Gujarat NRE, a product of the resource bubble of 2007, recently came under scrutiny for questionable corporate governance practices. Here is how a small Australian paper in the mining town of Illawarra reported about the lavish lifetyle of the promoters and their shenanigans even as the company sank
Beleaguered miner Gujarat NRE Coke Ltd (GNCL) has initiated its corporate debt restructuring (CDR) program with major lenders to get rid of its toxic debt, according to a filing on BSE. The company has been unable to pay off its debts for the last few months and even could not pay its miners in Australia. This company had stormed the small mining town of Illawarra and has since been the central talking point of that town’s small society. Illawarra Mercury, a local newspaper has been closely following the company’s Australian subsidiaries for its questionable corporate governance practices and inability to keep its promises to its miners.
The real problems started in earlier sometime back but this year GNCL admitted it could not repay its debts. Then, in July, the Australia environmental regulator, Clean Energy Regulator, slapped charges on the company’s Australian mines for failing to pay up carbon credits as per Australian environmental regulations. Problems mounted further as the company was included in the list of biggest environmental polluters in the country. The company tried to desperately raise cash by selling off various assets, including some of its wholly-owned subsidiaries in Australia.
According to Illawarra Mercury, one of the company’s subsidiaries owned a multi-million dollar home to accommodate Arun Jagatramka, but sold it for way more than the market value to parties closely associated with the Jagatramkas – a typical Indian trick by Indian businessmen to keep the assets private and the debts public. A mansion, at a coveted address, bought at $5 million, was sold off for $10 million, according to Illawarra Mercury, to Besant International owned by a person called Kunal Chandak. The Jagatramkas were also spotted in a local derby (a horse race and frequent hang outs for the rich and famous) with the Chandaks.
The paper also reported that as many as 500 workers from both the Russell Vale and Wongawilli mines in Australia, have not been paid for weeks, reportedly totalling $5 million, and it is still not certain whether they will be paid at all. Their future is insecure. The Australian local even reports that families of miners are finding it hard to make ends meet. Despite the Jindals taking over the Australian mines, their future still remains uncertain. Bob Timbs, who represents the workers of Gujarat NRE Coke’s Australian mines was reported saying, “...even the most optimistic of Gujarat’s workers are becoming deeply cynical by the flim flam that has come from (Gujarat NRE Coking Coal) head office.”
While the miners continued to suffer, the Jagatramkas continue to live a lavish lifestyle. Illawaya Mercury reports that during one of its meeting with shareholders and miners, on 16 October, Arun Jagatramka came in a shiny Bentley, decked up in a tailored suit while the workers were donning their usual ‘dusty highs’.
His extravagances didn’t include just horse races and a Bentley. Being an avid sports fan, the Jagatramkas even sponsor an Australian basketball sports team—Woologong NRE Hawks—with Gujarat NRE embezzled on the team’s jersey. A quick glance at Jagatramka’s twitter account will show tweets of mainly sport-related items, mostly of of his sponsored team, Hawks.
All this comes at a time Gujarat NRE Coking Coal Ltd (GNCCL), the Australian company, relinquished its majority stake to Jindal Steel & Power (Jindal), with the latter holding 53.63%, to pay off its debts and pay outstanding salaries to miners.
The company has come under heavy fire for its questionable corporate governance practices. Shortly before GNCL adopted its accounts for the 2012-13 fiscal, Grant Thornton, the company’s auditors for GNCCL, said that they could not express an opinion on the financial statements since they have doubts on the company's ‘Going Concern’ assumption, valuation of impairment and assets, deferred tax assets, recoverability of trade receivable and completeness of contingent liabilities. Shockingly, it was discovered recently that ICAI president Subodh Agrawal, who is also chairman of the audit committee of Gujarat NRE Coke, recommend unaudited financials of the company’s Australian subsidiaries to the Board of Directors, knowing fully well that they are highly material amounts.
The company told shareholders that in its consolidated financial statements, 91% of its assets and 64% of its revenues, which are in Australian subsidiaries, are unaudited!
The RTI is one of the most powerful tools and an essential democratic right of every Indian citizen. A handy guide takes you through the steps to file an effective guide
The Right to Information Act, 2005 (RTI) that came into force eight years back has proven to be one of the most powerful tools put to use by every Indian—big and small—to obtain information that was all along denied under the garb of ‘official secrecy’. Thanks to the benefits of the RTI, many of India’s biggest scams and scandals are now exposed.
Deepak Sandhu, chief information commissioner (CIC), very rightly says, “RTI is a game changer. It has democratised information to the citizen’s advantage. The citizen is central in the Act. Other countries offer freedom of information while our legislation recognises it as a right.”
Here are a few tips to make effective use, to extract the most appropriate response, and minimise the possibilities of rejection on frivolous grounds.
(Nagesh Kini is a Mumbai-based chartered accountant turned activist.)
During the September quarter, the lender’s income from operations rose 11% helping the company to record moderate net profit of Rs122.72 crore, despite slow growth of auto sector finance
Sundaram Finance Ltd, India’s fifth largest non banking financial corporation (NBFC) reported a 10% increase in its second quarter net profit on slowdown in auto sector financing, especially commercial vehicles and passenger cars.
For the quarter to end-September, the lender said its net profit rose to Rs122.72 crore from Rs111.50 crore while its revenues from operations rose 11% at Rs558.31 crore from Rs504.45 crore, same period last year.
The company registered positive growth despite fall in auto sector financing on slow auto sector growth. Its loan disbursement increased just 6% for the half year ended September 2013, to Rs5,178 crore.
“Market conditions continue to be challenging with the sales of commercial vehicles and passenger cars having fallen sharply and prospects of an early revival appearing unlikely. We will continue to focus on our stated objectives of growth with quality and profitability,” said TT Srinivasaraghavan, managing director, Sundaram Finance Ltd.
Sundaram Finance’s gross non-performing assets (GNPA) during the second quarter stood at 1.58% and net non-performing assets (NNPA) at 0.94% only. Its capital adequacy ratio (CAR) stood at 17.66% as on 30 September 2013.
At 12.25pm Tuesday, Sundaram Finance was trading marginally down at Rs520 on BSE, while the benchmark Sensex was marginally up at 20,652.