The e-commerce brand's parent Getit Infoservices has told the Ministry of Corporate Affairs and the Registrar of Companies to ensure that the Malaysian investor, who is a majority shareholder in the firm, does not exit without meeting its liabilities and commitments.
Pushed against the wall by its majority stakeholder – Astro Overseas Ltd (AoL) – owner of e-commerce firms under the brand AskMe, Getit Infoservices has knocked on the doors of Ministry of Corporate Affairs (MCA) and Registrar of Companies (RoC) asking them to ensure that the Malaysian investor does not exit the country without meeting its liabilities and commitments.
AOL owns 98% in Getit Infoservices through Astro Entertainment Networks Ltd, Mauritius (AENL). The majority shareholders of AOL are Usha Tegas group and sovereign fund Khazanah Nasional of Malaysia.
In a letter to the ministry and RoC on August 9, the key managerial personnel (KMP) of Getit Inforservices expressed concerns over its foreign investor reneging on its "written promise and commitment of funding the company of its latest tranche by July 31".
This, KMP said, will starve the company of funds and adversely impact its operations, employees and tax and statutory liabilities.
"This has come as a surprise as till recently the majority shareholder, AENL made various promises and commitment both in writing as well as oral, committing thereby to fund the Getit Group till July, 2016, on the basis of which the key managerial personnel were running on a going-concern basis," said the written to Tapan Ray, secretary, MCA and D Bandopadhyay of RoC Delhi.
The letter states that the company will not be in a position to pay the salaries of around 4,000 of its employees for last month – July – and could cause delay shelling out taxes including the deposit of tax deducted at source (DTS), service tax and other statutory payments such employee provident fund, gratuity, ESI and others
The company lamented that with its net worth already having turned negative and not having sufficient cash flows and profits, it was in no position to meet its liabilities to creditors and vendors.
"Getit Group also does not have the financial capacity to pay to the creditors as the total liabilities of the group have exceeded the assets by around $50 million and Getit Group has no tangible assets that could cover these liabilities," states the letter to the government officials.
The management of the company further accused the overseas investors and its nominee directors on Getit's board of failing to act "as per their fiduciary capacity" and never in the "interest" of the company, which had "forced" non-compliance of statutory liabilities on the company and them.
With AOL looking to exit from Getit, its minority shareholders were considering a management buyout (MBO). Sources in the company, who did not want to be named, said the MBO was not getting through because of resistance from the AOL.
The letter said the foreign investor backed out of an important board meeting, at the last minute, called for approval for allocation of preferential shares to it against the money received for the same by Getit, on frivolous grounds.
"One-and-a-half hour before the scheduled time for convening the EGM (extraordinary general meeting), AENL refused to attend the EGM and board meeting and cited some utter baseless, untrue, fictitious, imaginary reasons for not attending the meeting," said the Getit letter.
The domestic group said since Section 42(6) of the Companies Act, 2013, required a company to allot shares within 60 days from the date of receipt of share application money, or face huge financial liabilities, they were now in non-compliant with the Act's provision.
Getit Infoservices had received share application money from AENL on June 9, aggregating to Rs 51.02 crore. It had, therefore, called the board meeting and EGM on August 8, so that it could make the payment within the prescribed period.
The group which had several e-commerce companies under it has asked the government official, in its letter, to initiate some "precipitative action" against AOL and AENL in the "interest of larger wellbeing and welfare of around 4,00 Indian families".
"AOL and AENL cannot look at exiting India without paying the rightful amounts to the employees, third party, vendors, statutory authorities, etc," it said in its letter.
It has also accused the Malaysian investors of intimidating its company secretary and "conspiring" to sack her on frivolous grounds.
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