Parekh Aluminex, which is under Central Bureau of Investigation (CBI) lens for fund diversion after taking loans from banks, is close to a resolution under National Company Law Tribunal (NCLT), with a bidder willing to buy out the bankrupt company.
This is the second case after Bhushan Power and Steel to be mired in fraud allegations after the bidder was approved by the committee of creditors (CoC). Bankers say the fraud is against the promoters and it should not affect the resolution of the case.
Eight Capital Management, a distressed assets investor, is purchasing the Mumbai-based Parekh Aluminex for Rs 1,400 crore, a source familiar with the development said. This is a 67% haircut as the aluminium rolls manufacturing company has unpaid loans of Rs 4,000 crore to a consortium of banks led by the Indian Overseas Bank (IOB).
A BIG KNOCK
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- Rs 4,000 cr – unpaid loans of Parekh to a consortium of lenders led by IOB
- Rs 2,297 cr – the company has allegedly defrauded IOB
- Rs 390 cr – the alleged fraud amount for Federal Bank and Axis Bank
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The deal is awaiting approval from the National Company Law Tribunal (NCLT). "The CoC has given a nod to the Eight Capital's bid. Now the NCLT has to clear it," the source said.
The promoters of Parekh Aluminex have been facing charges of fund diversion and money laundering. In June, the Enforcement Directorate (ED) conducted searches at multiple locations linked to Parekh Aluminex and its promoters in Mumbai under Prevention of Money Laundering Act (PMLA). The ED also attached a 47.39 acre land of the company on the outskirts of Hyderabad. The land parcel is valued at about Rs 46.97 crore.
The CBI has filed six criminal FIRs against the company while the economic offences wing of the Mumbai Police also filed a similar complaint.
The ED had stated the company had allegedly defrauded Indian Overseas Bank and others to the tune of Rs 2,297 crore and the Federal Bank and Axis Bank for an amount of about Rs 390 crore.
The agency had stated that its probe found diversion of the loan amounts taken for manufacturing purpose to non-manufacturing related activities with an intent to defraud the banks and to get personal benefits for them and their associates. "Investigation conducted so far has revealed that the loan amount was further illegally siphoned off to various entities amounting to about Rs 1,557.45 crore," it said.
Parekh Aluminex was one of the largest manufacturers and exporter of aluminum foil containers, and also one of the biggest manufacturers of aluminium foil rolls and lids in India. It has manufacturing facilities located at the union territory of Dadra and Nagar Haveli.
In the past it had acquired a Singapore-based firm by taking over its plant and machinery, which also brought a new customer base, including Emirates Airlines, Singapore Airlines and Thai Airways.
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