How to make Rs 125 cr for free? Ask Xenitis by Durbar Ganguly, the Daily Pioneer
The Xenitis story turns even more curious if one takes a look at the gullibility of banks which queued up to fund the promoters. The company had shown secured and unsecured loans at Rs 173 crore and Rs 31.17 crore respectively as on September 30, 2007, as mentioned on page 10 of the Draft Red Herring Prospectus (DRHP).
This is besides the cash credit enjoyed in excess of Rs 200 crore from a consortium of 11 banks, led by UCO Bank, as listed in the DRHP (page 15) and other banks like Development Credit Bank, Shakespeare Sarani branch, Axis Bank etc. The company borrows from one bank to pay another and every year it has to show healthy increase in top line to get higher loans and higher cash credit limits from banks so that the previous liabilities to them can be met by new borrowings. This is blatant abuse of public money.
But siphoning off this money, borrowed from banks, was not the sole purpose of inflating the business volumes. A news item on April 16, 2008, in The Economic Times, Kolkata edition, shows how Santanu Ghosh, the Xenitis owner, sold 5 per cent of his personal stakes in the company to SBI for Rs 25 crore and that another 20 per cent would be offloaded this year. Thus, within this year, Ghosh aims to earn Rs 125 crore by off-loading his personal stakes in the company.
Evidently all the window-dressing was not merely to borrow from banks to run the business, but to create a platform for selling the business itself to earn riches for the promoter. Earning personal riches of Rs 125 crore in five years from the profits of a legitimate business is a Herculean task. By window-dressing the books and logging in huge fake turnover, Ghosh did better to entice institutions into buying his personal stakes in the business.
Global Automobiles (P) Ltd, another arm of this company, has also been indicted for such fraudulent booking of turnover. But the company is using its proximity to the political bosses in West Bengal to sit pretty over the show-cause notices issued to it by the directorate.
Does the UPA Government require more to investigate activities of such companies working from the Left Front-ruled West Bengal?