How realty firm fudged auditing right from inception

Ministry of Corporate Affairs 'failed' to act

While thousands of people pin hope on the police investigation into the dubious real estate firm Dreamz Infra India Ltd, a public company registered in Bengaluru, it has come to light that the company has fudged auditing since its incorporation in 2012.

On one hand, the company has not filed any financial statements with the Registrar of Companies since 2014 and on the other, the statements filed till then are falsified.

No accounts

As of March 2014, the company has shown to have collected Rs 185 crore from customers in the form of advances for the upcoming housing projects. Out of this amount, approximately Rs 91 crore was shown as invested in the business, though no details of business are given. Above all, there is no account shown for the rest of the amount received from customers.

In 2012-13, the advances from the customers stood at Rs 151.11 crore, which rose to Rs 185.91 crore the next year. Interestingly, the company’s directors availed themselves of high benefits out of this money.

The managerial remuneration of the directors was Rs 1.55 crore, leave encashment Rs 20 lakh, the remuneration of all the directors is Rs 33.84 lakh, the commission is Rs 69.74 lakh and travelling expenses are as high as Rs 1.27 crore.

Being a public company, the directors have diverted the advance from the customers for expenditures in different ways. This apart, inventories (project under process) were shown at Rs 71.73 crore.

This is how a major portion of the money collected from the customers has been swindled by the company.

Multiple wrong entries

Multiple wrong entries in the company’s financial activities started from the very year of incorporation.

There is an entry of unsecured loan of Rs 13.82 crore in the beginning of the incorporation year. In the balance sheet of the company for 2011-12, the short-term borrowings are shown as Rs 13.82 crore.

However, in the next year’s balance sheet, the same column, unsecured loans under short-term borrowings, is shown as nil. The company had transferred an amount of Rs 5.05 lakh in 2012 to another company by name Dreamz Drinking Water Pvt Ltd, which does not exist.

Several such wrong entries have gone unnoticed by the regulating authorities. Moreover, despite not filing any financial details for the past three years, no action has been taken against the company or directors by the Ministry of Corporate Affairs.

Firm directors

Dreamz Infra India Ltd was incorporated in January 2012 and its directors are Disha Chowdhary, Sujit Sudhakaran, Surya Singh Prakash and Iqbal Khan. The company was started with a paid-up capital of Rs 2 crore.

How to get your money back?

Here is a tip for people who invest or pay advance money in a real estate project which is yet to take off.

If the realty company is registered with the Registrar of Companies (RoC), a customer can raise a complaint in a prescribed format, which will be listed along with the financial details of the company.

One such complaint was raised by Gajanan Hungund, who works for an MNC in Bengaluru, against Dreamz Infra. Though RoC has not replied to his complaint, Dreamz shot off a letter, asking Gajanan to withdraw his complaint.

“I received a letter stating my complaint has damaged the reputation of the company. I insisted on return of money with interest. I consider myself lucky, since within 45 days I got my money back with interest. The ministry of corporate affairs should have taken some action against this company,” he said.


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