Curious case of NuPower Technologies, Deepak Kochhar's money-rotating firm?

The morality and purpose of issuing fully and compulsorily convertible debentures to a former promoter can be questioned, depending on the money trail

Deepak Kochhar-owned NuPower Renewables sold its stake in its subsidiary NuPower Technologies to Anirudh Bhuwalka-promoted AMW Motors’ subsidiary A-One Parts & Services in 2016, only to buy fully convertible debentures in the same firm soon after. 

After Bhuwalka’s purchase of NuPower Technologies, the company subsequently issued fully, compulsorily convertible debentures (FCDs) to NuPower Renewables. An FCD allows investors to provide debt capital, which, after a stipulated period of time, gets converted into equity shares. 

The FCDs were to be converted into equity shares after three years.

NuPower Technologies made four FCD issuances between September and November 2017, totalling Rs 8.26 million to NuPower Renewables, which would be converted into 826,400 at Rs 10 per share three years later. After conversion, NuPower Renewables will have 13 per cent in NuPower Technologies.

The three directors on the board of NuPower Technologies are associated with AMW Motors or its related companies.

Legal experts said issuing FCDs was normal business practice and there was no restriction to who it was issued to.

Without commenting on this case, an expert said the morality and the purpose of issuing FCDs to former promoters could be questioned, depending on the money trail.

Kochhar and Bhuwalka did not respond to queries on the deals. AMW Motors had earlier denied it had bought any company related to Kochhar.

NuPower Technologies’ FCD prospectus in September 2017 said: “The company ceased to be subsidiary of NuPower Renewable Private Limited with effect from March 31, 2016 subsequent to sale of entire holding of NuPower Renewables Private Limited in the company to A-One Parts & Services Limited.”

NuPower Renewables was promoted by Deepak Kochhar, husband of ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar and Venugopal Dhoot, chairman of the Videocon group.

According to regulatory filings, Dhoot sold his stake in NuPower Renewables to Mahesh Chandra Punglia, which was later transferred to Pinnacle Trust, in which Kochhar is managing trustee. 

As of March 2015, the income of NuPower Technologies stood at Rs 1.15 billion and suffered a loss of Rs 560 million. The sole customer of NuPower Technologies was its earlier holding company NuPower Renewables. 

Before the sale to Bhuwalka in 2016, all the assets attached to the office of NuPower Technologies were sold to Kochhar's Pinnacle Energy for Rs 280 million, according to the regulatory filings. 

NuPower Technologies manufactures wind turbine generators. Its equity capital is Rs 550 million. The company had started a pilot project to assemble wind turbines but it was never scaled up, Deepak Kochhar had told Business Standard earlier.

The Finer Points

• NuPower Technologies is involved in the manufacturing of wind turbine generators
• At present, it has a total paid-up equity capital of Rs 550 million
• It started a pilot project to assemble wind turbines but it was never scaled up
• The sole customer of NuPower Technologies was its earlier holding company NuPower Renewables