Today is day 55 of our NewsX NPA investigation campaign. Case 33 on our list is Delhi based garment retailer Creative Home Fashions Ltd. As per our NPA list, the company owes Vijaya bank 77 crore and per the ROC records, the company is allegedly defaulting on 7 loans with a cumulative total of 28 crore. Once again we bring to you a case which reflects the sad state of affairs of the financial industry. Let’s have a look at the full report.
Number 33 in the NewsX NPA list is Creative Home Fashions Pvt Ltd. According to NPA list, the company owes Vijaya bank 77 crore rupees which have now been classified as an NPA. The registered address of the company is a 210, Vardhaman apartments, Mayur Vihar phase I, Delhi. According to the data with the registrar of companies with the ministry of corporate affairs, Creative Home Fashions was incorporated in July 2000 with an authorized capital of rupees 2 crore. The company held its last AGM in September 2011 and filed its last balance sheet in March 2011
Now here’s a case where a Delhi based garment retailer allegedly defaulted on multiple loans, one after the other, and despite that, it kept securing new loans every passing year. Another example harking to the core issue surrounding NPAs companies that sink loans, just keep getting new loans, where a small NPA then turns into crores and crores as good money is thrown after bad. According to the ROC records, the directors of the company are Joseph Olickel Thomas, Umesh Kumar, Simon Joseph, Kutty Ullas Kumar, and Krishan Murari Gupta. And on our NewsX NPA list we have TO Joseph, Elizabeth Thomas, Sophy Joseph, and Geeta Advani listed as the directors of the company
Have a look at a further examination of the ROC records, they show multiple loans from the different bank. Here’s a loan of 50 lakhs, here’s another loan of 9 crore, then a third loan of 15 crores, then a fourth loan of 3 crores, the list doesn’t end there, here’s a fifth loan of 25 lakhs and yet another loan of 15 lakhs, and lastly, a loan of 75 lakhs. So Creative Home Fashions owes banks a total of more than 28 crore rupees according to the ROC.
When we hit the ground, a local guard informed us that the company had vacated the building almost 5 years ago. According to the ROC records, Joseph Olickel Thomas has 2 other companies listed under him, which were incorporated between 1998 and 2000. We decided to check the ROC records for the rest of the companies as well. Both the companies had loans owed to Vijaya Bank. While GK Product private ltd had 2 pending loans worth rupees 15 crore, the 2nd company well computer exim private ltd, owed a total of 20 crore rupees to Vijaya Bank. We also tried speaking to the new owner of the property at which the company was initially registered.
When we dug further, we found that Vijaya bank had called for an auction every year between 2013 and 2016; each of the 4 notices mentions Creative Home Fashion Pvt Ltd as the borrower and each notice has listed out different properties for auction. The auction notice from 2013 listed 1 property including a factory with 2 buildings with a reserve price of rupees 13 crore, whereas the bank was aiming to claim 50 crore. Similarly, the notice from 2014 listed the same property, this time at a reserve price of 9 crore rupees.
And this one from 2015, listed 2 properties with a reserve price of 4 crore each, taking the total to a little over 8 crore while aiming to claim 50 crore. And this last e-auction notice from 2016 again listed 2 properties and claimed the same amount of rupees 50 crore, taking the total reserve price to just over 8 crore yet again. So, the bank kept calling for an auction, year after year, hoping to recover a huge amount, compared to which the collateral amount was hardly anything exposing not only the bank’s struggle to dispose of the properties but the struggle to get even the valued price
So, this is what we know, Creative Home Fashions Pvt Ltd was started in 2000 by Joseph Thomas on our NPA list, the company owes Vijaya bank 77 crore and on the ROC records, the company owes a total of 28 cr rupees to Vijaya bank and to Hong Kong and Shangai banking corporation ltd. Vijaya bank called for an auction every year between 2013 and 2016…while the bank was aiming to claim 50 crore, the properties listed for auction summed up to be not more than 13 crore according to our investigation the company shifted its base elsewhere 5 years ago.
Here we are again with same people, multiple loans, multiple companies, loans to pay off loans in a never ending cycle. This case also reveals how with smaller companies, the banks are tighter with collateral but still struggle to dispose of the properties. The auctions go slow, banks struggle to get valued prices and assets get locked up for years, not just the NPAs of loans with banks, but India’s economy suffers the blow of non-performing assets on the ground. A faster system would unlock these assets, help banks recover a part of the loans and unclog the system. We’re not there yet, we need to be.