From Our Bureau
NEW DELHI: The Baidyanath Group, one of the oldest players in the Indian Ayurvedic pharmaceuticals run by a family since 1917, is in the throes of a major financial scam blown up by its two members, alleging laundering of over Rs 10,000-15,000 crore through 72 shell shenanigans, all operating from within its premises.
Despite grave irregularities mentioned in the qualified statutory auditor’s reports over the decades, the Registrar of Companies, Kolkata, registered the complaint but took no immediate action against the board of the company indulging in serious corporate governance lapses, frauds and malpractices and cheating of the government revenues.
Founded over 100 years ago by late Pandit Ram Dayal Joshi, along with his brother Late Ram Narayan Vaidya, the company was incorporated on 22.05.1947 and run by late H L Sharma, eldest son of Joshi, as its managing director until his death in 1985.
Peeved by the family’s name being defamed with the financial frauds, elder sons of Sharma, namely Rajesh Sharma and Rakesh Sharma, filed a complaint on November 7, 2022 with the Ministry of Corporate Affairs (MCA), Serious Fraud Investigation Office (SFIO), and Registrar of Companies, Kolkata, etc. (ROC) for a probe into the state of affairs of the company.
They have alleged gross mis-utilization of the assets/funds of the company, filing of the financial statements with the authorities saddled with the aid of decoy accounting without following the accounting and secretarial standards and paying a paltry tax to the government by suppressing and diverting profits. They have also sought the appointment of independent administrators immediately to stop further frauds in the company by those managing it.
Brothers Rajesh and Rakesh Sharma said they were the minority shareholders in the company. They decided to go public as those managing the show even suppressed their rights and denied them more than Rs 80 crore they were to be paid as the legal heirs of their father Late H L Sharma. They cite the stinging remarks of the statutory auditor that the board did not explain regarding the objections he raised in the audit report.
Citing the company’s balance sheet for 2020-21, they challenged the paltry profits of Rs 11 crore shown by dubious means, including transfer of funds to 72 asset-less bogus companies and Rs 25 crore, more than 200% of the net profits, pocketed by individuals, relatives of the directors, as perks and remuneration.
The complaint also alleges how the company squeezed its coal mining and power division through an illegal demerger and changed the name of the demerged entity as Shivmonk Energy Private Limited, without following the due process of law.
Despite having equity shares of the company, the two brothers have been deprived of their right for the past two decades by never serving any notice of any general meeting, as mandated under Section 96 of the Companies Act, 2013, nor are they provided any financial statements as mandated under Section 136 of the Act.
They said the financial embezzlement and misappropriation of funds was so much that the statutory auditor in his report categorically reported that the financials of five units of Kolkata, Patna, Jhansi, Nagpur and Naini (Allahabad) have not been audited by him and since decades, the company is continuously violating the stringent provisions of Section 145 of the Companies Act, 2013.
