Zuari Agro Chemical under MCA lens over corporate governance violations

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Zuari Agro Chemical, a Goa-based agrochemical company, is under the scanner of the Ministry of Corporate Affairs over a complaint raised by one of the employees about the firm's corporate governance practices.

At present, the exact nature of the corporate governance issue is not clear. "We have asked for information for inspection and in the coming days, we will also conduct a physical inspection," a senior official from the ministry told Moneycontrol.

The company has not responded to Moneycontrol's queries which were sent on March 2. Repeated calls to senior company executives remain unanswered.

The ministry's western regional director office ordered an inspection of the company under Section 206 of the Company's Act. The Western Regional Director has ordered the probe after obtaining a report from the Registrar of Companies' (RoC) office in Goa.

The RoC has found some instances of corporate governance violations in its preliminary probe. It wanted to investigate these issues further.

The flagship company of Adventz, Zuari is a single-window agricultural chemical solution provider. Started in 1967 by late KK Birla, the facility went on stream in 1974. Its products are being sold under the brand Jai Kisaan.

As per the Company's Act Section 206, "If the Registrar is satisfied on the basis of information available with or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act or if the grievances of investors are not being addressed, the Registrar may, after informing the company of the allegations made against it by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order within such time as he may specify therein and carry out such inquiry as he deems fit after providing the company a reasonable opportunity of being heard".

Once the MCA gets a complaint, the RoC conducts a preliminary inquiry, on the basis of which the ministry's regional director orders an inspection.

On the basis of the inspection report, the ministry will decide whether the case should be investigated by its own regional director or should be transferred to Serious Fraud of Investigation Office (SFIO). The SFIO usually probes cases if multiple agencies are involved in the same case.