Gitanjali Patel

Gitanjali Patel 

Posted Monday March 10, 2014
 

Behind the paywall: The Indian Ministry of Corporate Affairs registry

Photo CC Flickr User sandeepachetan.com travel photography

Even if growth has fallen in recent years, India is still an economic juggernaut. The country is registering growth levels of over 5% annually and continues to enjoy record levels of foreign direct investment. And while corruption remains shockingly high both on the state and local level where petty bribes occur as a normal part of everyday life, efforts to combat corruption are in progress. The most prominent of these efforts is the inauguration of India’s corporate registry within the Ministry of Corporate Affairs.

The information provided by the Indian MCA however, is so obscured by layers of practical and financial restrictions that investigators lacking patience will simply miss it. The second post in our Beyond the paywall series will look at what is available behind the barriers of this corporate registry and evaluate the value of its data for investigations.

We thought it would be interesting to use one of the operating companies of the major Indian conglomerate Tata Group as our case example, both because it was listed as themost transparent company in emerging markets (despite its long-standing history of involvement in fraud and corruption scandals), and because ironically, Tata Consultancy Services was commissioned to develop the MCA registry.

So if we choose Tata Motors as our operating company, what information can we actually find and what obstacles do we face?

The paywall (and other logistical walls)

The MCA does not make its access restrictions immediately obvious on its site. It is possible to conduct free company searches, however it is not until you try and view documents that you discover the cryptic small print telling you that access to the actual data requires a login.

Login

The adventure continues when trying to create your login and you find out you have to download a Java application which then doesn’t work in a Chrome or Safari browser. It is only once you’ve downloaded Firefox or Internet Explorer and successfully created a login do you notice the small fee of Rs50 (49p) needed to obtain records for a particular company. The MCA employs a sort of ‘online shopping’ system whereby you select the companies you would like information for and ‘add to cart.’

Problems with Java

The complications don’t stop there, however. Some documents require you to download Adobe Acrobat PDF reader (they don’t display in Chrome or Firefox’s built-in PDF readers) and the site’s performance is often intermittent with some pages painfully slow to load. If you are inactive for more than 7 minutes the site will automatically log you out without any warning.

The data

Though the journey is long and slightly arduous, the MCA registry really does contain valuable information. Listed below are the different types of information available and how to find them.

  1. Company name, number and registered address

  2. Financial information (P&L, balance sheet)

  3. Director names (and shareholdings in the company)

  4. Share capital and structure

  5. Subsidiary companies

  6. Changes in director

  7. Mortgages and other charges

However, information is buried in a somewhat confusing list of categories that takes patience to navigate (pressing back will get you an error, you have to reload every time):

Category List

1) Company name, number and registered address
Section: Annual Returns and balance sheet attachment
Document name: XBRL document in respect of profit and loss*

2) Financial information

P & L:
Section: Annual Returns and balance sheet attachment
Document name: XBRL document in respect of profit and loss

Loss and Profits

Balance sheet:
Section: Annual Returns and balance sheet attachment
Document name: XBRL document in respect of balance sheet

Balance

3) Director names (and shareholdings in the company)
Section name: Annual Returns and balance sheet Eform
Document name: FormSchV [date] for the FY ending on [date]

Director

4) Share capital and structure
Section name: Annual Returns and balance sheet Eform
Document name: FormSchV [date] for the FY ending on [date]

Capital

5) Subsidiary companies
Section: Annual Returns and balance sheet Eform
Document name: FormSchV [date] for the FY ending on [date]

Subsidiary

6) Change in directors
Section: Change in directors
Document name: [Form [number]]()

Change director

7) Mortgages and other charges
Section name: Charge Documents
Document name: Form [number] Charge ID [number]

Mortgages

Investigators should be warned that these records are only available for a limited amount of time and so documents should be downloaded immediately.

Applying MCA data to a case study

Interestingly our case example ‘Tata Motors’ was involved in a major corruption scandal in 2010, when it built a car factory on Gujarati land bought for a fraction of the asking price, leaving the company with an astronomical monetary benefit of Rs33,000 crore (£3.23 billion).

Since the MCA provides quite detailed information in its annual-return documents, we had a look to see if we could find anything that might indicate the movement of such huge flows of money around that time.

Tata MCA

Though Tata Motors is obliged to declare its deployment of funds, a breakdown of specific expenditure is not listed. As a result it’s not possible to see whether the huge sum Rs33,000 crore had even been partially accounted for. Conveniently the corresponding document containing attachments also seems to be empty:

Tata documents

What can we take away from this\?

In a country of such a great size and population, data gathering is problematic due to the lack of infrastructure needed to process and format data encompassing thousands of languages. As a result, limits and holes in data can be frustrating, though the picture is not completely bleak. India’s progressive transparency initiatives have been hailed in emerging markets where projects are predominantly government-led (unlike in most other developing countries where initiatives are mostly citizen-led). Independent grass roots initiatives such as ipaidabribe.com are also tackling corruption problems at a local level.

In conclusion, the MCA registry is no one-stop-shop, the information available is extremely valuable and would be otherwise impossible to find. Instead of answers, director, shareholder and subsidiary information offer clues for further steps in an investigation. As we saw in our previous post on the Cayman Island’s registry, data on international entities can often be supplemented with information from other jurisdictions such as the US or UK.

Stay tuned for our next post - if there’s a particular country or registry you’d like us to look at, please let us know in the comments or by emailing research@arachnys.com.

Topics: / Behind the paywall

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