Chanda Kochhar Money Trail: En familia Kochhar is biggest beneficiary

When you cut a corner to get to the front of the line, question is what do you do when you get there? What is the event horizon and are you availing pecuniary benefit from it? The Chanda Kochhar-Advani family (Chanda Kochhar before marriage to Deepak Kochhar was 'Advani') enterprise in complicity with Videocon's Venugopal Dhoot is a result of a shameful abuse of power and pelf. An unholy trinity involved in chicanery and deceit. It is built on an edifice of greed and naked avarice.

IANS has followed the paper trail to bring forth an investigative series on the construct of this fraudulent boilerplate, one that is under a multi-disciplinary probe now.

Pacific Capital Services Pvt Ltd is under inspection and a separate report is ready for submission by government agencies. In parallel, NuPower is also under inspection by another investigating officer in the Office of the Ministry of Corporate Affairs Regional Director western region, Mumbai. Ditto with Videocon International under probe by a separate I.O.

It provides a peep into the nexus between the Kochhar/Advani families and the Videocon Group. The seamless intertwining of the two entities and virtual convergence each time shows clear mala fide across the deal board. At the time of incorporation of NuPower i.e. on 24.12.2008, Pacific was owned 90 per cent by Neelam Advani (wife of Mahesh Advani who is Chanda Kochhar's brother) while 10 per cent of the equity was held by Virender Kochhar (Deepak Kochhar's father).

Thus in effect NuPower was promoted by Venugopal Dhoot and Kochhar Group almost equally (Deepak Kochhar had one share more than V.N. Dhoot and his associates. The emergent story of cronyism and collusion is a veritable house of horrors, for the blatant and open abuse of power is visible. On December 24, 2008, Dhoot along with associates and nominees, Deepak Kochhar and an entity called Pacific Capital promoted and incorporated a company NuPower Renewables Ltd with a subscribed capital of ₹500,000 (divided into equity shares of ₹10 each). Pacific subscribed to 25,000 shares (50 per cent), Dhoot subscribed to 24,996 shares, his associates to 3 shares and Deepak Kochhar subscribed to one equity share. The directors were Dhoot, Deepak Kochhar and Saurabh Dhoot (Venugopal Dhoot's son).

Government sources indicate that on January 7, 2009, NuPower increased authorised share capital from ₹500,000 divided into 50,000 equity shares of ₹10 each to ₹4,50,00,000 divided into 44,50,000 equity shares of ₹10 each. The same day, the game was afoot as NuPower issued 19,97,500 share warrants of the company to Deepak Kochhar. The 19,97,500 warrants issued to Kochhar were convertible at any time during the period commencing from the date of the issue of warrants up to and including 31.7.2010 into equivalent number of equity shares of the company at face value of ₹10 each at par value.

But in reality in what was a sweetheart deal, he was paid only Re 1 per warrant totalling ₹19,97,500 only as per financial statement as at 31.3.2010.

Here is the sequence of events that follows, the expediency and alacrity shown by the dramatis personae is mysterious. The transaction results in ₹64 crore received from Videocon International by Supreme Energy transferred to NuPower Renewables for subscription of zero coupon fully convertible debentures. Before this NuPower becomes subsidiary of Supreme and Videocon advances ₹64 to Supreme Energy owned by Venugopal Dhoot in 2010 which is then converted into equity between 2015 and 2017.

* January 7, 2009: Board of NuPower resolved to acquire 'Wind Power Business Divisions' of Shriram City Union Finance Limited and Shriram Transport Finance Company Limited through Slump Sale Agreement for an agreed consideration of ₹74,04,88,292 (around 74 crore] that is ₹50 Crores to Shriram City Union Finance Limited and ₹24 crore to Shriram Transport Finance Company Limited.

* January 15, 2009: V.N. Dhoot resigned from the Board of Directors of Supreme.

* January 15, 2009: Venugopal Dhoot and Saurabh Dhoot resigned from NuPower as Director.

* January 15, 2009: Mahesh Punglia (DIN 01622009] was appointed as Director of NuPower along with Karunchandra Srivastava, Retd. IAS (Director Identification Number, DIN 00314951)

* March 20, 2009: Supreme, vide letter dated 20/03/2009, to NuPower expressed its interest for investing in the Company by the way of Fully Convertible Debentures.

* March 25, 2009: NuPower signed two Slump Sale Agreements with Shriram Transport Finance Company Limited (STFCL) and Shriram City Union Finance Limited (SCUFL)

* May 2009: Chanda Kochhar becomes the CEO & MD of ICICI Bank Limited.

* June 5, 2009: NuPower became a subsidiary of Supreme. Supreme acquired 49,994 equity Shares (24,996 equity shares from V.N. Dhoot and 22,500 equity shares from Pacific) of face value ₹10 each respectively for consideration at Par Value.

* June 5, 2009: Deepak Kochhar acquired 2,498 equity shares of NuPower from Pacific of face value ₹10 each.

* September 8, 2009: Videocon Industries Ltd. (VIL) advanced ₹64 crore to Supreme. VIL has not specifically disclosed the same under the Related Party Transactions in its financial statement.

(VIL has not separately disclosed this amount in its financial statements, but it is admitted on oath that the amount was clubbed in figures under the head 'Advances' but was also not disclosed as Related Party Transactions as required under AS-18 being a transaction with Related party as Supreme was a related party of VIL Violation on these counts and also of Section 295 of CA, 1956 is reported in the Inspection report of VIL.)

(Supreme has disclosed the receipt of ₹64 crore in its financial statement as at 31.03.2010 (FY 2009-10) under the head 'Unsecured Loans" but not disclosed the name from whom it has received the said amount. In FY 2010-11 the amount is reclassified and shown as Securities Application Money. Further in the FY 2011-12 onwards it was shown under long-term borrowings as OCD (zero coupon) and in all these years, the name of VIL has not been disclosed in financial statements.)

* September 8, 2009: The Sum of ₹64 core received from VIL by Supreme was transferred to NuPower for subscription of Zero Coupon Fully Convertible Debentures.

* September 18, 2009: NuPower, STFCL and SCUFL mutually agreed to amend the two Slump Sale Agreements both dated 25/03/2009.

* March 25, 2010: NuPower allotted 64,00,000 zero coupon, FCD's of ₹100 each to Supreme totaling to ₹64 crore as against funds received on September 8, 2009. These Fully Convertible Debentures ('Series A Debentures') each were having a face value of ₹100 to Supreme convertible on the earlier of

a) the date of commencement certificate issued by the relevant government authorities to NuPower certifying the commencement of 230 MW of wind power turbines;

b) the date when the Series A Debentures will compulsorily be required to be converted for filing of the draft red herring prospectus by NuPower with SEBI for the purpose of listing the securities of NuPower, and;

c) June 30, 2013 into such number of equity shares of NuPower having face value of ₹10 each as are achieved by dividing a number being such percentage (not less than 75) of the subscription amount for the Series A Debentures paid by Supreme with fair market value of the Equity Shares as on the date of conversion of the Series A Debentures, as determined by the Board of NuPower in accordance with the terms of issue of the Series A Debentures at the time of conversion.