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    51 views23 pages

    Company's Update On UAE Litigation (Company Update)

    Uploaded by

    Shyam Sunder

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    Adminis five Office: WINSOME DIAMONDS andi iol slr terY AND JEWELLERY LTD Near Dharam Palace, 85, Gamdevi \Formerly Known as Su-Raj Diamonds and Jewellery Ltd.) Grant Road, Mumbai - 400 007 Civ NO.:L369106/4985PLC015915, eee cae 9 June, 2015 The General Manager Department of Corporate Services BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai - 400 001 Dear Sir, Scrip Code: 507892 Sub: Company’s update on UAE litigation Under the captioned subject, please find attached herewith the copy of the letter given to Standard Chartered Bank, lead consortium bank and all other consortium banks vis- a-vis Company's update in respect of the legal cases filed against the defaulting overseas parties based in UAE. This is for your information and record. Thanking you, Yours faithfully, _. For WINSOME DIAMONDS AND JEWELLERY LIMITED aw, “ASISH NARAYAN COMPANY SECRETARY Encl. as above Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. WINSOME DIAMONDS AND JEWELLERY LTD |Foinpetly Known as Su-Raj Diamonds and Jewelery Ltd.) ‘Administrative Office: CIN NO,-L36910GJ19B5PLC015915 Fax. :(91-22) 4920 0333 30" May 2015 To, Standard Chartered Bank Lead Bank to consortium Crescenzo, C-38/39 G Block, Bandra Kurla Complex Mumbai — 400 051 3. Sub: Your email dated 19" May, 2015 making various requests. Company's update on the UAE litigation We address this letter in continuation of our earlier correspondence including email dated 25" May 2015. We have e: through our Advocates addressed two letters dated 30™ December 2014 and 15" March 2015 to the Bank to which there is no response on the facts stated therein, We have also addressed a letter dated 13 May 2015 to the Hon'ble Governor of Reserve Bank of India and to the Office of the Hon*ble Prime Minister of India briefly apprising them of the correct facts that have transpired in this matter. Copies of these 4 letters (Sr. Nos. Ito 4 of the compilation enclosed herewith) are enclosed for your record, It is well known that you have been making back-room attempts to ensure that the Company fails in its process) to recover dues from the UAE customers and repay the consortium of banks. Despite this uncooperative approach taken by your Bank, it must be noted that the Company has made all possible attempts and is hopeful of recovering the outstanding amounts from UAE customers. Judging by your conduct in last 24 months, it comes Registered Office Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. 906/907/908, 9" Floor, The Plaza Near Dharam Palace, 55, Gamdevi Grant Road, Mumbai ~- 400 007 Phone : (91-22) 40046746 Administrative Office: 906/907/908, 9” Floor, The Plaza Near Dharam Palace, 55, Gamdevi Grant Road, Mumbai — 400 007 Phone : (91-22) 4004€746 CIN NO,:L36940GJ1985PLC015915, Fax — :(91-22) 49200333 WINSOME DIAMONDS AND JEWELLERY LTD {Formerly Known as Su-Raj Diamonds and Jewellery Lt) as no surprise that Standard Chartered Bank now feigns ignorance of the UAE proceedings and the bona fide steps that have been taken by the Company for recovery of dues from its UAE customers. The actions of the bank are even otherwise arbitrary and have caused enormous prejudice to the company and shareholders. 4. To put the matter beyond any shadow of doubt Mr. S. P, Tanwar, the Nominee Director of the consortium banks with effect from 27" September 2013 has exchanged numerous cortespondences with the company and bank officials in relation to the’UAE litigation. 5. ‘Standard Chartered Bank led consortium filed O.A. No. 304 of 2014 against Winsome for recovery of INR 4680.04 crores before the Debt Recovery ‘Tribunal -Il, Ahmedabad. Punjab National Bank led consortium filed O. A. No. 174 of 2014 against Forever (an associate company ) for recovery of INR 2121.82 crores with interest before Debt Recovery Tribunal-l, Ahmedabad. In these proceedings it is expressly admitted that the amounts are due from the Haytham entities against the jewellery supplied by the Company and orders have been sought against the UAE customers to deposit their amount with the Banks or with DRT. However, despite knowledge of UAE suits, there is not a whisper of the UAE proceedings in the DRT proceedings. 6. Be that as it may, it is obvious that the attempt to obstruct the Company’s efforts is the part of an attempt to permanently destroy the Company and Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: 906/907/908, 9" Floor, The Plaza WINSOME DIAMONDS ; rote tetany See eno (Foxmery Kndwn as Su-Raj Diamonds and Jewellry id) Phone : (91-22) 40046746 CIN NO.:L36910GJ1985PLC015915 . Fax: (91-22) 49200333 shareholders. Nevertheless, some of the undisputed facts and steps taken by the Company are briefly stated: (i) From 2000 onwards, the Company has been able to achieve high growth due to the support of the consortium banks. The facilities were sanctioned after a thorough evaluation of the financial position and the net worth of the Company and the guarantors. (Illustratively see the Consortium Assessment Notes for the years ended 2009-10 & 2010-11 at Sr, Nos. 5 & 6 of the Compilation enclosed herewith). The assets of the Company increased from 25 crores in 2002 to only Rs. 124 crores in 2013, whilst the facilities has correspondingly increased from Rs. 160 cores lacs in 2002 up to Rs. 4,614 crores in 2013. The entire receivables from exports were hypothecated to the consortium banks and that was accepted as the only effective security for the transaction without anything more. ‘This was accepted and acknowledged by the banks. Although usual financing documents were executed, the consortium banks accepted this as a successful business model that an inward remittance from the customers was the only mode of repayment as well as the security to the consortium banks. This is also the normal industry practise qua other exporters. Under this established business model, the Company haé achieved a turnover of USD 102 milion in 2001-02 to approx. USD 1,276 million in 2012-13. This was a continuous Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: WINSOME DIAMONDS 906/907/908, 9” Floor, The Plaza AND JEWELLERY LTD Near Dharam Palace, 55, Gamdevi Mumbai — 400 007 (ormery Knéwn as Su-Raj Diamonds and Jewelery Lid) Cee tot7s) 40046788 CIN NO.:L36940GJ19B5PLCO15915 ee eee cycle and has operated on a daily basis for over 15 years. During this period, there was no default in servicing the LC facility or repayment of bullion banks. Gi) Im fact, Standard Chartered Bank, who was the only SBLC facility provider, entered into the business of providing Bullion supplies. Standard Chartered Bank was therefore, the beneficiary of both ends of the transaction. As far as the Company is aware, Standard Chartered Bank(Mumbai) was instrumental in proposing and initiating Standard Chartered Bank(London) in becoming a bullion supplier. The Company has been given to understand that Standard Chartered Bank (Mumbai) received benefits from the bullion supplies made by Standard Chartered Bank (London). This demonstrates the tremendous confidence and unconditional . acceptance of the Company’s business model. Therefore, not only Standard Chartered Bank but all other consortium banks have earned large amounts in terms of commission, costs and charges running into hundreds of crores on this very business model and in which the receivables was the only security. Charts showing the SBLC charges paid by Winsome to the consortium banks; Bank interest received and paid by Winsome; and increasing credit facility advanced by banks to Winsome is at Sr. Nos. 7to 9 of the compilation enclosed herewith, Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: 906/907/908, 9" Floor, The Plaza WINSOME DIAMONDS Dhi Palace, 55, Gamdevi AND JEWELLERY LTD Grant Road, Moma 200 007 (Fermoy Kd as Su-Re Diamonds and deweley Ltd) Re aatanies te CIN NO.:1369106J1985PLC015915 Cee eee (iii) Since inception, Winsome has been a professionally run company, which operated through its board of directors. The expertise and experience of the directors is contemporaneously recorded in all the Annual Reports, which you already have. Mr. Jatin Mehta resigned as the Managing Director in April 2011. Upon Mr. Mehta’s resignation, Mr. Lakhpatraj Bhansali was appointed as the whole- time director. On account of his old age and difficulty in travelling, ‘Mr. Bhansali ceased to be a director w.e.f 8 May 2012 and thereafter Mr. R. Ravichandran and Mr. Ramesh Parikh were appointed as Executive Director- Operation and Executive Director- Finance respectively for a period of 3 years, Mr. Parikh is a Chartered Accountant and a former banker who was in-charge of credit monitory and also the head of finance in the Company. Mr. Ravichandran was the head of operation and had extensive knowledge and experience of the diamond and jewellery business. In Financial Year 2012-13, Mr. Mehta only attended a board meeting ‘ on 9" May 2012. No other me s were attended by him in the said financial year. Banks noted these changes and had no objection whatsoever, This is borne out from the Minutes of the Consortium Meeting held on 11" July 2012 and 15 October 2012.(See the Minutes at Sr. No. 10811 of the Compilation enclosed herewith).After the resignation of Mr. Mehta as a director, several Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: 906/907/908, 9" Floor, The Plaza Near Dharam Palace, 55, Gamdevi Grant Road, Mumbai - 400 007 Phone : (91-22) 40046746 CIN NO,:L36910GJ1985PLC015915 : Fax :(91-22) 49200333 ~ WINSOME DIAMONDS AND JEWELLERY LTD [Formerly Known as Su-Raj Diamonds and Jewellery Lid.) facilities were granted including by State Bank of Hyderabad, IDBI, Central Bank of India, Bank of India, Punjab National Bank and Oriental Bank of Commerce. The financial statement, quarterly reports and other corporate activities were contemporaneously informed to the Bankers as well as disclosed on the Bombay Stock Exchange and the Company website. The Minutes of the board meetings clearly show that it was business as usual. (iv) The banks were always aware of the major customers of the Company. The banks have independently verified the credentials of ‘some of the customers through the world renowned agency M/s Dun & Bradstreet.(See an Illustrative Dun & Bradstreet Report at Sr. No. 12 of the compilation enclosed herewith). These reports were directly submitted to some of the Banks by the agency. The company learnt of the same on its account being debited for the professional fees of the said Dun & Bradstreet. The agency/banks raised no objection to the Company carrying on its business with the said customers. (v) From January 2013 onwards when there were delays in inward remittances, repeated remiriders were addressed to the 13 entities calling upon them’ for immediate payment of the outstanding dues. (lustratively Winsome’sLetters dated 7" January 2013, 19” January 2013, 12" February 2013, and 8"March2013 are at Sr. Nos. 13t0 16 Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: 906/907/908, 9” Floor, The Plaza Near Dharam Palace, 55, Gamdevi Grant Road, Mumbai ~ 400 007 Phone : (91-22) 40046746 CIN NO.:L36910GJ1985PLC015915 Fax : (91-22) 49200333 WINSOME DIAMONDS AND JEWELLERY LTD (Formerly Known as Su-Raj Diamonds and Jewlery Ltd.) of the Compilation enclosed herewith). In response, the 13 UAE. entities admitted. the receipt of jewellery and to the outstanding amounts, but sought time to repay the same (illustratively see letters . dated 22" January, 2013, 15% February, 2013 and 23 February, 2013 by one of the 13 entities at Sr. Nos. 17 to 19 of the Compilation ‘enclosed herewith). The Company was anxiously following up on the payments and you are aware of the same, (vi) On 21* March 2013 our Director Mr. R. Ravichandran met Mr. Haytham in Dubai to discuss the immediate payment of the dues to the Company. Until then, there was never a default by the Company. ‘Two further meetings were-held on 9" and 18" April 2013 between Mr. Haytham, Mr. R. Ravichandran of the Company and ‘Mr. Debabrata Chatterjee of Standard Chartered Bank representing the Consortium to discuss the possibilities for immediate payment. The supply of the jewellery was never in doubt. The Consortium had requested for a written audit confirmation on the reasons for non- payment by the defaulter entities to the Company. (vii) In April, 2013 several emails have been exchanged between the ‘Company and Mr. Haytham calling upon him to immediately clear outstanding dues (see emails at Sr. No. 20 of the Compilation enclosed herewith). The Minutes of Consortium of Meetings of 23" Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: 906/907/908, 9” Floor, The Plaza Near Dharam Palace, 55, Gamdevi Grant Road, Mumbai - 400 007 Phone : (91-22) 40046746 CIN NO,:L96910GJ1985PLC015915 Ce eee WINSOME DIAMONDS AND JEWELLERY LTD (Forrerly Known as Su-Raj Diamonds and Jewellery Ltd.) April 2013 records in detail the meetings with Haytham and the fact that the Company was contemplating legal actions against the defaulters. The Minutes of the Board Meeting held on 8" May 2013 records further discussions and the proposed steps for recovery of amounts from the overseas customers. (see the Minutes of the Meeting at Sr. No. 21& 22 of the Compilation enclosed herewith). On 16"May, 2013 all the defaulter entities have admitted and acknowledged, their debt by separate letters to the Company (Ulustratively See Sr. No. 23 of the Compilation enclosed herewith). These letters are also a part of Miscellaneous Appl ion @ Ex. A/12 in O. A. No. 304 of 2014 filed by Standard Chartered Bank against the Company. Thus the outstanding towards the supply of Jewellery was never in question. Your bank has itself relied upon this debt acknowledgment letter to make its claim against the 13 defaulter entities in the Garnishee proceedings. (ix) On 23/24 May, 2013 representative of Consortium Core Group (Punjab National Bank, Standard Chartered Bank, Canara Bank, Central Bank of India and Union Bank of India) along with Mr. R. Ravichandran and Mr. J. R. Mehta again met Mr. Haytham in Dubai. ‘The Banks were informed by Mr.Haytham that the main reason for delay by UAE customers in payment of their outstanding dues was Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: WINSOME DIAMONDS 906/907/908, 9" Floor, The Plaza Near Dharam Palace, 55, Gamdevi AND JEWELLERY LTD Grant Road, Mumbai ~ 400 007 (Formerly Known as Su-Raj Diamonds and Jewellery Ltd.) Phond : (31-22) 40086746 CIN NO.2L36940GJ1985PLC015915 Fax — : (91-22) 49200333 liquidity constraint owing to losses that the UAE customers incurred foreign exchange and commodity transactions, Mr.Haytham also submitted a copy of the Auditor’s report - Falcon International (Auditors) dated 20" May 2013 representing Italian Gold, Al- Mufied, Al-Alam, Blackstone Group Management Ltd., certifying that those companies had incurred foreign exchange and trading loss of approx. USD 990 Million in support of his contention regarding losses. During the meeting, MrHaytham assured to arrange for payment of USD 75 to 100 million per year for clearance of . outstanding dues of the Company and of Forever Precious Jewellery And Diamonds Ltd. Several em: Is were exchanged wherein ‘Mr.Haytham responded to the queries raised by the Company. The details of the meeting are recorded in a “Report on visit to the Buyers in Dubai of Winsome Group”. (SeeReport on visit to the Buyers in Dubai of Winsome Groupat Sr. No. 24 of the Compilation enclosed herewith and emails exchanged between banks, company and Mr. Haytham at Sr. Nos. 25 of the Compilation enclosed herewith). (%) On 11 June 2013, a CDR proposal was addressed by the Company to the Consortium of Banks. (See Sr. No. 26 of the Compilation enclosed herewith) Registered Office : Ashoka Tower, Kesharba Market - 2, Gotalawadi, Katargam, Surat - 395 004. Administrative Office: WINSOME DIAMONDS BE 906/907/908, 9 Floor, The Plaza AND JEWELLERY LTD Near Dharam Palace, 55, Gamdevi Mumbai — 400 007 (Forrerly Known as Su-Raj Diamonds and Jewelery Lid) ane ettanvan ee CIN NO,-L36910GJ1985PLC015915, es eens (xi) On 14" June 2013, all UAE customers. signed the “Acknowledgment of 7 Debt and Arrangement for Repayment Schedule” admitting their liability . to repay the dues (Illustratively see Sr. No. 27 of the Compilation enclosed herewith). This settlement agreement has been arrived at under the aegis and blessings of the consortium banks. Under the terms of this agreement, the third party UAE purchasers have agreed and committed to make payments directly to the consortium banks.The Banks have confirmed that the payment is pending towards the jewellery supplied by the Company. (xii) In June/July 2013, the CDR proposal on behalf of Winsome was considered (Minutes of the Meetings held on 14” June, 2013, 24 June, 2013and 25 July, 2013 are annexed at Sr. Nos. 28 to 30 of the Compilation enclosed herewith). IDBI Capital Market Services Ltd. filed a Flash Report with the mandate from Central Bank of India and Canara Bank on 17" June 2013 with the Corporate Debt Restructuring (CDR) Cell. The Flash Report records the satisfactory operations of the Company until the defaults and the sudden halt in payment by the overseas customers in March 2013. In fact, even

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