Editorial – July 2015

The market regulator Sebi should investigate the Matrix IPO filing to unravel the secrecy of the company’s ownership-benefit structure.

At the heart of the matter is the relationship between Matrix and an unknown Mauritius registered company, Aleta Pvt Ltd about which nothing is known except its name and the fact that it is registered in Mauritius under Global Business Category 1 (GBC1). A company under this category can be registered with just $1 paid-up capital, have just one shareholder, and operate with two directors. The record of the directors, shareholders, and company’s accounts are secret, inaccessible to public. Therefore the company belongs to what in financial world is known as secret jurisdiction, against which there is a worldwide consensus among campaigners for tax justice, belonging to both government and non-government. Detailed investigations by statutory bodies into the Matrix IPO will reveal the revolving doors between legitimate business and illegitimate money.

Our analysis for this cover story is based on information that has been put out by Matrix in the public domain, responses of the company to our queries – some of which even went unanswered – as well as vital information pieced together from different sources.

The Matrix IPO is a stake dilution by the promoters: Gagan Deep Singh Dugal, Manjit Singh Dugal and Urvashi Kaur, Aleta Pvt Ltd of Mauritius and AAJV Investment Trust. The IPO is a stake sale of 36.10 per cent from these existing shareholders. Money will not flow back into the company, Matrix, but into the accounts of the promoters. The maximum per cent of the offer is accounted for by Aleta at 29.41 pc followed by the Dugal family at 6.91 pc and a nominal per cent of 0.59 pc belongs to AAJV Investment Trust.

Another significant point of investigation should be the conversion (managed by Dugals) of Rs 50 crore debentures into equity shares issued by Matrix in favour of Bennett Coleman & Co Ltd (BCCL). This is important on two accounts, first to establish the major sway of the ‘secret’ company Aleta over Matrix and second to determine what bearing this transaction has on the valuation of Matrix shares now that it is bracing for the IPO. Read our cover to know all the details with calculations and statistical charts.