Public Interest   Exclusive
How banks helped Modi's new minister get rich while shareholders got poor

While YS Chowdary is extremely wealthy, the shares prices of his three listed Sujana companies are down by 93-97% while being bailed out by banks

 

Prime Minister Narendra Modi on Sunday inducted 21 ministers in his cabinet. This includes Telugu Desam Party (TDP)'s YS Chowdary, popularly known as Sujana Chowdary. He is an industrialist and one of the richest members of Parliament (MPs) in Rajya Sabha with assets of about Rs190 crore. However, the Sujana group headed by Chowdary is also one of the biggest bank defaulters. Should not PM Modi, who talks about 'cleanliness' in public life all the time, ask his minister to clean his slate before serving in the government?

Citing a release issued by Central Bank Employees Union last week, Congress general secretary Ajay Maken alleged that Chowdary had defaulted on repayment of Rs316 crore taken from Central Bank of India.

Finance minister Arun Jaitley defended inclusion of Chowdary in the Modi cabinet. "They said TDP representative Chowdary has non-performing assets of his company. One of his many companies -- he is a well-known industrialist -- was making losses. One account was in difficulty. The bank restructured it; he is paying back all the instalments (and) has a regular account today," Jaitley told the Times of India.

The All India Bank Employees' Association (AIBEA), which released a list of top 50 defaulters in the country, had identified one of Chowdary's companies. The list released in December 2013, shows that Sujana Universal Industries Ltd (erstwhile Sujana Industries) with dues of Rs330 crore was one of the biggest defaulters. Of this, Rs203 crore pertained to a loan taken from Bank of India and Rs127.42 was taken from Central Bank of India.

Earlier in July 2014, while releasing list of 1,129 'wilful' bank defaulters whose loan dues were about Rs54,000 crore in Andhra Pradesh alone, P Venkataramaiah, general secretary of Bank Employees Federation of India (BEFI), has said, "Most of the companies mentioned in the list are still being run by politicians, bureaucrats and other influential persons who are blocking the recovery."

As of March 2014, Sujana Universal had long-term borrowings of Rs176.62 crore, down 7.63% from Rs191.11 crore in FY2013. However, its short-term borrowing increased by Rs23.14 crore to Rs380.01 crore from Rs356.86 crore during the same period.

Sujana Metal Products Ltd has a long term borrowing of Rs940.1 crore as of March 2014, up by Rs135 crore from Rs805.9 crore as on March 2013. Its short-term borrowing also increased to Rs687.36 crore from Rs536.53 crore, same period a year ago.

According to Sujana Towers Ltd’s annual report for FY2014, this unit was on a borrowing spree. Its long term borrowing has increased by Rs595.04 crore to Rs1,038.64 crore as on March 2014. The company attributed the huge increase in borrowing to working capital term loan (WCTL) and interest on WCTL converted as funded interest term loan (FITL) taken from banks and increase in promoter's contribution as per corporate debt-restructuring (CDR) package it obtained. Its short-term borrowing decreased 6.8% in March 2014 to Rs648.52 crore due to decrease in working capital loans following conversion to WCTL as per the CDR package.

Chowdary's Sujana group’s three companies, Sujana Universal, Sujana Metal and Sujana Towers listed on the stock exchanges. Their stock prices tell us the story of these three companies. All three have reported losses during FY2014.

For the year to end-March, Sujana Metal reported a net loss of Rs20.57 crore from a net profit of Rs41.62 crore while its total revenues fell to Rs3,394.9 crore from Rs4,247.1 crore, same period a year ago. Same is the story of the company's share price. From a high of Rs149.2 in May 2007, Sujana Metal is currently trading at just Rs3.78 on the BSE – a fall of 97%.

These companies have been trouble for decades and have been merrily taking advantage of government ownership of banks and complete lack of accountability. In 2003, Sujana Metal, the then Rs412 crore loss making steel re-rolling and casting company, obtained a corporate debt-restructuring (CDR) from its lenders. Lenders led by Industrial Development Bank of India (IDBI), sanctioned an ad hoc debt restructuring facility as well as deferred repayment of principle and interest up to March 2005 for Sujana Metal.

 

Industrial Finance Corporation of India (IFCI), Bank of Baroda, Bank of Rajasthan, IndusInd Bank and the South Indian Bank were part of the lenders who permitted the CDR package to Chowdary's group company.

Sujana Universal said its net loss widened to Rs6.30 crore from a profit of Rs3.4 crore during FY2014. During 2013-14, the company's total revenues increased marginally to Rs3,465.75 crore from Rs3,367.66 crore a year ago period.

Sujana Universal traded at Rs42.7 in August 2005, its highest over the past nine years. Currently, it is trading at about Rs2.55 on the BSE a fall of 93% over nine years.

During the year ending March 2014, Sujana Towers' net profit tumbled to Rs2.66 crore from Rs6.56 crore, while its total revenues declined to Rs1,823.5 crore compared with Rs1,827.1 crore in the 12-months to end-March 2013.

Sujana Towers' share price movement is also not different from its two group companies.

 

On January 2008, Sujana Towers traded at Rs354.3 and tumbled to a low of Rs19.4 in February 2009. In April 2014, Sujana Tower touched its lowest level of Rs7.46 over the six years. At present, the scrip is trading at around Rs16.5 level, a fall of 95% from the peak.

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    User 

    COMMENTS

    Mahesh S Bhatt

    6 years ago

    Donot worry this is universal.USA bailed out 2008 casualties.India is doing the same technique.

    Congress also has done the same with Dhirubhai since 1984 evading taxes paying Ministers its makes better sense to run India.

    Today RIL/R ADAG are fortune companies are in Swan Telecom scams/RIL KG6 Vinod Rai's Gold plated agreement which we Indians are paying for gas/petrol/diesel.

    Not to forget Essar Oil delisting recently.

    Merger of Reliance Petroleum+RIL.

    Reliance Natural resources+Reliance Power etc etc.

    We need money without value systems.

    CARRY ON PM INDIA IS PROUD PICTURE ABHI BAKI HAI MERE DOST ENJOY.

    Mahesh

    REPLY

    Ramesh Patwardhan

    In Reply to Mahesh S Bhatt 6 years ago

    Correct ...

    Y.Markandeya

    6 years ago

    While these NPAs prosper,the citizen is hoodwinked by Fixed Deposits,where the rate of inflation is more than the rate of income,making the interest fake income and annually the principal value in real value decreases up to the rate of inflation making it a fake saving.To cap the injustice the fake income is added to the taxable income,bloating the income rax and thus robbing the other incomes like salaries or pensions.For looying the banks there is no income tax.
    Markandeya

    Rajendra M Ganatra

    6 years ago

    YS Chaudary's riches have not come from value creation, but out of the loot from banking system. Even if his dishonoured CDR is extended, he will fail.

    CCD

    6 years ago

    The three companies under the Sujana Group, viz. Sujana Universal Industries Ltd (SUIL), Sujana Metal Products Ltd (SMPL) and Sujana Towers Ltd (STL) manufacture products and offer services predominantly for the infrastructure sector. They have manufacturing plants in the States of AP, Telangana and Tamil Nadu. The Group provides direct and indirect employment to over 7000 persons.

    The entire infrastructure industry in the country has been badly affected since the melt down of the global financial markets in 2008, not only due to steep fall in material prices resulting in huge depreciation in inventory values but also dwindling business opportunities as a result of fall in fresh investments in the economy. While the private investment died down in the country due to extreme caution by the domestic and overseas investors, the Govt. policies of cutting down plan investments to reduce budget deficits made the matters worse. As a result, almost all the companies offering products or services to the infra sector faced financial crises leading to heavy losses. Manufacturing companies in combined AP and Tamil Nadu, like Sujana Group companies were further affected due to severe power cuts of over 60% and steep increase in power costs,

    In order to rescue the banking sector from their entire exposure to the infra sector turning bad and to provide an opportunity to the companies in the infra sector to survive the impact of economic down turn, RBI devised ‘Corporate Debt Restructuring (CDR)’ mechanism, under which the loans are permitted to restructure within defined parameters, so that the banks are protected from the negative effects of the economic slump faced by the infra companies. SMPL and STL are among the nearly 1000 companies whose debts are restructured under CDR. The loans of SMPL and STL under the CDR are regular since implementation of the CDR package.

    It is incorrect to state SUIL is a defaulter to Central Bank of India and Bank of India. The loan accounts of SUIL with these banks are regular and are classified as ‘Standard’ assets in their books.

    The Group has no loans from IFCI, Bank of Rajasthan, Indus Ind Bank and South Indian Bank. In fact loan from them were closed in full more than 7-8 years ago.

    It may be further added that during the last 27 years of its existence, the Group dod not seek any waivers from the banking system.

    SUIL made a public issue of equity shares at par in the year 1989 and a rights issue @ Rs.17.50 per equity share in 1992. SMPL made a public issue of equity shares at par in 1992. After this, none of the Group companies raised equity from the public. The equity shares of STL, which was de-merged from SMPL through High Court approval, were listed as per the de-merger scheme. Further equity requirements of all the three companies from time to time were met by equity contributions, at varying premia, by the promoters consisting of Mr. Chowdary, his friends and relatives. A total of Rs.546 crores was invested by the promoters as equity at premiums ranging from Rs.2.50 to Rs.160 for equity share, as determined under relevant guidelines.

    Most of the original shareholders had sold their shares at a profit and thus a majority of the public shareholders today in Sujana companies are those who acquired these in the secondary market. It is a well known fact that equity price movement on the stock exchanges in the country is highly speculative and depends on various factors, fundamentals of the company being only one of them. The price of equity share of STL of Rs.5 face value was at one time being traded at over Rs.230 despite there being no significant announcement by the company. The equity share of SUIL of face value Rs.10 was also traded at over Rs.80 and that of SMPL of face value Rs.5, at over Rs.50.

    Investment in listed equity shares is one of several asset classes available for the investors in the country. The investors in the equity shares of Sujana companies in the secondary market, apparently took a rational decision on their own knowing fully the other opportunities for investment available in the country and as these equity shares are regularly traded, their investments were always liquid, so that they could liquidate them at anytime of their choice. However, the promoters of these companies, who invested Rs.546 crores have no such exit opportunity to liquidate their investments. They continued to invest further funds in order to meet the companies’ requirements. Thus if any share holders have really suffered huge losses by investing in the equity shares of Sujana companies, it is the promoters, consting of Mr. Chowdary, his friends and relatives.

    Shri YS Chowdary hails from a rich family in AP, who have been tax payers since last three generations. He had invested in the equity of these companies and has not sold any of those shares. He is a successful entrepreneur, made lot of efforts for the progress of these companies and took a huge investment risk.

    Your analysts are welcome to visit us and collect any facts in this regard.

    manoharlalsharma

    6 years ago

    It's story from SHARE MARKET u may be KNOWING as MAD-MARKET.

    Ralph Rau

    6 years ago

    Electoral Politics is driven by money.

    Do not place great hopes on cleaning the body politic without cleaning up electoral financing.

    Rajan RG

    6 years ago

    There are gossips like Modi monitors each and every minister. There was a rumour that a minister while going to airport has been asked to wear decent dress etc., Where is Modi now?

    p s deekshitulu

    6 years ago

    In view of the confusion prevailed over the present status of corporate accounts of Mr. Sujana Chowdhury with the banks, Government should come out with clarification on the issue.

    REPLY

    Ramesh Patwardhan

    In Reply to p s deekshitulu 6 years ago

    I think Arun Jaitley and the minister himself have come out with clarification. Jaitley is saying that all is well now and the minister in question says that this is politically motivated! Aren't they sounding like congressmen?

    Ramesh Patwardhan

    6 years ago

    Congress and BJP are are two sides of the same coin.

    REPLY

    R S Murthy

    In Reply to Ramesh Patwardhan 6 years ago

    agree totally

    Ambareesh Baliga

    6 years ago

    You have missed out Bartronics

    REPLY

    Debashis Basu

    In Reply to Ambareesh Baliga 6 years ago

    He is not on the board :)

    sathya cumaran

    In Reply to Ambareesh Baliga 6 years ago

    sathya cumaran dhandapani
    the present BJP govt is no way better than cong govt but our Pm says he wants to clean but it not possible because all his ministers are tainted the present FM is minister who had argued and championed the cause for Bhopal gas targedy for which he had been heftly demanded and that is case of present BJP got old wine in an new bottle no way better than congress

    Sankar Narayan

    In Reply to sathya cumaran 6 years ago

    That is 'electoral politics Dharma' as different from 'coalition Dharma' !

    Ramesh Patwardhan

    In Reply to sathya cumaran 6 years ago

    In fact with the kind of monster majority they have, they might prove to be worse off than the previous regime ...

    "Termites ate up my tax records", says tax evader Abhishek
    He has been slapped with a Rs56 crore tax demand. Singhvi's contention that termites ate up his tax and expense records, because of which he could not prove his claims, did not cut any ice with the IT Department's Settlement Commission.  
     
    Senior Lawyer and Congress Leader Abhishek Manu Singhvi has been slapped with a tax penalty of Rs 56.67 crore, the Indian Express reported today. The IT Department's Settlement Commission added over Rs91.95 crore to his declared professional income for an assessment period of three years and charged in appropriate tax liability.
     
    In his statement to the Indian Express, Singhvi said that he had himself approached the Settlement Commission and in response the Settlement Commission started an investigation and slapped a penalty. He said that he could not prove his expenses because, “all my documents were destroyed in a termite attack.” He also said that he bought laptops for his employees worth Rs5 crore, on which he was not allowed to claim depreciation. Incidentally, Singhvi has 14 employees. This, the Commission noted, implied that Singhvi had bought 1,250 laptops at an average cost of Rs40,000 for his 14 employees. 
     
    The Commission also said in its order that contrary to Singhvi's claims that net income from his legal practice was only 55%, senior SC lawyers had told the I-T Department that a senior counsel's net income is between 90% and 95%.
     
    The Commission detected non-verifiable cheque payments to the tune of Rs10.97 crore. Singhvi had claimed that he had spent Rs35.98 crore to purchase solar panels for his company called Rishab Enterprises. The I-T Department found that the purported purchases were intended for tax evasion by inflating the cost of the panels.
     
    Following a rejection of Singhvi's application for immunity from penalty and prosecution by the Commission, Singhvi approached the Jodhpur High Court and has got a stay on the Settlement Commission's order arguing that the Commission had no authority to levy the penalty on him and had stepped out of its jurisdiction.
  • User 

    COMMENTS

    SuchindranathAiyerS

    4 years ago

    And wannabe judges ate up his babies?

    Patriot

    4 years ago

    LOL .... these thieves have been getting indulged in tax theft all the time and no matter what they say. Even once upon a time Rajiv Gandhi wanted to run the party with the Boforce scam money. Nothing left to expect from them except for stealing money.

    Adarsh K. Hoizal

    4 years ago

    These Modi bhakts are so foolish. They are commenting on this news as if it is a recent one. This news was published in 2014. Also Singhvi resigned from Congress party in 2012 itself. But our ignorant bhakts are not aware of this in 2016.

    Further no politician makes more ridiculous comments like Feku Modi. Also, it is now revealed through an internal email that Aditya Birla group paid Rs. 25 cr to Modi when he was CM of Gujarat. Bhakts must go and fetch some burnol now.

    REPLY

    Patriot

    In Reply to Adarsh K. Hoizal 4 years ago

    LOL Brother it's not their fault. It's the congress who have been eating so much of public money since independence that whatever news of corrupt congress leaders come out these innocent people get furious about it irrespective of the age of the news. In-fact the Congress deserves this. Had enough of the scams in India till now.

    Shankar Mk

    4 years ago

    Yes. Termites eat only tax records. Even insects, germs, anmals are interested in tax records, that too particularly of those people who are twx evaders.Honest tax payers records are bitter in taste.

    Sasidharan Krishnan

    4 years ago

    This man & some of his colleagues themselves were the termites who ate up the country's wealth to a great extent. They will have to explain one day & pay for their crime.

    Prakash Kulkarni

    4 years ago

    In mean time I am searching for Singhvi's leaked video..

    Dally Ponnappa

    4 years ago

    He is one big liar and shameless giving silly reason that termites have eaten, this proves his character and desperate situation of so called senior congress veteran termite Singhvi

    4 years ago

    Manu Shanghai and many other Congress lackys now have no guts to come out with the truth. It's time they visit a high security jail. All criminals

    Madhusudhana Vedantam

    4 years ago

    How come that termites exactly knew what they have to eat leaving aside all other important files and documents? How much tax he had evaded when Congress was in power and how many more such evaders in the party and its political allies.

    Srinivaasan

    4 years ago

    1250 Laptops for 14 employees at a rate of 40000 being an average. That is, This guy has bought 89 Laptops per head!!?? What the F word!! How on earth would someone manage 89 Laptops using just 2 Hands?? Kya hum itna Chutiye hain ki iska kehna maane?

    Krish Menon

    4 years ago

    Termites must also have eaten his brains! Thats why he has no grey and white matter and like his colleague Mr Kapil Sibal, his upper floor is empty!

    Sateesh Kuthiala

    4 years ago

    Termites also ate up his morals a long time again. The same termites are now eating up the congress party.

    Krishnan Sevel Venkataraman

    4 years ago

    This proves beyond any doubt that irresponsible people were in the helm of affairs in governing our Country all these years during the Congress Administration. We have been taken for a ride for such a long time.

    Shrikrishna Prabhu

    4 years ago

    He forgot Modi will do PEST control of him and his termites

    Natty Raju Natarajan

    4 years ago

    He is one of the official spokes person for the Congress party. What else you can expect from him. Lies, and lies only

    Seven Scams that Target Veterans

    Fraudsters are found targeting military members through bogus services and scams. Don’t get fooled

     

    Veterans who have served the country often have unique concerns specific to their military service, such as finding a job when they return home or filing for certain benefits they have access to through government programs. Unfortunately, fraudsters know this too and target military members through bogus services and scams. Here’s a list of areas where scam artists sometimes prey on veterans with links to what vets can do to avoid getting ripped off.

    1. For-profit schools

    2. Phony job offers

    3. Phishing and identity theft

    4. Pension claims

    5. Home-based businesses

    6. Charitable donations

    7. Bogus investments

    Service members also have some unique consumer protections provided by federal law. Read more about those protections here.

     

    For further information about protecting veterans from fraud, click here.

     

    Courtesy: TruthInAdvertising.org

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