Rotomac a wilful defaulter, recovery process underway
Rotomac's Vikram Kothari had established a group company, Rave Entertainment, to set up a multiplex business in cities such as Meerut, Chandigarh, Panipat, Sonepat, Agra and Noida.
At a time when the fraud at Punjab National Bank (PNB) has roiled the industry and the regulators, another scam involving a domestic pen maker, Rotomac Global (formerly Rotomac Pens) has surfaced.
But unlike in the case of Nirav Modi and Mehul Choksi, banks began the recovery process almost six months ago, after declaring Rotomac promoter a wilful defaulter.
But did banks try to fulfil the dreams of a pen maker who also made a pan masala?
Rotomac's Vikram Kothari had established a group company, Rave Entertainment, to set up a multiplex business in cities such as Meerut, Chandigarh, Panipat, Sonepat, Agra and Noida. He also ran a commodity trading business which he blamed for the losses and inability to repay the bank loans.
Bank of Baroda (BoB) has declared Rotomac Global a wilful defaulter about six months back and all other banks have declared the account as a non-performing asset (NPA) about two years back.
Bank of India, which is the lead bank in the consortium, has provided 100% to the account. The total exposure of all the banks put together is about Rs 2,900 crore, which burgeoned to over Rs 3,500 crore with interest payments.
A senior Bank of India official told DNA Money, "We have undertaken 100% provisioning on this account. A forensic audit was also conducted and it was discovered that the company has diverted funds."
Banks started their recovery process following a decree from the Debt Recovery Tribunal (DRT) to attach the company's properties.
Another senior banker said, "Just last month, Allahabad Bank sold off two real estate properties, both residential. And we are also looking at selling his other residential properties in Dehradun. The company, which is now in the National Company of Law Tribunal (NCLT), will go for liquidation."
Another banker from Union Bank of India, which is in the process of attaching the promoter's house in Dehradun, said, "It is good that the CBI is also closing in on the company so that our recovery process will get fast-tracked."
Bank of India, Union Bank of India, Bank of Baroda and Allahabad Bank are some of the banks that have exposure to the company.
"The company started defaulting about two years back. The promoter also ran a trade finance business along with the pen manufacturing business. He told the bankers that he faced losses on the trade finance business. Banks have appraised the RBI and recovery process is underway," said the Bank of India official.
Rotomac Global, owned by Vikram Kothari, was incorporated in 1992. The company was set up to provide good quality and economically-priced ball pens.
Rave Entertainment Ltd is one of the group companies that was to set up a chain of multiplexes across the country. Rotomac promoters also ran an export and import business to deal in various commodities like rice, soya, maize, granite, petroleum/plastic products, polyester knitted flocking (fabrics), gold, hard coking coal (HCC), among other things.
Source: DNA Money