Wednesday 20 November 2013

Pawan Kumar Ruia Group not Just Siphoning Cash but also Business out of Dunlop India.

While the P.K Ruia Group had been making false submission before the Supreme Court of India for restarting the work at Dunlop India's factories, however one finds that their deeds and actions are contrary to their words.

Dunlop India's factory located at Kolkatta and Chennai are not in operation since last 13 years or more and the Ruia management had in these past years have not just siphoning cash out of Dunlop India but gradually siphoning the business of Tyre's to one of their subsidiary Dunlop India Tyres Pvt Ltd.

Below is an extract of the Website of Ruia Group  which clearly indicates the above act of Siphoning the Tyre business to Dunlop India Tyres Pvt Ltd which is a distinct and separate entity in which Dunlop India Ltd has no interest or any stake and is solely owned by the Ruia Group.

This is a classic example of the rampant corruption prevailing in  Corporate India.


Dunlop Auto Tyres Pvt. Ltd.
  
India is witnessing a huge growth in the demand of cycle-tyres in recent years. With an aim to share the growth pie, the Ruia Group in 2010 acquired a facility in Himachal Pradesh (India) and introduced state-of-the-art technology for manufacturing a wide range of high-quality cycle-tyres in the plant. Subsequent to the thorough refurbishment process, the company was renamed as Dunlop Auto Tyres Pvt. Ltd (DATPL).
  
DATPL’s bicycle-tyres bearing the brand DUNLOP have been readily consumed by the quality-hungry segment of the market. DATPL has increased its market presence further with tubes, repairing solutions, chains, rims and other products related to bicycle. The company has planned to manufacture tubes for motor cycles and other two-wheelers.

Monday 18 November 2013

Loot at Dunlop India continues by Ruia Group of Companies,

" You can't fool everyone all the time" but  Pawan Kumar Ruia group is successfully fooling everyone including  creditors, employees, banks, shareholders, RBI and also the courts of India all the time. To see How ? read more.

Pawan Kumar Ruia, the chairman of Kolkata-based Ruia group, in an interview given to one leading financial newspaper, said that he is quite certain that his company - Suryamani Financing (a 20-year-old NBFC) is eligible to set up a bank. Suryamani Financing has applied for a banking licence before the Reserve Bank of India (RBI).

Now, this news might be a jolt to Ruia's confidence or may be an eye-opening piece of detail for RBI before it decides its list of applicants.

In its preliminary investigation, the enforcement directorate (ED) has found traces of "money laundering and hawala transactions in the book of accounts" in one Ruia group company.

In its confidential report, which is exclusively with Headlines Today/Aajtak, ED has given complete details of how Falcon Tyres Ltd and Dunlop India Ltd was "money laundering" and almost taken its shareholders for a ride.

In 2008, ICICI Bank had given a loan to two Ruia companies-Shalini Properties and Developers Pvt. Ltd and SPR Resorts Ltd-against the mortgage of a 58.5-acre plot in Athipattu village near Chennai. Dunlop India Ltd (DIL) sold this plot in 2007 to a subsidiary, Dunlop Properties Pvt. Ltd, which in turn mortgaged it a year later with ICICI Bank for credit facilities obtained by two Ruia Group companies. Substantial shares of Falcon Tyres Ltd (FTL) and DIL were pledged as additional collateral with ICICI Bank. The loan amount was around Rs.575 crore.

After a long legal battle, the Kolkata High Court had passed a winding up order in 2012 - wherein had exposed the fraud committed by Pawan Kumar Ruia (PKR) group and ordered the properties to be transferred back to DIL.

According to investigative officers, with the fear that high court order would make ICICI Bank insecure and force them to use the second collateral by invoking the shares of FTL and DIL. If invoked, ICICI Bank would have controlling stake and power to change the management in these companies.

"So to overcome this threat, PKR group had planned money laundering to the tune of Rs.200 crore," an officer said.

Modus operandi was as usual. As per the investigation report, Manali Properties and Finance Pvt Ltd - a PKR group company created a loan of Rs.165 crores in the book of accounts of FTL. Instead of asking the company to repay, PKR assigned this loan to three hawala companies i.e. Suncap Commodities Ltd, Regus Impex Private Ltd and Salputri Commerce Pvt Ltd.

The deed of assignment had been induced with conversion clause wherein Falcon Tyres Ltd could issue new shares worth Rs.165 crores to these three companies instead of paying back the loan. "As per the plan - it reduced the collateral security pledged with ICICI bank to minority and  simultaneously managed Rs.165 crores hawala and money laundering between Manali Properties and the three companies," investigative officer said.

Later on, FTL made a preferential allotment of shares to these three companies upon an alleged conversion of outstanding loans. Dated Feb 9, 2012 - Manali Properties had assigned portions of the debt of Rs.144 crores as under i.e. Suncap Commodities Limited (Rs.50, 41, 57,505), Regus Impex Private Limited (Rs.50, 41, 57,506) and Salputri Commerce Private Limited (Rs.43, 21, 34,985).

In addition, an idential model was executed with Dunlop India Ltd, wherein Dunlop shares of Rs.60 crores (appox) were alloted to these three companies. Thus, the total transactions under ED investigation with the three companies amounted to Rs.204 crores.

ED in its report said, "It needs to be enquired as to how the company with the paid up capital of Rs.1.11 crore could afford to give a loan to the tune of Rs.144 crores on interest free basis. Surprisingly, the loan is given to a group company. If the sources of funds at Manali Properties are investigated this whole transaction would prove to be a circular transaction."

As per the investigation details, it is also clear that the company chooses to issue preferential shares against the loan due to Manali, especially when there was no demand upon them to pay the loan, and the loan amount was not carrying any interest burden. "On the contrary, by issue of shares of Rs.144 crores, the management (which has taken decision to issue shares) diluted their shareholding, wherein they become minority shareholder after the issue of shares. Whereas, the three unknown shell companies having no presence or expertise in the tyre industry held majority stake of the company, without claiming any seat on the board of the company."

Interestingly, DIL was already ordered to be wound up and it would be evident that the transaction between Dunlop. The companies buying shares of DIL is nothing but an accomodation for in the books. An investigative officer raised the question that how can any company's share have value once it is ordered for winding up?

Shockingly, as per the report, even in the case of a group company i.e. M/s Stephens Financial Services Pvt Ltd, loans which were receivable from DIL were also assigned around the same time to the three said companies using the same modus operandi.

Report concludes, there has been huge transfer of assets/loans to benami and hawala companies of the tune of Rs.2000 crore wherein assets of Public Ltd were transferred to shell companies and further book entries were passed for the payment of the diminished transaction value, thus no monetary transaction or gain to the transfer or company.

To get an official reaction of PKR, a detailed queries had been sent to Ruia group, which remain unanswered.

Investigation is still going on against Ruia group and PKR.

Please view 
The Order of the Supreme Court dated 17th March 2013.- http://judis.nic.in/temp/929820131732013p.txt

Also view
The Order of the Supreme Court dated - http://judis.nic.in/temp/9298201312622013p.txt



Supreme court Stays, Calcutta HC's Winding -Up Order

13 Jun 2013 

The Supreme Court on Monday stayed the Calcutta High Court order on winding up of ailing tyre manufacturer Dunlop India. However, it asked the country's oldest tyremaker not to sell or create any third-party rights in its properties.
A bench headed by Justice Gyan Sudha Mishra stayed the HC order that directed the company, which had set up its first factory at Sahaganj near Calcutta in 1926, to wind up and pay off its creditors.

The HC had also directed the official liquidator to take 'immediate possession' of the assets of Dunlop India, which has facilities in Sahagunj in West Bengal and Ambattur in Chennai. Neither of these has been in operation since 1998.
The order came after Dunlop argued that another bench of the apex court had ordered status quo in February in a related petition filed by Kanti Commercials.
Pawan Kumar Ruia, the chairman of the group, had taken over Dunlop from the late Manohar Rajaram Chhabria's Jumbo Group in 2005. By then, it was already in considerable financial stress and was seeking protection from creditors.
Both the factories of this one-time blue-chip company, at Sahagunj in Hooghly and Ambattur in Tamil Nadu, are closed now.


Senior counsel Abhishek Manu Singhvi, appearing for the Ruia group company, claimed that the management is genuinely trying to revive and run the factories as it has already cleared dues to 10 out of its 16 creditors, and repaid R39.73 crore out of its total debt of R52 crore between July 2012 and January 2013. Besides, Dunlop had deposited R10 crore in the company court, he added. According to the firm, the remaining claims were under bona fide dispute and pending in the courts, and required to be established in a competent judicial forum.