Rotomac Global Private Ltd has been involved in a cheating case of Banks in India for Rs. 806.75 crores. The Bank of Baroda had approached the CBI with a complaint against Kothari. Kothari had borrowed Rs 800 crore from various public sector banks including Allahabad Bank, Bank of India, and Union Bank of India.
The CBI has filed a charge sheet against Kanpur-based Rotomac Global Private Limited, its promoter Vikram Kothari and other directors.
Understanding of Rotomac Global Private Ltd
Since, among those named as accused are Mr. Kothari’s wife Sadhna and their son Rahul, as the company directors. This is the third case registered by the CBI against the Rotomac group entities.
The bank had extended various credit facilities to the company since 2002. Therefore, in September 2015 the loan account was declared a non-performing asset.
Background of Kotharis and Rotomac Global Private Ltd.
Belonging to a well-known and well-heeled Kanpur-based business family, Mr. Kothari had set up his stationery business under the name of Rotomac in the 1980s. His brother, Deepak Kothari is the owner of Pan Parag, a prominent mouth-freshener brand in India. In the late 90s, the family business was divided among the two brothers with Vikram getting the ownership of Rotomac, while his brother Deepak was given Pan Parag.
The company, incorporated in 1992 as Rotomac Pens Private Limited, had diversified its business into various segments. Hence, in 2008 it was renamed Rotomac Global Private Limited. The Central Bureau of Investigation (CBI) investigated the case deeply.
Investigation of Rotomac Global Private Ltd
According to the FIR, the accused persons adopted various means to cheat the bank. The funds were directed to group companies, Crown Alba Writing Instruments India Private Limited and Rotomac Polymers Private Limited, and misappropriated. Therefore, a forensic audit also revealed several financial irregularities in the account books.
Additionally, the group had shown foreign exchange losses of ₹1,578.71 crores in 2013-14 and ₹159.50 crores in 2014-15. It raised a debit note of ₹1,273 crores on four linked parties and concealed the losses. From 2013-14 Rotomac Exports Private Limited suffered forex losses of Rs. 1207.49crore. Hence, in 2014-15 it alleged Rs. 110 crores.
In many cases, as alleged, the place of issue of the Bill of Lading was China or Dubai, despite the fact that they were neither the loading port nor the discharging port. At the instance of the corporate office of Bank of Baroda, overseas centers in Dubai, China, and Hong Kong tried to contact the debtors of the company but were unable to do so as only the virtual offices existed.
From the date in respect of issuance of letters of credit, booking of forward contract, its utilization and authorization, and cancellation mentioned in various sanctions and review proposals reveal that the borrower has canceled more forward contracts than actually utilised for payment of LC. After going through multiple transactions, CBI discovered that no activity chain can be drawn from bills of lading.
Fictitious and non-existent or virtual offices of Gulf Distribution Ltd have been found in Hong Kong. It used the secretarial services of C.K. Liu & Co for this purpose in Hongkong. Ditto in Dubai where Pacific Universal General Trading LLC premises found an office boy. This resulted in the violation of the Foreign Exchange Management Act (FEMA) and the Enforcement Directorate was roped in to check the FEMA violations.
Final Word regarding Rotomac Global Private Ltd
Against Rotomac Global Private Ltd the first case was registered. Mr. Kothari, his wife, and their son in an alleged ₹3,695-crore loan default case. Mr. Kothari and his son were arrested. Hence, the Bank of India accused them of cheating a consortium of seven banks.
In May 2018, the agency filed the first charge sheet against Rotomac Global Private Ltd, the Kothari’s, and three bank officials, accusing them of cheating a consortium member, Bank of Baroda, of ₹456.63 crores.
