Case file: 35
Name: SR Foils and Tissue Ltd
NPA amount: Rs 65 crore
Bank: State Bank of India
Branch: Stressed Assets MGT BR DELHI
Number 35 in the NewsX NPA list is SR Foils and Tissue Ltd. According to our NPA list, the company owes State Bank of India Rs 65 crore which has now been classified as an NPA. The registered address of the company is Vardhaman Plaza 2, J-Block Community Center, Rajouri Garden, New Delhi.
According to the data with the registrar of companies with the ministry of corporate affairs, SR Foils was incorporated in July 1997 with an authorized capital of Rs 15 crore. The company held its last AGM in September 2014 and filed its last balance sheet in March 2014.
According to the RoC records, the directors of the company are Rakesh Gupta, Rishi Gupta and Durlabh Singh Gupta. The original promoter Rakesh Gupta appears on our NPA list as well.
According to the RoC records, Rakesh Gupta has 6 other companies listed under him, which were incorporated between 2007 and 2011. We decided to check the RoC records for the rest of the companies as well. Of them all, only Vanity Enterprises Private Limited had an outstanding loan worth Rs 2.5 crore from Bank of Baroda.
When we hit the ground, we happened to speak with the guard who was deployed at the registered address of the company. He told us that the property was under the bank for the past one year and no auction had taken place since then.
During the course of our investigation, a legal trail appeared. We found a number of judgment copies for cases between SR Foils and Tissues Ltd and ICICI Bank. It reveals that an extension of 90 days was provided to the resolution professional to complete the corporate insolvency resolution process of the company. Then we found this judgment copy from 6 months back, again pertaining to a case between ICICI Bank and SR Foils and Tissues Ltd.
It alleges that the company was defaulting on a default worth Rs 113 crore as on 31st May 2017. According to this copy, the bank claimed that the company first defaulted on a loan in April 2014 following which it turned into an NPA. This prompted us to check the company’s financial status before 2014.
When we dug further, we found this media report from 2010 which reflected a healthy financial status of the company. It says that the company won 2 prestigious awards in the year 2010. So a company which was running a healthy business turned bad in no time and it was never the same. In fact, the loans kept multiplying from one after the other ever since.
When we dug further into the paper trail, we found a 2017 high court judgement copy which reveals that the property of SR Foils and Tissues Ltd was attached by the Commercial Tax Department in 2014. It further reveals that ICICI Bank sold the property to another company GMC Engineers and Contractor Private Limited, the auction of which took place in January 2017.
We’ve written an email to the company, but haven’t received a response. We’ve also written to the bank, but are yet to hear from them.
So, this is what we know. SR Foils and Tissue Ltd was started by Rakesh and Rishi Gupta in 1999. On our NPA list, the company owes State Bank of India Rs 65 crore, while on the RoC records the company has 30 outstanding loans worth Rs 400 crore. In 2014, the company allegedly defaulted on a loan provided by ICICI Bank after which it was classified as an NPA. The company’s property was then attached by the commercial tax department. Following which it was sold by ICICI Bank in an auction to GMC Engineers and Contractor Ltd in 2017.
Businesses go bad. That’s the nature of the free market. But again this investigation is a red flag on banks doling out loans to what used to be a good business, bit just isn’t anymore. There is a risk in all financial transactions and investments, the question is – Do banks just go by the past reputation of the company or its current health or business environment before good money turns bad.
Each investigation by us has brought us closer to a fuller understanding of the NPA issue in India, a fuller public understanding. We’re not stopping here. We will be back with more.