Can one small office house 114 companies? This is the question that led the officials of the Hyderabad Regional Office of the Registrar of Companies (RoC) to launch an inspection at a small office at a mall in Jubilee Hills on Wednesday.
The officials were looking into shell companies operating out of Hyderabad, when they found that the 114 companies owned by the kin of tainted Satyam founder Ramalinga Raju were being “kept alive” by SRSR Advisory Services Private Limited, that provides financial services.
“This is the largest number of companies registered with one company in both Telangana and Andhra Pradesh. It’s premature to call them shell companies, but prima facie evidence suggests financial wrongdoings. We will have to look at the documents we collected today, evaluate and come to conclusions,” said an official who was part of the raid.
The small office at the Fortune Monarch Mall on Road No 36, Jubilee Hills employed 30 people, many of whom were listed as directors for the 114 companies. “This way, they can avoid violating the Companies Act that limits the number of companies a person can be a director to just 20. We will check if other rules have been violated,” said another official.
The officials told TNM that the RoC will be conducting inspections in six locations in the city in coming weeks as an effort to crack down on shell companies.
When the Satyam scam came to light in 2009 the CBI and Enforcement Directorate booked cases and filed charge sheet against many of the companies owned by the Satyam founder, Ramalinga Raju. The 114 companies are part of that ongoing case being investigated by the CBI and the Enforcement Directorate.
SRSR Advisory Services was founded in 1999 and has Namburi Ramaraju and Namburi Siva Linga Ravi Prasad Raju as directors.
Ramalinga Raju’s brother B Suryanarayana Raju is the former managing director of SRSR Advisory Services and was also the director of SRSR Holdings. They have already been named in CBI and ED chargesheets with reference to the Satyam scam.
SRSR Advisory Services officials were initially hesitant to speak and sent in a lawyer associated with the case as their unofficial spokesperson.
”These companies have zero balance sheets, no transactions happen on their ledgers. So the question of financial wrongdoings don't arise. Agree that these companies were named in CBI and ED chargesheets but at some point the case will get over. These companies have acres of land and 287 properties and other assets, including fixed deposits attached to them. These companies are being kept active and not operational only until the case gets over. We can’t close these companies, as, if cases against these companies are struck down, the attached property can be returned to the rightful owners. As SRSR Advisory Services is an accounting firm, they help these companies and so they are all functioning from the same address. It is not an offence to have many companies in the same address if there are multiple board of directors,” the lawyer told reporters.
RoC officials called this a ploy. “They have made the employees the board of directors to be the fall guys when the case goes awry, we will be looking into the fine print of the matter in the coming days.”