Vengeance against Margadarsi Chit Fund Private Limited by CM YS Jagan

It is well-known fact, that how the shares sold at a premium of 36 or 40 times more than the Paid up Capital prior to the commencement of the business turned into a shambles by the individuals and firms infused the financial support through crony capital and quid pro quo as facing cases for more than 10 years by the present CM of Andhra Pradesh. But, unfortunately, the CM of the present Andhra Pradesh Government using executive power against a few people though has been tainted due to his imprudent financial practices when his father was CM of the United Andhra Pradesh.

Now, his eyes are laid to destabilize the Margadarsi chit funds private limited, which is carrying it’s business operations legitimately from the date of its inception of the company to the last financial year 2021-22 for more than 60 years. Till now Margadarsi Chit fund Private Limited after paying statutory funds of Rs.188.10 crores, the company contributed direct taxes of Rs.1050 crores and GST of Rs.275 crores, the postpaid taxes reserves legally available for investment by the company is over Rs.1,500 crores, out of which Rs.460 crores had been invested by the company in Mutual Funds. It has doubt that Investing in Mutual funds out of post-tax paid reserves a law violation.

If We have a keen observation at the financial documents filed by Margadarsi Chits Private Limited with the Registrar of Companies, as on 31st March 2022, out of the Rs. 1,170.73 crore total payable by the company head wise: 1) Chit dram by the company means the future liability pertaining to the foreman ticket ( Own Ticket ) Rs Rs.272.88 crores, 2) Security for the future subscription means Security amount collected as per section 21(e) from the prized subscriber towards their future subscriptions payable Rs. 138.54 Crores, 3) Bid payables means prize money payable to the successful bidders from the auction and Dividend payable to customers was Rs 580.59 crore, 4) Subscribers Refundable means amount payable to canceled non prized subscribers was Rs 19.92 crore and 5) amount paid by subscribers as the advance was Rs 158.80 crore.

Hence, Total payables by the company for Rs 1,170.73 crore has been backed up with Rs.2,723.39 crores are available in the form of post-tax paid free reserves in the form of cash or immediately convertible liquid assets Of this, 459.99 crore rupees are in mutual funds as the investments from the free reserves of the company, which means that there are still 2,263 crore rupees as back-up for the amount payable by the company. Of these, 1,929 crore rupees are in the form of bank deposits and cash and the balance of 333 crores are Receivables to the company, it means the company's strongest liquid assets base is available as the backup to the payables.

There is no big rocket science in this, after deducting the Rs 1,170.73 crore payable by the company from the post-tax reserve of Rs 2,723.39 crore, the remaining Rs 1,552 crore can be invested legitimately in mutual funds or advances or other investments as decided by the company. Professional opinion is that not only for the Margadarsi Chit Fund Pvt. Limited, any Organisation legally operating in this country can have right to make all legitimate investments from the post-tax paid reserves.

Further, the company with a turnover of over 10,000 crores, it is not a big deal to get 160 crores in cash and post-dated checks at the end of the financial year or any month in the financial year and if We look at the checks received at the end of the financial year, what percentage has been encashed according to the dates of those checks can be examined, anyone can understand the facts. At least 75% of the checks should be encashed as per those dates which would reflect reality rather than making false allegations with preoccupied motives. In the case of Margadarsi Chit Fund Private Limited, checks had been encashed for more than 80%.

Ironically, AP CB CID has been projecting the amount paid by subscribers as advance, Subscribers Refundable, Security for the future subscription, etc. are showing as “ Deemed Deposits “ with ulterior motives where there is no scope to express it as Deposits. Further, the attempt made by the AP CB CID against Margadarsi Private Limited to showcase the investments made in Mutual funds from its reserves as deemed deposits is ridiculous. Apart from this, they are making allegations that "There is a possibility that the mutual funds' investment by the company may have the risk impact on the deemed deposits though these investments were made out of the free reserves of the company after maintaining sufficient reserves in Bank deposit, Cash and Liquid assets.

In fact, the Andhra Pradesh government has been payable nearly Rs. 200 crores per month for the state government employees' subscription CPS funds every month out of the deduction from the employee’s salary and in addition, about Rs. 200 crores of the state government contribution together with a total of about 400 crores of funds per month that should be invested in these mutual funds. But, unfortunately, the last 10 months, about 4,000 crores of funds have not been invested and diverted for other means as per the source of the information.

This is a clear violation of the state government that funds deducted form the employee's source, but not utilized for the designated purpose. Definitely, it is the classical example of deemed deposits utilized illegitimate manner by the state government. It seems to be better if the cases are booked considering the fears of the state government employees of Andhra Pradesh against the heads of the Andhra Pradesh government rather than creating unfounded fears among the chit subscribers with lies.

As per the opinion of the Andhra Pradesh CB CID, Investments in mutual funds are risky and adverse impact on the depositors. Hence, financial institutions such as LIC, SBI, Kotak Mahendra, HDFC, and ICICI, which are doing business with crores of clients in Andhra Pradesh, are conducting business in mutual fund trading, Investment, and other activities, Whether all these organizations in the state are going to file the cases to cease their operation by means of expressing the view that these institutions clients have the risk of investing in mutual funds?

 State government CB CID officials that those who argue that if the company uses the reserve after paying the tax as the amount has been collected as deposits, then they should observe the state government's accounts given to the CAG after 31 December 2021 in the financial year 2021-22 show revenue deficit, fiscal deficit, etc. had been altered with huge adjustments for more than 25 thousand crores as on March 31, 2022? It would be better to know the truth by filing the cases on window dressing of the accounts of the state government to fix the people involved in it including the concerned Ministers and the Head of the state in the government.

Would anyone unjustly arrest and harass an auditor to vent for their personal grudge against a company or individual? If these are all questioned, will the questioners be given notices and harassed? By doing this, people are not accepted with attempts to suppress freedom of speech with notices, not being able to tolerate questioning of this evil on the grounds that the government of Andhra Pradesh has made a mistake in this matter by arresting the auditor and issuing the notices to auditors and advocates that who questioned in the public forums to harass them to keep the people as a puppet in the democracy.

In Andhra Pradesh, it seems that nobody is spared from the harassment, rather than the officials who have to explain the contents of the law comprehensively to the government and are holding press meets like politicians and is there a need to hurry in Delhi to conduct a press meet by saying that only a few journalists are allowed? Except for the temporary benefit for a few politically, in the case of Margadarshi Chit Funds Pvt Ltd their efforts may bring temporary happiness but ultimately justice will take the place for the truth as truth prevails. If the state government can't bear to question these mistakes and harass such people, then the court will knock on the door for justice as already it is happening.

-Lanka Dinakar, Financial Expert & AP BJP Political Feedback Pramukh.