Account books of Rose Valley entities paint no rosy picture about firm

Fine print: Balance sheet and profit and loss account have revealed several suspicious transactions pointing to leakage of funds

A close look at the finances of Rose Valley entities reveals suspicious expenditure in the profit and loss account of its group companies. For instance,Rose Valley Real Estate RVRE has made payments to the tune of Rs 365 crore in the two year period of 2010-11 and 2011-12 towards voluntary retirement,without elaborating further.

Another significant entry of Rs 484 crore is marked as miscellaneous expense in the 2011-12 financial statement of Rose Valley Hotels and Entertainment RVHE.

The balance sheet and profit and loss Pamp;L statement of RVRE accessed from the Registrar of Companies RoC not only points to a poor performance of the company,but also to leakage of cash. While its revenues for the year ended March 2012 stood at Rs 42.5 crore,its losses for the year amounted to Rs 222 crore.

The losses in the previous year stood at Rs 374 crore. The company wrote off voluntary retirement expenses amounting to Rs 200 crore and Rs 165 crore in FY12 and FY11,respectively. During 2011-12,the companys cash and bank balances also fell down from Rs 733 crore to Rs 572 crore.

There is a clear leakage of funds from the company of at least Rs 160 crore in FY12 as the cash has come down in the balance sheet without any relevant entry for the same. The Voluntary retirement compensation written off amounting to Rs 200 crore does not seem to be a relevant justification, said a research director in a leading global financial services firm after going through the balance sheet and Pamp;L statement of RVRE.

When contacted,the company told The Indian Express,There is no voluntary retirement component. The figure that is being referred to relates to compensation for relinquishment of right of occupancy. This is clearly in contrast to what RVRE has stated in its filing with the RoC.

The case of RVRE is not in isolation. The facts at RVHE also reveal many questionable entries.

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The Pamp;L statement for the year ended March 2012 shows a miscellaneous expenditure of Rs 489 crore,with its losses showing almost a nine-fold increase from Rs 52 crore in FY11 to Rs 468 crore in FY12.

While RVHE saw its cash and bank balances jump from Rs 741 crore in FY11 to Rs 1,222 crore in FY12,its other current liabilities jumped from Rs 990 crore to Rs 2,906 crore.

The company gave loans and advances amounting to Rs 596 crore during the year out of which Rs 378 crore were given to its holding company i.e. RVRE and another Rs 217 crore were given to its own chairman and promoter Gautam Kundu as is disclosed in the related party transactions.

While miscellaneous expenses amount to Rs 489 crore itself raise questions,the company saw its cash rise by only Rs 481 crore whereas its current liabilities have gone up by Rs 1,916 crore, said a chartered accountant who did not wish to be named. Regulators need to ask where is all the money going.

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Responding to the queries raised by The Indian Express for clarity on the miscellaneous expenses amounting to Rs 489 crore,the company said,The major component in other expenses category is Rs 478.6 crore paid by way of commission,subject to withholding taxes,for procuring time-sharing bookings.

When asked about loans to RVRE and Kundu,the company said that the loans given to RVRE are non-interest bearing and that no loan has been given to Kundu.

Sebi orders company to wind up holiday membership scheme

MUMBAI: The Securities and Exchange Board of India Sebi on Wednesday issued a fresh order on Rose Valley Hotels and Entertainment Ltd asking the company not to raise money in the name of holiday membership schemes.

The order follows a probe into the scheme,where Sebi found that RVHEL was allegedly running a Collective Investment Scheme without registration and necessary approvals. ENS