1 room, 114 shell companies: Satyam's Raju makes a comeback in Hyderabad

Officials at the Registrar of Companies (ROC) raided a tiny office in Hyderabad's tony Jubilee Hills area and found 25 employees running 114 companies out of a single room. What's even more intriguing is the fact that a majority of the entities are owned by family members of B Ramalinga Raju, the man who pulled off India's biggest corporate fraud --- the Satyam Scam.

The tiny office in Fortune Monarch Mall has the registered address of SRSR Advisory Services Private Limited, a financial services firm. ROC, which is raiding six locations in Hyderabad, found most of the firms were linked to Raju and his relatives.

One of the officials raiding the office claimed that this was probably the largest number of companies registered with one company in both Telangana and Andhra Pradesh. "It’s premature to call them shell companies, but prima facie evidence suggests financial wrongdoings. We will have to look at the documents, evaluate and come to conclusions,” he said.


An ROC official said, “According to rules, any person can be a member of 20 registered companies. We are checking whether this rule has been violated as the same people figure as directors in many of these companies.”

Post-Satyam scam in 2009, CBI and ED had filed chargesheets against these companies.

“The chargesheets filed by ED and CBI against these firms are separate issues. We are looking into shell companies’ angle,” said the ROC official.

SRSR Advisory Services officials said, “All these companies are named in CBI and ED chargesheets. ED has attached assets. The companies are active, but not operational. We have been filing zero balance sheets for most. We can’t close these companies as the assets will be returned to them if cases against them are struck down. As SRSR Advisory Services is an accounting firm helping these companies, they are all functioning from the same address. It is not an offence to have many companies at the same address.”

Satyam rocked corporate India and laid bare many alarming truths about the inadequacies of the country's corporate governance standards. The government reacted to the fraud by overhauling the regulatory framework, with the new Companies Act 2013, which fixed liabilities of auditor and independent directors, among other changes. In 2014, market regulator Sebi amended Clause 49 of listing guidelines to improve corporate governance.