New Delhi: The role of bank officers of 10 public sector banks is under the scanner for allegedly sanctioning loan to Antrix Diamond Exports Private Limited that has turned into non-performing assets (NPAs). The internal investigation report reviewed by Firstpost shows bank officers connivance because pre-sanction appraisal of the company was not carried out, neither was solvency of Antrix Diamond Exports properly monitored. The bank officers also ignored mandatory site visits to verify collateral (securities) and business activities.
The lenders with consortium leader, Bank of India, is claiming Rs 479.23 crores from Antrix Diamond Exports that was floated in 1986 and engaged in import of rough diamonds and export of cut and polished diamonds. Other banks that have taken a hit includes Canara Bank, IDBI Bank, Bank of Baroda, Andhra Bank, Allahabad Bank, Central Bank of India, State Bank of Bikaner & Jaipur now merged with State Bank of India, Punjab National Bank and Indian Overseas Bank. The public sector lenders have questioned Antrix Diamond Exports' business transactions with foreign entities. The report has raised suspicion over the genuineness of foreign buyers and suppliers of Antrix Diamond.
"Ownership of premises and business of manufacturing sites was never appraised or inspected in real terms. At overseas centres, sham and associate concerns were informed to be on the same address and without any signboard or indication. Their accommodation bills were discounted and consequently both the companies of same promoters defaulted in payment of bills," the investigation report said.
The investigation report further revealed that Antrix Diamond Exports alleged associate firm Anaya Gems Inc had also availed loan of $10 million from Punjab National Bank, Hong Kong branch and an outstanding amount of $9.2 million was classified as NPA on 8 June 2018. Anaya Gems Inc is also enjoying facilities of $25 million from Bank of India, New York branch and $ 5 million from Allahabad Bank, Hong Kong.
In order to establish the link between the two firms, the investigation report claimed that credit facilities enjoyed by Anaya Gems Inc are guaranteed by Antrix Diamond Exports Private Limited and facilities availed by Antrix Diamond are guaranteed by Anaya Gems Inc. Interestingly, Allahabad Bank was the first one to raise the red flag way back in 2015. As per the investigation report on 10 September 2015, Allahabad Bank informed that the account had turned NPA in their books and sought recovery action against the firm through Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI). Around the same time, Punjab National Bank too was witnessing unusual activities and at least 8 bills amounting to Rs 11.20 crore were due. Central Bank of India declared bills to the tune of Rs 24.75 as overdue including majority from Anaya Gems Inc, and Bank of Baroda claimed 6 bills and 4 PCFC (Pre-shipment Credit in Foreign Currency) worth Rs 16.24 crores as overdue.
PCFC is credit provided by a bank to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment, on the basis of letter of credit opened in his favour or in favour of some other person, by an overseas buyer.
Ajay Gandhi, Managing Director of Antrix Diamond Exports denied the allegations leveled against the company in the internal investigation report. Gandhi said: "Our group (Antrix Diamond) is in the diamond business for more than 60 years. We deny all the allegations ... We have always conducted our business in fair and transparent manner." Gandhi, however, did not respond to the bank's allegations of sham companies and link between Antrix Diamond Exports and Anaya Gems Inc. Bank officials has claimed Anaya Gems Inc is part of Antrix, and Gandhi's son is the Chief Executive Officer of the firm in the USA.
The company has filed a bankruptcy application with National Company Law Tribunal (NCLT) Mumbai, which has put a moratorium on any action by creditors against Antrix Diamond Exports till corporate insolvency resolution or approval of resolution plan by the bench.
Ram Ratan Kanoongo of Resolution Professional of Antrix Diamond Exports said powers of board of directors including Ajay Gandhi's, got suspended and Resolution Professional of Antrix Diamond Exports Private Limited is made responsible by NCLT to manage the operation of the company. He, however did not respond to specific allegations made in the investigation report.
Kanoongo said: "After examining at our end, we have not found any bank investigation report made available to us, since the beginning of CIRP (Corporate Insolvency Resolution Process) from March 2018. During the CIRP, the Committee of Creditors (CoC) has not approved the resolution plan, so the matter is pending at NCLT for liquidation order. The matter is presently subjudice."
As far as forensic audit in the entire saga is concerned, the report said: "M/S E&Y were appointed as forensic auditors for scrutiny of transactions for suspected diversion. The company was continuously informing the bank about the sluggish market but at the same time it was increasing demand with banks for more finances."
Punjab National Bank had submitted that Antrix Diamond Exports was availing fund-based export credit facilities of Rs 41.50 crores including Rs 6.92 crores as standby limit under 'Expo Gold Card.' Lead bank of the consortium, Bank of India has been hit by exposure of Rs 115.78 crore, Allahabad Bank Rs 46.98 crore, Canara bank Rs 42.43 crore and IDBI bank Rs 43.69 crore.
It appears from the investigation report that bank officials ignored warning signals in the Antrix Diamond Exports case. For example, questions have been raised about mortgaged properties by State Bank of Bikaner and Jaipur (SBB&J) in an on-site investigation report.
The report said property based in Ahmedabad that was pledged as collateral security was found to be occupied by other persons.
"At the time of our visit, we found that on the first floor shutter was locked and a name plate was displayed duly written that the possession of the property by Nandkishor R Agrawal since 20/11/14. We have asked to the company's official Chetan Shah about this possession but he could not give any reply about the possession of first floor with Agrawal. The 3rd and 4th floor office blocks were found vacant and most of the office doors have written the name of firms which we could not identify. Even Chetan, representative of the company also could not give proper reply in this respect," SBB&J inspection report said.
The report further recommended that the lead bank (Bank of India) is requested to get the fresh valuation of all the mortgaged properties done at the earliest.
"Lead bank is further requested to please ask the company about the possession of the property of Antrix Arcade, Raspan Part Plot road, final plot No 28, T P Scheme No 102, Nikol, Ahmedabad as during the visit of bank officials for security inspection, it was observed that on 1st floor a name plate was displayed duly written that the possession of property Nandkishor R Agrawal and 3rd and 4th floor offices name of the unknown firms were displayed," SBB&J report added.