital Ltd, Mumbai, Merchant Bankers have come forward to offer services for sale of equity/strategic partnership of the company subject to payment of certain fees."
"Since all payments from the company's collections are subject to RBI/bankers' approval, the company shall seek their approval for the payment of fees. After receipt of their approval, the company shall proceed further in this regard," he added.
The AGM was conducted to elect a new auditing team to prepare the audit report. However, the AGM, its first after the Reserve Bank of India (RBI), on September 13, 2013, barred the company from doing any business until further orders in public interest, saw angry shareholders seeking response on the crisis.
The RBI letter pointed out that the company had been over several years, falsifying its books of accounts and other financial statements, thereby portraying a positive net worth.
The company has negative net owned fund (NOF) and has been incurring losses year on year. It has also been violating the Reserve Bank's regulations and reporting false information in its regulatory returns, it added.
The crisis had been brewing in the company after the RBI action. One of the promoter shareholders and managing director of the company, Farouk Irani, submitted his resignation on October 21, 2013. On November 1, 2013, A C Muthiah, chairman of the company, and another promoter shareholder, resigned from the board to make an impartial enquiry in the conduct of the company for several years, said Selvaraj.
The company was incorporated by A C Muthiah, on September 10, 1973, with Irani, who is pioneer of corporate leasing services in India, as managing director. Statutory auditors, Sarathy & Balu, also withdrew their audit report and resigned.
Following the resignation of Muthiah, Justice S Mohan was appointed as chairman, who resigned from the company on March 5, 2014.
The RBI also appointed NC Rajagopal & Co, chartered accountants, to carry out special audit of the books of accounts and transactions undertaken by the company from the year ended March 31, 2010. The RBI had issued a show cause notice to the company and its directors on February 18, 2014, for cancellation of Certificate of Registration.
The board of directors have also appointed R K Raghavan, former director of Central Bureau of Investigation (CBI), to conduct a forensic audit to find out diversion of funds so as to initiate both criminal and civil action against persons whom the forensic audit report may identify, said Selvaraj.
