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Lenders plan criminal case against Shamken promoters, executives

Our Economy Bureau  |  New Delhi 

Lenders to the New Delhi-based are planning to initiate against the promoters and senior group to recover dues worth to Rs 650 crore.
The move follows an investigative audit report, which revealed mis-statement of accounts and diversion of funds by four
Bank of India, Syndicate Bank and Indian Overseas Bank have already lodged a first information report with the Delhi police. The other lenders are ICICI Bank, IDBI Ltd, IFCI Ltd, ING Vysya Bank and Uco Bank.
The lenders are also planning to approach with the report to prevent it from registering Shamken Cotsyn, Shamken Spinners, Shamken Multifab and Dwarikadhish Spinners as sick entities.
Lenders would seek consent for filing recovery suits in the debt recovery tribunal and appointment of a court receiver, senior bank said.
Despite attempts to get the Shamken group's reaction over the phone, promoter and chairman and managing director H B Chaturvedi did not comment. On both occasions Chaturvedi said that he was meeting lenders. He is now scheduled to meet the lenders on April 10.
Senior Bank said the lenders have also formed a crore group to decide on the future course of action to recover the dues. Investigations into the group's activities have also been referred to the Serious Frauds Investigation Office, they said.
The move against the group has gathered pace after ICICI Bank, which is said to have resorted to evergreening of Shamken group's loans, has also joined hands with other lenders.
The by has pointed out that the gross block additions between 1996-97 and 2002-03 was exaggerated compared with the actual capital expenditure.
As per the audited balance sheet of the four group companies, the additions to the gross block was pegged at Rs 685.77 crore against a capital expenditure of Rs 113.92 crore.
The report also said that "fictitious entries" amounting to Rs 571.85 crore were made by the group firms with regards to the unexplained gap between the addition to gross block and the capex.
It also said the failed to furnish details of suspended projects amounting to Rs 317.97 crore during 2002-03 and additions to the gross block of Rs 253.98 crore (the difference between reported in the balance sheet and the actual capes and the value of projects) during the six years ending 2001-02.
The investigative audit also said the company's executives submitted forged, false, fictitious and fabricated certificates from chartered accountants and statutory auditors to IDBI and IFCI to draw funds.
It also said that the availed of multiple finance for the same set of equipment from various lenders.
Based on examination of the no-lien accounts relating to term loans from banks and institutions, the report said the loans intended for capex were diverted to or to the current account of the Shamken group to meet other expenses.
"The relevant no-lien accounts, in respect of majority of term loan were not made available to the special investigative audit team. It would be relevant to note that in all the no-lien accounts, which were made available to ANG & Associates, it was noticed that invariably there was diversion in all no-lien accounts, without any exception," the report said.
It also said that the group's profitability and cash flow appeared to be "stage managed". The group presented consistently good physical and financial track record till March 2003 and also paid regular dividends. In the latter half of 2002-03, however, it abruptly reported financial crisis by declaring an operating loss of Rs 137.61 crore, the report said.
The losses of Shamken Cotsyn were at Rs 19.48 crore, Shamken Spinners at Rs 53.45 crore, Shamken Multifab at Rs 49.16 crore and Dwarikadhish Spinners at Rs 15.52 crore.
It added that the adjusted balance sheet and cash flow based on the statement of borrowing and cash flows revealed cash losses on a continuous basis.

First Published: Mon, April 04 2005. 00:00 IST