The ministry of corporate affairs (MCA) said it had ordered a probe into the books and records of Royal Twinkle Star Club (RTSC), a holiday plan company owned by the Mumbai-based Mirah group, after investors alleged the company was involved in illegal deposit mobilisation. According to a recent ministry note, the probe was ordered in February and is being conducted by the regional director, Mumbai, where the company is registered.
Recently, MCA sent a reminder, asking the regional director to expedite the probe and give a report. The holiday solutions firm has a significant presence in Maharashtra and Gujarat, with Mumbai and Pune being principal centres. RTSC’s promotional materials say it offers customers “a variety of holiday plans to choose”.
Apart from RTSC, the Mirah group runs hotels under the Citrus name and retail food outlets such as Rajdhani, Mad Over Donuts and Falafels.
Investor groups have raised concerns over an option in the company’s holiday plans that allow to redeeming the subscription amount with interest. This, according to them, is being used by the company and its agents to woo potential investors.
“Not many people are keen on these holiday plans. They are being wooed on the promise of huge returns. The company says it follows a points system. But, each point is equivalent of Rs 100. People who do not want to avail of holiday plans are rede-emed their money with interest. This is nothing but deposit mob-ilisation,” said Bhupendra Singh of Mumbai-based Investors and Consumer Guidance Society.
According to Singh, while several companies, including listed firms, offer such plans, none of them offer redemption of cash. “In most cases, if you do not avail the time share within a particular period, it expires. But, here it does not, it can be redeemed in cash. That is where the problem is,” he added.
In a complaint to the registrar of companies in Mumbai, the society said its members were approached by agents of RTSC, who “guaranteed returns of 1.5 times in four years, 1.7 times the investment in five years , double in 6.5 years and three times in nine years”.
The company denied knowledge of any probe by MCA. “First of all, we are not aware of any such inspection ordered by the ministry of corporate affairs. However, we are regularly subjected to corporate audit, tax audit and other scrutiny,” Omprakash Goenka, chairman and managing director of the Mirah group, said in an email response.
Goenka said RTSC was marketing holiday plans by offering subscription to membership plans, not by collecting deposits.
According to him, the points mentioned in the offer documents are reward points, like those offered by any credit card company or airline company as bonus reward points.