Winsome's lenders begin groundwork to recover loan

With the doors closed for recasting loans to Winsome Diamonds and Jewellery under the corporate debt restructuring (CDR) window, lenders have begun the ground work to recover their dues.

To add to their discomfiture, lenders have found the forensic report of Kroll Advisory Solutions Ltd, which was commissioned to conduct an investigative audit, to be of "poor quality".

According to the lenders, Kroll's report was based on "hearsay and market intelligence", and not backed by corroborative facts. The lenders have sought answers from Kroll, said the chief of large public sector bank.

Winsome denied charges of money siphoning. In a communication to the Bombay Stock Exchanges, it said none of the specific points and observations in the reports of Ernst & Young and Kroll suggest that it indulged in siphoning of funds.

To proceed with debt recast, lenders' consortium led by the Punjab National Bank has put up three conditions. First, Winsome promoter Jatin Mehta has to bring in money upfront. Second, Mehta or his son should be on the board of the company, and third, they should be available for decision-making in India.

The consortium said the company did have a mandate for recast under the CDR mechanism, but the promoters failed to comply with the requisite conditions for the same. Hence, recast under CDR system was not possible. "None of these conditions have been met and now we have to look at option of recovering dues by enforcing securities," said another banker.

Mehta is the promoter of Winsome Diamonds & Jewellery and another company called Forever Precious Jewellery Ltd. The total debt of the two entities for CDR recast is pegged at Rs 5,800 crore - Rs 3,900 crore for Winsome and Rs 1,900 crore for Forever.

Winsome said the bankers have extended support and it was looking forward to further support from them for restructuring outside the CDR system.

The framework and approach of lenders will not change outside CDR as such restructuring exercise would be governed by norms prescribed by reserve Bank of India.

"The chances of recast outside CDR are dim," said a senior official of a public sector bank