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10/8/2017 The Golden Touch of Jay Amit Shah

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BUSI NESS

The Golden Touch


of Jay Amit Shah
BY ROHIN I SIN GH ON 0 8 /1 0 /2 0 1 7 4 COMMEN T S

BJP president Amit Shahs son, Jay Shah, has seen


a dramatic increase in some of his businesses since
Narendra Modi became prime minister.

Jay Shah, Prime Minister Narendra Modi and BJP president Amit Shah, seen
here at the wedding reception of Jay in 201 5. Credit: BJP

New Delh i: The turnover of a company owned by Jay Amitbhai


Shah, son of Bharatiya Janata Party leader Amit Shah, increased
16,000 times over in the year following the election of Narendra
Modi as prime minister and the elevation of his father to the post of
party president, filings with the Registrar of Companies (RoC)
show.

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Company balance sheets and annual reports obtained from the


RoC reveal that in the financial years ending March 2013 and 2014,
Shahs Temple Enterprise Private Ltd. engaged in negligible
activity and recorded losses of Rs 6,230 and Rs 1,724 respectively.
In 2014-15, it showed a profit of Rs 18,728 on revenues of only Rs
50,000 before jumping to a turnover of Rs 80.5 crore in 2015-16.

The astonishing surge in Temple Enterprises revenues came at a


time when the firm received an unsecured loan of Rs 15.78 crore
from a financial services firm owned by Rajesh Khandwala, the
samdhi (in-law) of Parimal Nathwani, a Rajya Sabha MP and top
executive of Reliance Industries.

One year later, in October 2016, however, Jay Shahs company


suddenly stopped its business activities altogether, declaring, in its
directors report, that Temples net worth had fully eroded
because of the loss it posted that year of Rs 1.4 crore and its losses
over earlier years.

The Wire sent a questionnaire to Jay Shah on Thursday seeking


details about the shifting fortunes of Temple Enterprise and his
other business ventures, as obtained from RoC filings, which he
said he could not immediately respond to as he was travelling. On
Friday, however, Shahs lawyer, Manik Dogra, sent in a response
with a warning that criminal and civil defamation proceedings
would be launched in the event of any slant or imputation which
alleges or suggests any impropriety on his part.

As is obvious, the story the RoC documents themselves tell do not


indicate anything more than the bare fact of various loans and
revenues, which have not been denied by Shahs lawyer. The world
over, it is normal for the business affairs of politicians relatives in
democracies to be subjected to public scrutiny, especially when
there is a sudden change in fortunes that coincides with an uptick
in the political cycle. During UPA-II, for example, the Congress
party spent the better part of three years confronting questions
about how party president Sonia Gandhis son-in-law, Robert
Vadra, had managed to grow his real estate businesses on the basis
of loans, including unsecured advances by real estate giant DLF
(http://economictimes.indiatimes.com/news/company /corporate-
trends/robert-v adra-ties-up-with-dlf-makes-low-key -entry -into-real-estate-
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business/articleshow/msid-7 698241 ,curpg-3.cms?from=mdr). Indeed


the sharpest attacks on Vadras affairs were from the BJP.

Though Shahs lawyer has not disputed the information drawn


from Shahs submissions filings that companies must
mandatorily make with the RoC to enable public viewing and
examination The Wire will be happy to publish any response
from Shah as and when it is received.

Th e sh ifting fortu nes of Temple Enterprise

Temple Enterprise was incorporated in 2004 with Jay Shah and


Jitendra Shah listed as its directors. BJP president Amit Shahs
wife, Sonal Shah, also has a stake in the company.

In 2013-14, Temple Enterprise did not own any fixed assets and
had no inventories or stock. It also got an income tax refund of Rs
5,796. In FY 2014-15, it earned Rs 50,000 as revenue. However, in
2015-16, the firms revenues jumped to over Rs 80.5 crore, a growth
of 16 lakh percent. Reserves and surplus jumped to Rs 80.2 lakh
from Rs 19 lakh the previous year. Trade payables were Rs 2.65
crore, up from Rs 5,618 the previous year. The assets of the
company were only Rs 2 lakh. The firm had no fixed assets the year
before. Short-term loans and advances were Rs 4.14 crore, up from
Rs 10,000 the year before. Inventories were Rs 9 crore, up from
zero the previous year, according to the firms filings.

The massive increase in revenues is described in the filings as


coming from the sale of products. This included Rs 51 crore of
foreign earnings, up from zero the previous year.

The filings also reveal an unsecured loan of Rs 15.78 crore from a


listed entity, KIFS Financial Services. The revenue of KIFS
Financial Services for the same financial year when the loan was
given was Rs 7 crore. The annual report of KIFS Financial Services
also does not reflect the Rs 15.78 crore unsecured loan given to
Temple Enterprise.

Rajesh Khandwala, the promoter of KIFS Financial Services, first


agreed to respond to The Wires questionnaire sent on Thursday
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seeking clarification on his firms dealings with Shahs companies


but subsequently did not respond to calls and messages. KIFS, a
non-banking financial company (NBFC), has had run-ins with
SEBI in the past (https://kifstradecapital.com/PMS-DISC.DOC.07 .1 0.1 5-
1 .pdf).

File photo: PM Narendra Modi with MP


Parimal Nathwani. Credit:
parimalnathwani.com
Parimal Nathwani (left) and Rajesh
Khandwala (right), with their
respective spouses. Credit:
parimalnathwani.com

Khandwalas daughter is married to Parimal Nathwanis son.


Ahmedabad-based Nathwani heads the Gujarat operations of
Reliance Industries and has operated for years at the intersection
of business and politics. He is an independent member of
parliament from the upper house. His re-election to the Rajya
Sabha in 2014 was supported by BJP legislators in Jharkhand
(https://timesofindia.indiatimes.com/city /ahmedabad/Parimal-Nathwani-re-
elected-to-Rajy a-Sabha/articleshow/2968451 8.cms).

A source close to Amit Shah told this reporter that neither


Nathwani or Reliance had any role to play in the facilitation of the
unsecured loan from Khandwalas firm to Temple Enterprise. On
his part, Jay Shahs lawyer said in his written response to The Wire
that Khandwala is an old friend of the family.

Rajesh Khandwala, the promoter of KIFS is the sharebroker for


the family of Jay Shah for the last several years. This NBFC has
been providing loans to Jay Shahs and Jitendra Shahs other
businesses regularly for the last several years. Jay Shah has had
family relations with Rajesh Khandwala much prior to the
marriage of Nathwanis son to Khandwalas daughter, about 4
years ago, says the statement from Shahs lawyer.

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In response to the query about the loan, Jay Shahs lawyer wrote:

Jay Shah, Jitendra Shah and their associates invested share


capital and unsecured loans in this company [Temple
Enterprise]. Since working capital facilities were not
available to a new business/company, interest bearing Inter
Corporate Deposits (ICD) were taken from time to time from
KIFS Financial Services Ltd., a registered NBFC, to run this
business. Tax has been deducted on the interest paid (TDS)
regularly and the principal and interest amount has been
repaid in full.

In 2015, the same year KIFS provided an unsecured loan to Shahs


firm, Khandwala and Shah also formed a limited liability
partnership (LLP), Sattva Tradelink, though this was dissolved
later. The Wire had asked Jay Shah to describe his dealings with
Khandwala, incuding Sattva Tradelink. Replying on Shahs behalf,
his lawyer said: Though this LLP was formed by Jay Shah with
Khandwala, in view of adverse market conditions no business was
carried out and the LLP was wound up and has already been struck
off from the Registrar records. (emphasis added).

It is not clear what Shahs lawyer meant by adverse market


conditions, for the year the LLP was formed was also the year
Khandwalas firm lent Rs 15.78 crore to Shahs company and the
latter went on to book revenues of Rs 80.5 crore.

Specific questions to Khandwala about why the annual report of


KIFS Financial Services for the loan year does not mention the loan
to Jay Shahs company went unanswered.

After th e boom, th e bu st

According to Shahs RoC filings, Temple Enterprise is described as


being engaged in wholesale trade and more than 95% of revenues
come from the sale of agricultural products. Temple Enterprise is
in the business of import and export of agri commodities like
rapeseed DOC, castor DOC meal, desi chana, soyabean, coriander
seeds, rice, wheat, maize etc, notes the statement from Shahs

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lawyer. The statement also credits the business acumen of Shahs


partner, Jitendra Jayantilal Shah, and the education Amit Shahs
son received for the performance of the company. The business
ownership and management was principally held by Jay Shah and
Jitendra Shah (an old family friend) and their associates. Jay Shah
is a qualified engineer having done his B.Tech from the renowned
Nirma University and Jitendra Shah was already engaged in the
business of commodities for the last several years and his
companies had been recording an annual turnover of over Rs.100
crore, says the statement.

Shahs lawyer also said a turnover of Rs 80 crore in the commodity


business is not abnormally high.

What does appear a little abnormal, however, is that the firm,


whose revenues jumped from just Rs 50,000 to over Rs 80 crore in
a single year (FY 2015-16) stopped its business activities last year.
The explanation offered by Shahs lawyer: Unfortunately, the
business activities of the Temple Enterprise Pvt. Ltd. resulted in
losses due to which the business activities were stopped sometime
in October, 2016.

From stock trading to power generation

Kusum Finserve is a limited liability partnership incorporated in


July 2015 with Jay Shah owning a 60% stake in it. It was formerly
a private limited company, Kusum Finserve Private Ltd, before
being converted into an LLP. The private limited company also got
inter-corporate deposits from KIFS Financial worth Rs 2.6 crore in
FY 2014-15. The partnership generated Rs 24 crore as income as
per its last filings.

The filings also reflect an unsecured loan of Rs 4.9 crore but do not
specify from whom. Shahs lawyer says the main business of
Kusum Finserve is trading in stocks and shares, import and export
activities and distribution and marketing consultancy services. He
adds that KIFS Financial Services has regularly been giving it
loans. This entity has also been regularly raising ICDs/loans from
KIFS Financial Services for the last several years and the amount of
Rs. 4.9 crore was the outstanding closing balance from them.

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These amounts were used for regular working capital. Tax has
been deducted on the interest paid (TDS) and principal and
interest amount has been repaid in full, the statement says.

While the main business of the firm is trading in stocks, its RoC
filings reveal it is involved in diversifying into a completely
unrelated field: it is setting up a 2.1 megawatt windmill plant
worth Rs 15 crore in Ratlam, Madhya Pradesh.

Loans from a cooperative bank, and a PSU

Shahs filings with the RoC also reflect Rs 25 crore worth of finance
from the Kalupur Commercial Cooperative Bank. The board of
directors of the bank include individuals from the Nirma group
and Nirma university. The chairman emeritus of the bank is
Nirmas Ambubhai Maganbhai Patel.

File photo of wind turbines in Rajasthan Credit: REUTERS/Pawan Kumar

The properties mortgaged include one owned by BJP president


Amit Shah, valued at Rs 5 crore, and another transferred by an
associate of Amit Shah, Yashpal Chudasama, to Kusum Finserve
Private Limited in 2014. Shah did not reveal what the value of the
2002 square foot property was but market estimates put it at Rs 1.2
crore. Chudasama, a former director of the Ahmedabad District
Cooperative Bank, was chargesheeted by the CBI in 2010
(https://www.ndtv .com/india-news/on-camera-amit-shahs-aides-try -to-
influence-witnesses-425220) for attempting to convince, coerce,
threaten, and influence witnesses on [Amit Shahs] behalf to

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conceal the truth from the CBI about the fake encounter of
Sohrabuddin and his wife Kauser-bi. In 2015, a special CBI court
discharged Chudasama from the case
(http://indianex press.com/article/cities/ahmedabad/sohrabuddin-encounter-
ips-officer-2-others-get-clean-chit/), just as it had discharged Amit Shah
too in December 2014.

Asked how Kusum Finserve had managed to raise a loan of Rs 25


crore from a cooperative bank against collateral valued at under Rs
7 crore, and whether other properties had also been mortgaged,
Jay Shahs lawyer said the bank did not give the firm a loan but a
non fund based working capital facility in the form of a Letter of
Credit up to Rs 25 crore. This facility is availed from time to
time, says the lawyers statement. This facility has been secured
on usual banking terms which include hypothecation of the goods
purchased under the LC, cash margin of 10% and collateral
security of a property belonging to Jay Shahs father and another
property of Kusum Finserve (purchased on April 5, 2014 through a
duly executed purchase deed) which is duly reflected in the
financial statement of April, 2014 to March, 2015, says the
statement.

The bank receives payments before the retirement of LC on its due


date resulting in this being a non-funded and no-risk facility for the
bank, Shahs lawyer said.

Railway s minister Piy ush Goy al, formerly minister in charge of the
Ministry of New and Renewable Energy . (Credit: Piy ush
Goy al/Facebook)

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Besides the cooperative bank, Jay Shahs partnership has also


availed of a Rs 10.35 crore loan from a public sector enterprise,
Indian Renewable Energy Development Agency (IREDA),
described as a mini ratna on its website, in March 2016. It is
controlled by the Ministry of New and Renewable Energy. Piyush
Goyal was the minister at the time the loan was sanctioned.

The loan taken from IREDA for setting up a 2.1 MW wind energy
plant is based on the equipment prices prevailing at that point of
time as per industry standards (approx Rs 14.3 crore) and duly
appraised and sanctioned in the normal course of business. The
outstanding loan as on 30-06-2017 is Rs 8.52 crore and interest
and repayment of loan are regular, says Shahs lawyer.

What is not clear are the parameters by which a partnership whose


primary business, according to Shahs lawyer, is trading in stocks
and shares, import and export activities and distribution and
marketing consultancy services decided to apply for and get a loan
sanctioned for a 2.1 MW wind energy plant despite lacking any
experience in the infrastructure or electricity sector. The Wire has
reached out to IREDA about its lending policies and will add its
response later.

From Sh ah s lawyer, a th reat

While replying to The Wires questions on behalf of his client, Jay


Shahs lawyer warned that any story on Jay Shahs business
dealings could have adverse legal consequences:

In view of the answers and explanations detailed above, the facts


are absolutely clear and you are requested not to publish anything
in this behalf, which would not only infringe my clients privacy
rights but would also be libelous and/or defamatory.

Jay Shah is a private citizen doing his legitimate business. His


business transactions are honest, legal and bonafide. Your
questionnaire indicates that your intention is to drag him into a
false and a manufactured controversy. Any slant or imputation
which alleges or suggests any impropriety on his part will not only
be false but also malicious and defamatory. It will also be a breach

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of his fundamental right to privacy. He shall, in that event reserve


the right to prosecute you for defamation and also sue you for the
civil wrongs.

Notwithstanding the above, if you or anyone in the print,


electronic or digital media carries and/or broadcasts any
defamatory and/or false imputations including those which breach
his fundamental right of privacy and/or defame him, Jay Shah
reserves the right to prosecute and sue such person/entity
including anyone who carries or broadcasts a repetition of such
libelous/defamatory statement.

Rohini Singh is an investigative reporter who worked at the


Economic Times till recently. In 2011, she broke the story of
Robert Vadras business dealings with DLF.

What to read next:

As BJP Explains Amit The Rise and Rise of Fact Check: Amit Shah's
Shah's Asset Increase, Amit Shah (and What Claims on Why These
Questions on Deleted this Means for the BJP) Are 'Acche Din'
News Reports Remain 27/01/2016 26/02/2017
01/08/2017 In "Politics" In "Government"
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Anjan Basu an hour ago


Compliments to Rohini Singh for such meticulous analysis of the
many layers of the scam! It could not have been easy for her to
gather such a large body of facts from many different sources.
Linking them up so as to reconstruct the broad pattern of
manipulation and deceit may have been even tougher. This is
investigative journalism at its best.
Reply Share

Dr. Sanjay Sharma an hour ago


Interesting that Amit Shah's BJP opposed Fundamental Right to
Privacy in Supreme Court & now son's lawyer uses
FUNDAMENTAL RIGHT TO Privacy to threaten scribe!

Quote:
Any slant or imputation which alleges or suggests any impropriety
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10/8/2017 The Golden Touch of Jay Amit Shah

on his part will not only be false but also malicious and
defamatory. IT WILL ALSO BE A BREACH OF HIS
FUNDAMENTAL RIGHT TO PRIVACY . He shall, in that event
reserve the right to prosecute you for defamation and also sue you
for the civil wrongs.
Reply Share

atul 3 hours ago


Big Expose ! Kudos The wire team , Hope few channels will show
this on TV and don't worry about legal threat we are with you
Reply Share

Anjan Basu 3 hours ago


A roaring scam, nothing less! Here is an incredibly intricate web of
deceit, malfeasance and manipulation. Clearly, Amit Shah's
political clout and the BJP's proximity to India Inc in general and
the Gujarat unit of Reliance Industries in particular have helped
reap a bounteous harvest of illegitimate profit for his son. Govt
agencies like the IREDA -- ably headed by the pliant Piyush Goyal
-- have also duly played their part in furthering the business
interests of the BJP President's son. A cloak of secrecy is paramount
to sustaining such illegal enterprises, and that explains the angry
response of Shah's lawyer to The Wire's queries. The poor lawyer
likely does not know he caught a tartar in The Wire. For all the
loud mouths who claim dynastic plunder to be 'alien' to the BJP's
political culture, here is a strong rebuttal they will find hard to wish
away. The piece could indeed be headlined as 'The Golden Touch of
Amit Shah, BJP President'.
4 Reply Share

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