Win­some Sacks Bank Nom­i­nee Di­rec­tor

Satya Prakash Tan­war had sought le­gal action against pro­moter Jatin Me­hta, who left the coun­try for Dubai a few years ago

The Economic Times - - Companies: Pursuit Of Profit - Su­gata.Ghosh@ times­

Mum­bai: Win­some group, In­dia’s largest wil­ful de­faulter af­ter King­fisher, has sacked the di­rec­tor nom­i­nated by the con­sor­tium of banks on the boards of its com­pa­nies af­ter the per­son asked Win­some to take le­gal action against pro­moter Jatin Me­hta who left the coun­try for Dubai few years ago. Win­some Di­a­monds and Jew­ellery — a listed com­pany, and group firm For­ever — owe .₹ 6,800 crore to 15 banks in In­dia.

The di­rec­tor con­cerned, Satya Prakash Tan­war, a for­mer State Bank of In­dia of­fi­cer, has said Me­hta was “solely re­spon­si­ble” for the ex­ports by the di­a­mond and bul­lion house Win­some to its UAE buy­ers, a per­son fa­mil­iar with the de­vel­op­ment told ET.

Tan­war has also put a ques­tion mark on a mys­tery Dubai sub­sidiary of the Win­some group com­pany, For­ever.

In an email on Fe­bru­ary 23, 2016, to the com­pany sec­re­tary For­ever, Tan­war said: “I was in­formed that the fi­nal ac­counts of For­ever were drawn up by the statu­tory au­di­tors with­out hav­ing re­ceived the ac­counts of the wholly-owned Dubai sub­sidiary of For­ever. I was told that the ac­counts could not be ob­tained as no one knows where the sub­sidiary was lo­cated in Dubai, and who was or were the peo­ple to be con­tacted or any con­tact de­tails what­so­ever!!...In fact, Jatin Me­hta had opened the sub­sidiaries there be­cause he saw a huge po­ten­tial for growth of busi­ness there and took over the en­tire re­spon­si­bil­ity of the in­ter­na­tional busi­ness of the com­pany. How can For­ever not be able to con­tact its own wholly-owned sub­sidiary de­fies un­der­stand­ing. But it is, ac­cord­ing to me, a ma­jor com­pli­ance is­sue.”

Win­some, how­ever, in its let­ter (March 28, 2016) to the banks, has com­plained that Tan­war has been rais­ing “friv­o­lous is­sues”, act­ing “against the in­ter­ests of the com­pa­nies”, and “mak­ing base­less al­le­ga­tions” at a time the group is try­ing to re­cover funds from its UAE buy­ers through le­gal pro­ceed­ings in the Shar­jah Fed­eral Court. Win­some’s de­ci­sion — seek­ing Tan­war’s res­ig­na­tion — has not gone down well among the mem­bers of the lenders’ con­sor­tium led by Stan­dard Char­tered Bank. “Tan­war is our nom­i­nee. He may con­tinue to be as long as the banks want,” said a se­nior banker.

The lo­cal banks had is­sued standby let­ters of credit (SBLC in bank­ing par­lance) — sim­i­lar to guar­an­tees — in favour of in­ter­na­tional bul­lion banks like Stan­dard of South Africa, Stan­dard Char­tered Lon­don and Sco­tia­bank, which sup­plied gold to Win­some Group. The ar­range­ment was if Win­some failed to pay the bul­lion banks, In­dian banks would step in to pay for the gold con­sign­ment. The terms of SBLC were such that a sin­gle de­fault al­lowed the bul­lions banks to en­cash the quasi-guar­an­tees. Win­some’s de­fault in March 2013, trig­ger­ing a string of de­faults, forced In­dian banks to pay more than a bil­lion dol­lar to the bul­lion banks. Ac­cord­ing to Win­some, the pay­ments for ex­ports were not re­ceived as its UAE buy­ers suf­fered mas­sive losses on de­riv­a­tives trad­ing. The trades did not take place on any exchange but were over-the-counter (OTC) deals. While an au­dit firm in the Mid­dle East gave a cer­tifi­cate that Win­some’s over­seas buy­ers had booked losses, the names of the coun­ter­par­ties to these OTC trans­ac­tions are not known.

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