If you browse through a case study on finance for mba the net you will come across various types of finance case studies. There are many such cases that take place any year which you will find interesting to read further. Here you will be discussed JVG finance case study examples with solutions in detail.
In this blog, you will be discussed the case study of JVG group that occurred in the year 1997.
In the month of October 1997, RBI banned JVG group of companies that were associated with the banking fields. Some of the branches that were a partner of the JVG group were JVG finance, JVG leasing, and JVG securities.
RBI took the decision to ban these groups by carrying out an investigation on the branch and found that JVG group were accepting a huge deposit which is beyond their limit. People who work under the organization raised voices against the company and this has led to huge disappoint among the depositor of this group.
Just after the month of seeing their various branches closed by RBI, JVG hired an office in Gurgaon to comfort the angry investors. There were hundreds of agent and investors who were part of the company and the agents who were responsible for raising the funds from the public were deeply worried. Well, this finance case study examples with solutions is obviously a situation to worry, isn’t it?
The agents along with workers teamed up in hope of getting back there money they invested in the group. But unfortunately, the results even worse and there spread a rumor that JVG group is suffering a financial crisis at that point. One of the comments of the JVG group chairman made public restless, he said that the certificates awarded to the people do not have any value and were fake. So they will not be paid.
The group offered the investor to start investing with as low as 500 rupees. The people were not in a mood to take the case to the court. According to a report, agents and the investor admitted that they were responsible for this tragic loss.
The Background of JVG Group
The chairman of the group, Sharma was initially a small-time contractor who earned merely 2500 a month. Then, he thought of opening a company and JVG group happen, the company made a huge turnover of 1000 crores in just seven years.
This made Sharma experience the luxurious lifestyle, he bought farmhouses and expensive cars and in town, he also took lease to deposits of taps especially in north India.
Sharma did his graduation from Kurukshetra University and started his career as a material supplier, he basically was a supplier of construction materials and later he went to launch his first ever company named as JVG group.
Sharma was very passionate towards his dream he wanted to make the turnover of the company to 12000 cores within 2000. In order to achieve this, he announced that he will invest around 4000 crores in various sectors including cement, hotels, power, and textiles.
Thus the group moved forward according to the goals but there was a lot of flak that was heard about this group. They also wanted to enter in the field of FMCG segment and thus they launched the ‘Avatar’ brand that is known for manufacturing detergent and bathing bars of these finance case study examples with solutions.
Later they also acquired polyester yarn plant by settling a tripartite agreement under the presence of IDBI and Mishra. The agreement stated that JVG paid 98 crores cash to Mishra to have a control over the 130 crores property.
Frauding Details
In the month of September 1997, various cheques that were post dated were issued and found to have bounced. Consequently, investors got disappointed and lodged complaints against the company to court under ‘negotiable instrument act’.
The government got many complaints against the group for not paying the maturity. RBI filed a complaint and this has led the company to wind up. Criminal prosecution limitation was also filed against the company by RBI.
According to RBI, the company accepted the deposits by raising funds from the investors that sum up to be 88.8 crores which were more than 750% of the net owned funds. The permissible limit was much higher and is above 25% for these finance case study examples with solutions.
Later on, Sharma repaid the matured amounts to the investors of the company and only 30 crores were left to be paid to depositors of the JVG finance with January 1998 as well as 100 crore to the polyester of JVG leasing within 1999.
Sharman declared that in these finance case study examples with solutions would be impossible for him to repay such amount even for the depositors whose deposits have not been matured. Sharma claimed that the agents of his group have issued fake certificates to the depositors and that has made his responsibility to pay Rs 100 crore. Suspicion grew for the doubtful nature of Sharma’s investment which had not yielded what he thought and it also resulted in receiving interest on old debt rather than fresh one.
After he was not allowed to raise funds, he tried to escape from the deposition by stating that the certificate issues were totally fake. He also refused to claim that he had invested most of the money with JVG group. He stated that he has invested most of his money in power, machinery, plant automobiles. He also said that the company is only responsible for investors who are proper and not for an investor who has fake certificates. Given below are the finance case study examples with solutions of the JVG group.
Solution to the Finance Case Study Examples with Solutions
Well, such is the finance case study examples with solutions, now what is your opinion on it?
In the year 1999, the special wing that is economic offenses wing from the field of crime branch was appointed to investigate the case in Mumbai. Sharma was arrested by the team from his Bandra flat. He was sentenced to 16 months of jail and after that, he was granted bail on a bond of Rs 1 lakh and he was also directed that he would not be able to leave the country without seeking courts permission and also he could not interfere with the evidence. The company was seized and was delisted from taking part in any NBFC activities and finance case study examples with solutions.
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