Pratibha Logistics Private Limited

Cosmos Bank (05/08/2018)

Rs. 52 crore to Pratibha Logistics Private Limited through Dadar Branch, Mumbai turning into NPA quite early.

This account became NPA quite fast within 3 years.

This company is a subsidiary of Pratibha Shipping Limited. I will deal with the parent company in a separate post later.

Pratibha Logistics Private Limited was incorporated on 20/06/2007 by the following promoters:

1. Mr. Sunil Anandrao Pawar
2. Madan Anandrao Pawar
3. Sachin Keshav Chavhan
4. Neelkanth Balkrushna Vidwans

During the year 2007-08, the Company had bought freighter ship called MV Pratibha Narmada for Rs.32 crore. The Company had taken a Term Loan of Rs.47 crore from Saraswat Co-operative Bank Limited. The loan was to be rapid in 36 monthly installments of Rs.36 lac with interest after the initial moratorium of 9 months.

In December 2009, Cosmos Co-operative bank Limited disbursed a term loan of Rs.32 crore to the borrower Company. The loan was directly given as repayment of part term loan to Saraswat Bank on behalf of the Company. The loan was to be repaid in 60 monthly installments of Rs.72 lakh. There was no moratorium. Sounds confusing as to why the borrower should opt more costly terms compared to Saraswat Bank.

However, in January 2011 a further term loan of Rs.20 crore was sanctioned through Dadar Branch of Cosmos Bank. The fresh repayment terms were 60 monthly installments with 4 months moratorium. Obviously, the things were not working well for the borrower company.

Thus till January 2011, the Company had borrowed Rs.15 crore from Saraswat Bank and Rs.52 crore from Cosmos Bank.

The basic parameters of the borrower company are as follows:

 

(Rupees in crore)

 

	31/03/2008	31/03/2009	31/03/2010	31/03/2011
Ship cost	32.00	32.00	32.00	32.00
Capital work in progress	5.29	20.17	38.48	49.82
Loan disbursement from Bank	14.00	29.48	55.99	61.78
Advances to others (asset side)	2.31	18.23	54.95	62.84

 

The company had obviously bought some ramshackle ship and was trying to retrofit with heavy repairs. The fact that capital work in progress was continuing for more than 4 years is sufficient to indicate the Borrower’s slow and steady journey towards NPA.

The Company is also default in compliances under the Companies Act, 1956 and 2013 since financial year 2011-12.

The account has become NPA and written off in the books of account by Cosmos Bank in about 2013-14.

Perusal of documents shows that both the banks have apparently not taken any collateral security form the Company as well as its Directors. It is obviously eye-raising practice that Rs.52 crore have been given by Cosmos Bank just by creating a mortgage on some scarp ship bought by the borrower and financing the costly renovation.

The parent Company Pratibha Shipping Limited has also gone caput and is under liquidation. More on that in a separate post.

I had approached Mr. Vikrant Ponkshe, the then MD and CA. Milind Kale, Chairman of the Bank with the following basic questions:

1. What is the actual amount of the NPA?
2. Why has the bank not taken any collateral security from the Company as well as the Directors?
3. Why was personal guarantee of the Directors not taken?
4. Whether the ship MV Pratibha Narmada was new one or the scarp one bought by the Borrower Company?
5. If it was a scrap one, has due diligence been done by the bank by taking valuation certificate from the Registered Valuer?
6. When the Parent Company Pratibha Shipping was defaulting in repayment of its huge loan, why was new loan given to its subsidiary in total violation of RBI norms?
7. Have you examined the continuous increase in advances given to others to ensure that there is no diversion of funds and loan is utilized for the purpose for which it is given?
8. Do you know that this company has incorporated a subsidiary called Pratibha Logitics (S) Pte. Ltd. based in Singapore in October 2010?
9. Have you seen how the subsidiary is financed by this defaulter company?

As is the practice in Cosmos Bank, both of them did not answer any of the questions. Instead, Mr. Vikrant Ponkshe tried to influence me by telling that Sunil Pawar and Madan Pawar are nephews of Sharad Pawar and cousins of Ajit Pawar. CA Milind Kale, the Chairman of the Bank went couple of steps further and explained me in detail how Krishnakumar Goyal, another Director of the Cosmos Bank is closely associated with Ajit Pawar in his real estate development business and how the Chairman Emeritus Mukund Abhyankar has good relations with Sharad Pawar himself.

I am still not clear how the relations of Directors of the defaulter Company with Sharad Pawar and Ajit Pawar would answer my questions.

Or is it a case of Entitlement of some class of people to defraud the Bank and public money just because they happen to be the relatives of some politician with impunity? I think it is the case. When one considers the facts in totality, the picture becomes quite crystal clear.

Friends, many of you must have taken home loan from Cosmos Bank. As per the practice, the bank also asks for personal guarantee as well as two guarantors if the loan amount is huge. This is besides the mortgage of your home. However, in this case, despite the amount being Rs.52 crore and despite the fact that holding company is a defaulter, loan was extended without any collateral security in total violation of RBI norms.

Obviously, this is not possible without the active connivance of the entire Board. It would not be out of place if one were to call this loan of this magnitude without collateral security, personal guarantees of the Directors and zero monitoring of the end use of the loan funds as an absolute fraud played by the Directors on the depositors and shareholders.

This is a fit case for the Government to dismiss the Cosmos Bank Board immediately and order investigation by registering FIR against the Board as well as the Defaulters. This fraud needs immediate intervention by the RBI, CBI, EOW, Central Registrar of Co-operative Societies, Finance Ministry and other relevant authorities. However, as I have stated in my earlier post, Dr. Mukund Abhyankar is confident, no one would touch him.

And the loot would continue.