A team of four people is running two private limited companies, two partnership firms, one proprietorship firm and one public limited company. They are working in six different business verticals. Two of those businesses had grown huge. They have expanded the business and opened seven branch offices. They have earned a big name, planning big and have good relationships with suppliers. They have created a big value for their organization. One fine day, they met one person who showed them a way to carry on business on a public platform. They were advised – list your company on a stock exchange. A big dream seemed a close reality. Free money was an added attraction. There was no obligation to pay interest. Brand value was increasing and cash registers were ringing. One of directors got convinced and decided to go public.
But, the same director was within two years nowhere to go and reply. In two years’ time, they were under heavy losses. All properties were attached by the bank. Eighty per cent of their business was lost and it turned red. What happened suddenly? All wealth evaporated. One person who was the decision maker of the whole organization got convinced. He was guided that all their black money will turn into white through the listing. To fetch more money from the market, file their return showing heavy profits. This person decided to follow the advisor and worked accordingly. They filed returns with heavy profits but did not pay full tax. As profits shown were very high, so was the tax liability. They could not afford to pay that much of tax. Next year, the department sent a notice of scrutiny. The businessman could not explain anything. They started following all wrong routes of tax avoidance. He got stuck as the business had come to a halt. They could not pay to suppliers. Suppliers stopped supplies. All bank borrowings became Non Performing Assets (dues of three months). Banks attached all properties mortgaged as collaterals. Finally, all are now busy managing propping up the business all over again.
Lessons learnt: Don’t follow someone blindly. Take opinions of more than one expert. Think and rethink your plans several times. Consult friends. Does your math to the last detail? Avoid indulging in malpractices.
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