Chanda Kochhar Money Trail-V: Videocon's Dhoot complicit in Rs 64 cr payout to Kochhar
Twice over the course of the ongoing all-encompassing multi-disciplinary Chanda Kochhar-Videocon Industries probe has chairman Venugopal Dhoot accepted complicity in the dirty deal.
 
Dhoot reported to the CBI vide letter dated 25.4.2018 that "With reference to the captioned preliminary enquiry, I hereby submit that in my capacity as CMD of Videocon Industries, I have been entrusted with substantial powers of management inter alia including the authority to make investments/extend loans, advances etc, accordingly, Rs 64 crore given by the company to Supreme Energy Pvt Ltd is within the powers entrusted upon me." 
 
This was disclosed by Dhoot during the inspection of Videocon during his statement under oath and through letter dated 15/11/2018. On 12.6.2018 a missive sent by VIL to SEBI states: "This was a decision in terms of authority as the matter is very old, we are checking whether there was any contract to this effect. Further in the next para, it is stated that no approval of audit committee was taken on the date of advance as there was omission on the part of Venugopal Dhoot to disclose the interest in the entity."
 
Slam dunk and an airtight case where the investigators have probable cause and clear collusion between Videocon's Dhoot and Kochhars.
 
The probe agencies have compiled the exact manner of flow of funds and the present status thereof in Videocon Group. Here is the anatomy of the collusive fraud: 
 
* Videocon Iindustries Ltd (VIL) paid Rs 64 crores purportedly as "advance" to Supreme on 8/09/2009.
 
* VIL then assigned this advance/receivable from Supreme to its Group company IRCL on 05/07/2011. 
 
* Indian Refrigerator Company Ltd (IRCL) it turn assigned it to another group company, Real Cleantech Pvt Ltd (RCLP) on 05/08/2011. 
 
* The Present status of RCPL is "Struck off" in RoC Records as ROC struck this company under Section 248 being defaulting in fining AR and BS after 2014 even though the amount is still payable by Supreme to VIL Group. 
 
* In lieu of this Advance, Supreme Energy allotted OCDs worth Rs. 64 Crores to RCPL on 05.10.2011. 
 
* RCPL allotted 0% OCDs to IRCL on 31/03/2012. 
 
* RCPL and IRCL are both VIL Group Companies and still continue to be same, except the fact that RCLP is now struck off. 
 
* In view of RCLP being Struck Off Company, this receivable by RCPL/VIL Group from Supreme (or Kochhar Group of Companies) is highly nonexistent/doubtful. It is clear that Videocon Group had no serious intention to recover the funds.
 
Further, the flow of Rs 64 crore received from VIL by Supreme and further flow in Kochhar group is as under:
 
* Supreme Received Rs 64 crore from VIL on 08/09/2009 shown as unsecured loan as per BS as at 31.03.2010.
 
* On the same day, on 08/09/2009, Supreme transferred this amount to NuPower Renewables purportedly for subscription for allotment of Zero Coupon Fully Convertible debentures. 
 
* NuPower allotted such debentures to Supreme on 25.03.2010. 
 
* Such Debentures were converted to Equity on 19.03.2016 at a premium of Rs 1,156.50 per share to Supreme and allotted 548,650 equity shares aggregating to Rs 64 core. The premium was on the basis of a valuation report by PWC which is already under examination by Income Tax Department (details may be examined during inspection of NuPower).
 
* NuPower is in the business of Wind Power using such funds coupled with bank loans and from other entities too. The said wind power assets of NuPower were later hived off into three parts by way of Slump Sale to NuPower Wind Farms Limited (Under inspection) and Echanda Urja Private Limited (under inspection) and the third portion remains with NuPower. 
 
How Companies/corporate structures have changed hands and considerations involved: 
 
* Supreme was a company belonging to V.N. Dhoot as all the shares were held by Dhoot and his associates at the time of "advance" of Rs 64 crore of funds by VIL to Supreme.
 
* Dhoot transferred all his equity held in Supreme to Mahesh Punglia (his consultant CA) on 2.11.2010 at par (9990 equity shares of Rs 10 each at par) while Rs 64 crore was still receivable by VIL from Supreme and at present which is still receivable by RCPL (Videocon group Company) 
 
* In the meantime, Dhoot floated another company NuPower jointly with a Company, Pacific Capital Services Private Limited (a company owned by the relatives of Deepak Kochhar) as 50:50 venture. 
 
* NuPower became subsidiary of Supreme as result of sale of all 50% of his shares by Dhoot to Supreme at Par (24996 shares of Rs 10 each totaling to Rs 2,49,960) and Pacific sold to Supreme of its 22500 equity Shares of Rs 10 totaling to Rs 225000 at par). Rest of the shares held by pacific were sold to Deepak Kochhar at par. 
 
* Later, on 12.03.2012, NuPower further allotted 1897000 equity shares of Rs 10 each to Deepak Kochhar as managing trustee of Pinnacle Trust and 100000 equity shares of Rs 10 each Sunil Bhuta on conversion of warrants. Consequently, NuPower ceased to be subsidiary of Supreme and 97.66 % were held by Deepak Kochhar and his associates and only 2.32% with Supreme. 
 
* Puglia sold his entire share holding of 9990 equity of Rs 10 each in Supreme (which he had got at par from Dhoot to Deepak Kochhar in his capacity as the managing Trustee of Pinnacle Energy Trust on 29.09.2012 at par totaling to about Rs 10 lakh. On the same date, the remaining 10 shares held by Vasant Kakade (an associate of Dhoot) were transferred to Prem Rajani (an associate of Kochhar]. At this stage Dhoot, even indirectly, exited from the ownership of Supreme and it became a hundred percent company of Deepak Kochhar (through his trust) at par face value of Rs 10 per share even though at this stage also a sum of Rs 64 crore was due from Supreme to RCLP (Group company of Videocon).
 
* Thus, Deepak Kochhar owned and controlled both Supreme and NuPower even though at this stage also a sum of Rs 64 crore was due from Supreme to RCLP (Group Company of Videocon now struck off).
 
* Later, sums of about Rs 325 crore have flown in NuPower from Essar Group/Firstland Holding Limited between 2010 to 2012. 
 
* NuPower acquired Wind Powers from Shriram Group and also constructed its own wind power business by consolidated funds in its kitty (sum total of funds from Videocon, Firstland, DH Renewable, bank loans etc). 
 
* Later, this company under inspection namely NuPower Wind Farm Limited was incorporated by Deepak Kochhar. 
 
* The Wind Power Business of NuPower was sold by slump sale to the company under inspection and another part to NuPower Wind farms and third undertaking remains with NuPower. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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Paytm Mall hit with Rs 5-10 crore cashback fraud
Paytm Mall on Tuesday said it has been hit by a cashback fraud which could be in the range of Rs 5-10 crore.
 
The fraud was detected through a tool that the company developed in partnership with global professional services firm EY (formerly Ernst and Young), said a Paytm Mall spokesperson.
 
He said Paytm went for a deeper audit after it found that some small sellers were getting large percentage of the cashbacks offered at Paytm Mall.
 
The audit reportedly revealed that a number of employees were colluding with junior employees to earn the cashbacks.
 
"The fraud is in the range of Rs 5-10 crore," the spokesperson told IANS.
 
A brainchild of Paytm Founder and CEO Vijay Shekhar Sharma, the ecommerce platfom's losses have mounted and in the financial year 2018, the company posted a loss of nearly Rs 1,800 crore on revenue of Rs 774 crore.
 
According to Forrester Research, the market share of Paytm Mall almost halved in 2018 -- to 3 per cent from 5.6 per cent in 2017.
 
"Our partnership with E&Y will help benchmark with global best practices as we build a technology driven fraud prevention system to scale our operations," Srinivas Mothey, Senior Vice President - Paytm Mall, said in a statement on Monday. 
 
"Our teams continue to work closely with E&Y to share our learnings and insights. We are committed to building a trusted commerce platform and will take strict action wherever needed," Mothey added. 
 
Over the past few years, Paytm has been bleeding massively in online retail business and there is no respite in sight.
 
Apart from admin, finance and other support functions, the company also has a business operations team which works closely with partnered merchants to plan and execute cashback offers and promotions leaving a scope for collusion. 
 
"The EY partnership will also undertake audit and fraud prevention using both human and Artificial Intelligence (AI)," said Paytm Mall.
 
Paytm Mall is far behind the top two e-commerce players in terms of market share. They have a single-digit share against the top leaders which are commanding over 30 per cent market share.
 
Paytm Mall has so far managed to raise over $650 million from Alibaba, SoftBank and SAIF Partners.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Chanda Kochhar Money Trail-IV: Ubiquitous Mhatre locked in Kochhar family enterprise
As one goes deeper and deeper into the concentric circle of rot left behind by the Kochhars, the revelations are confounding. La Familia was never of this magnitude and its bedrock couldn't have been open and naked cronyism to this degree. Paper trails always have a missing link. The missing link leads you to the destination, in this case helps connecting the dots.
 
In Brothers Kochhars case, the missing link is Sharad Mhatre. In hot pursuit of the paper trail of family enterprise, IANS has now found that two investment companies, Elegant Investrade Pvt Ltd and Daisy Finvest, were used by the Kochhars to further their business interests. Elegant was incorporated on January 29, 1997 by Ms Savita Naik and Mr Sidharth Jadhav for Rs 20. 
 
Sometime in 1997, it was acquired by Anand Mohan Dalwani, a resident of 6 B Prem Kutir, 177, Backbay Reclamation, Marine Drive, Mumbai-20. The same year, Banque Indo Suez (later known as Calyon Bank), one of the key lenders to Credential Finance Ltd (CFL), filed company petition No 265 of 1997 before the Bombay High Court for winding up of CFL for their failure to repay the loan and the appointment of a liquidator.
 
To cut to the chase, during the pendency of this case, on December 31, 1997, Elegant entered into a deed of assignment with HDFC Bank through which it acquired the rights on the assets pledged by paying Rs 2.75 crore. It remains a mystery as to how a company incorporated with just Rs 20 managed to execute this deed by forking out Rs 2.75 crore. No details are available with RoC (Registrar of Companies) on this turn of good fortune.
 
The provisional liquidator who was appointed by the court on March 7, 2003 and on March 18, 2008 as official liquidator also took over CFL's office at Maker Chambers V. Elegant steps in again at this point and files a company application No 837 of 2008 in company petition No 265 of 1997 seeking direction to the official liquidator to remove the seal of closure of the said office premises. CFL agreed to pay Rs 40 lakh in three instalments to the Banque and paid another Rs 15 lakh on March 2, 2009.
 
On July 24, 2009, the court ordered the official liquidator to release the same office, observing that Elegant was the bona fide purchaser. Elegant is another front of the Kochhars - the shares have changed hands and are now owned by Quality Advisors (Trust).
 
Anand Dalwani with 9999 equity shares of Rs 10 each and Sharad Mhatre with 1 share were replaced by Quality Advisors on October 4, 2016 in the first tranche taking over Dalwani's 9999 shares and on March 31, 2017, the balance 1 share was taken from Mhatre. 
 
Over time, the paid up capital of this company has remained at Rs 1 lakh, but between FY 2003 to FY 2011, the company has shown share application money of Rs 2.60 crore and loans as nil. When new rules kicked in 2011, from FY 2012 onwards Elegant started showing unsecured loans amounting to Rs 8.91 crore in FY12 and Rs 5.65 crore in 2017.
 
As it happens this Sharad Mhatre is on the board of directors of Kochhar companies - Supreme Energy, NuPower Wind Farms, Credential Securities, Credential Capital Services, Daisy Finvest et al. In Daisy Finvest, Sharad Mhatre has been on the board since August 21, 2006. Daisy was typically created on December 20, 1996 by Santosh Jabare and Chandra Prakash Soni with a paid up capital of Rs 20. 
 
In 2004, a Jaipal S Bhatia purchased the company and the authorised capital and paid up capital was ramped up to Rs 1 lakh. In 2006, Daisy found new buyers in Pacific Capital Services Pvt Ltd, 91 per cent owned by Neelam Mahesh Advani, wife of Mahesh Advani, brother of Chanda Kochhar.
 
Between FY March 2004 till March 2010, the company has shown Rs 4.99 crore funds - Rs 1 lakh paid up equity, Rs 4.25 crore share application money and Rs 73.43 lakh unsecured loans. From 2011 onwards the mystery sets in as the share application money evaporates and instead unsecured loans crop up. This ranged between Rs 6.36 crore and Rs 10.62 crore. 
 
Then comes the clincher, in a board meeting on August 31, 2017, a proposal to amalgamate the company with Credential Securities was approved. The road ends with the Kochhars.
 
Credential Securities was incorporated on April 15, 1994 by Deepak and Rajiv Kochhar at an investment of Rs 200. In January 2015 the authorised capital was raised from Rs 25 lakh to about Rs 1.01 crore. On January 12, 2015, the company issued 10 lakh equity shares of Rs 10 each to Dubai-based NRI Jaiprakash Karna. 
 
Subsequently, these shares were transferred to his wife Varuna Karna, Chanda Kochhar's sister. As on March 31, 2017, the accumulated losses of the company were Rs 57.99 lakh, up from Rs 57.37 lakh on March 31, 2015 when Karna made the investment. Incidentally, Jaiprakash Karna also set up two companies, Emsol Innovation and Emjay Enterprises, both based in Chennai.
 
It doesn't end there, this wheel comes full circle with an examination of the Kochhar family's business interests, where the final pitstop uncovers a man called Sharad Shankar Mhatre and his strong linkages with the family and multiple directorships in their companies. One such company is Opel Properties where Mhatre has been a director since June 21, 2006. 
 
Neither Rajiv or Deepak Kochhar are directors in Opel though. Started in July 2003 by Jaipal Ajit Singh Bhatia and Amit Chimanlal Shah with Rs 1 lakh as paid up capital and Rs 2 lakh as authorised capital, the company changed ownership in 2006 with ubiquitous Pacific Capital Services taking over.
 
It is here that the company ownership takes a curious turn since PCSPL is 91 per cent owned by Neelam Mahesh Advani, Chanda Kochhar's sister in law. During 2005 and 2006, Opel's capital jumped to Rs 6.31 crore on March 31, 2006 from just a meagre Rs 1 lakh on March 31, 2005. This remained steadfast for the next seven years. 
 
In FY 2014-15, Opel obtained unsecured loans of Rs 11.29 crore. To trace the origins of the Mhatre-Kochhar connection, one needs to go back to Elegant Investrade Pvt Ltd where Sharad Mhatre is a director. In his application to the company, he has described his profession as service.
 
Elegant Investrade is believed to be a front for the Kochhars. The ownership has changed hands and gone to a trust called Quality Advisors Trust. It is alleged that the assets of NuPower, Kochhar's renewable empire, are held by Pinnacle Energy, a trust whose beneficiaries are Kochhars. This is the modus operandi used by them for wealth succession and retaining a veil of secrecy over their assets.
 
On doing a deeper dive, it is revealed that Mhatre, Director Identification No 00921939,resident of G 1 L Narayan Niwas P.SHB.Palkar Marg, Parel, Mumbai 12, is also a director in NuPower Wind Farms Ltd, Credential Securities Pvt Ltd, Credential Capital Services Pvt Ltd, Daisy Finvest, Pacific Capital Services Pvt Ltd, all seemingly with a Kochhar connect; he is also a director in Nemani Capitals Pvt Ltd, Opel Properties Pvt Ltd with a Chanda Kochhar family connect, Mandeep Software Services Pvt Ltd and Supreme Energy Pvt Ltd.
 
In Nemani Capitals, Mhatre is a director since August 29, 2008 while in Mandeep Software Services, he has been a director since August 26, 2008 along with Neelam Mahesh Advani, Chanda Kochhar's brother Mahesh's wife. Mhatre is also a director in Ruplila Steels; Citius Power and Citius Energy, which have both been struck off in the post DeMo drive against errant shell companies.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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COMMENTS

Ajay Sharma

1 week ago

While this series is very insightful, I hope that Moneylife will provide a big picture view of these complex transactions. Where was the financial wrong doing? What was the point of all of this? How does all of this tie in to ICICI Bank?

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