CBI raids Rotomac Pens MD Vikram Kothari's house; loan default pegged around Rs 2,919 crore

As the security agencies grapple with the investigation pertaining to the PNB fraud case involving billionaire Nirav Modi, they now have another challenge to tackle - Rotomac Pens loan default case, which is pegged to be over Rs 2,919 crore. The CBI had registered an FIR under criminal breach of trust, diversion of funds, and violation of foreign exchange rules against Rotomac promoter Vikram Kothari for a loan default of Rs 456 crore on Sunday. As the inquiry intensifies, sources reveal Kothari had availed of loans worth 2,129 crore from seven different banks; Bank of Baroda, which lent Rs 456 crore to Rotomac, has already written off the loan as NPA(non-performing asset) in 2015. Kothari allegedly took the loan on the basis of fake export orders, fake suppliers, and fake bills, but Kothari's lawyer defends the Kanpur-based businessman saying the case 'is a loan default'.

The banks impacted by his loan default include Allahabad Bank, Bank of India and Union Bank of India among others. Reports of his absconding act, much like billionaire diamantaire Nirav Modi, ran rife after his Mall Road office in Lucknow was found locked for a week.

There were no arrests in the case yet, CBI spokesperson Abhishek Dayal categorically said. He said Kothari, his wife and his son are being examined by the CBI, which is conducting the searches. CBI has registered an FIR against Kothari.

Following the rumours of fleeing the country, Kothari issued a statement saying, "First of all, it is not a scam. I am not going anywhere. I am an Indian citizen and am very much in my hometown. Though banks have declared my company as a non-performing asset (NPA), I am not a defaulter. The matter is still sub judice with the National Company Law Tribunal (NCLT). I am regularly in touch with the banks and am constantly cooperating with them. I availed the loans and will repay them soon."

Allahabad Bank, Bank of India, Bank of Baroda, Indian Overseas Bank and Union Bank of India compromised their rules to sanction loans to Rotomac, sources said. Kothari took a loan of Rs 485 crore from Mumbai-based Union Bank of India and a loan of Rs 352 crore from Kolkata-based Allahabad Bank.

A year later, Kothari has reportedly not paid back either the interest or the loan. Last year, Bank of Baroda (BoB), a consortium partner declared pen manufacturer Rotomac Global Pvt. Ltd. as 'wilful defaulter'. The company then moved the Allahabad High Court seeking removal of its name from the list of wilful defaulter. A division bench comprising Chief Justice D B Bhosle and Justice Yashwant Verma had passed the order on a petition filed by the company, contending that it has been wrongly declared a wilful defaulter by BoB despite having "offered assets worth more than Rs 300 crore to the bank since the date of default".

Rotomac was declared a wilful defaulter vide an order dated February 27, 2017 passed by an authorised committee, as per the procedure laid down by the Reserve Bank of India.

The development comes less than a week after Punjab National Bank (PNB) had detected a USD 1.77 billion - about Rs 11,400 crore - scam wherein Modi allegedly acquired fraudulent letters of undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders. The PNB fraud pertains to issuance of fake LoUs to companies associated with billionaire jeweller Nirav Modi by errant PNB employees, which enabled these companies to raise buyers' credit from international branches of other Indian lenders. Last month, PNB had lodged an FIR with CBI stating that fraudulent LoUs worth Rs 280.7 crore were first issued on January 16. At the time, PNB had said it was digging into records to examine the magnitude of the fraud. In the complaint, PNB had named three diamond firms - Diamonds R Us, Solar Exports and Stellar Diamonds - saying they had approached it on January 16 with a request for buyers' credit for making payment to overseas suppliers.

(With PTI inputs)