Mumbai: Yashovardhan Birla, a renowned industrialist and a flamboyant personality regularly featuring among the who's who of Mumbai's corporate echelons is the latest to be reported by a bank for wilful default.
Kolkata based UCO bank in their notice shared a black and white image of the 51 year old page-3 celebrity saying his company had defaulted on a large amount. The bank said that Birla Surya Limited where Yashovardhan is a Director took a credit limit of Rs 100 crores.
The credit was taken for purpose of manufacturing of multi crystalline solar photovoltaic cells from the bank's Nariman Point branch. At present, the balance outstanding was Rs 67.65 crores plus unapplied interest from date of NPA (non-performing asset).
UCO bank declared Birla Surya Limited as an NPA account on 3rd June'13.
The notice bearing the authentication of the General Manager and Zonal Head Zonal Office of Mumbai said that the bank sent several notices/actions, however the borrower company and its director/promoter/guarantor were declared as "wilful defaulters by the bank and their name reported to the credit information companies for public information."
Being featured on a business page for wilful default for a page3 regular may be a disgraceful development, however it should be recalled that Yashovardhan Birla has been reported multiple times in the recent past. In 2013, he was accused in a cheating case. Back then, a Mumbai resident alleged that Birla, his wife and employees of Birla power solutions owed her Rs 7.90 crores. The complainant also alleged that she was promised two percent interest per month for investing in the company. She complained that she did not receive the interest, and the cheques issued to her by the firm had bounced. In what may appear as a sensational claim, the complainant added that the total defrauded amount was likely to go upwards of Rs 300 crores.
In another case in the same year, United Bank of India termed the company as a non-performing asset and issued several public notices. That news resulted in several banks contemplating a mass recall of loans offered to Birla Surya Limited. Back then, it was reported that the company had defaulted on loans worth Rs 1,000 crores.
By 2014, the income-tax department and economic offices wing of Mumbai Police conducted searches of Yash Birla Group for money laundering and tax evaasion. The EOW slapped provisions of Section 420 and 120-B against Birla Power solutions for defaulting on repayment of fixed deposits sought from investors. It was reported that the firm took deposits worth Rs 214 crores from 8,800 investors.
In 2015, the PTI reported that Yash Birla and four unrelated businessmen from Maximum-city parked their money with Swiss banks. It was not reported as to how much money Birla stashed in his Swiss account, but his name had also featured in the HSBC, Geneva account holders list that was published by the Indian Express.
It was in 2019 again that Yash Birla led companies came in the wrong side of news. This time, it was the Ministry of Corporate Affairs asking the Serious Fraud Investigation Office to investigate accounts of Birla Cotsyn, Birla Shloka Edutech and Zenith Birla (India) limited over allegations of diversion of funds. The case development on Zenith Birla is awaited while Birla Cotsyn and Birla Shloka claimed that they had paid off monies taken from small-investors.
Although UCO bank has not suggested the total exposure of loans sanctioned to Yash Birla and his group of companies, the amount could only grow if other banks too started reporting their exposure to Birla Surya and other companies promoted or linked with Yash Birla.
Companies within Yash Birla Group include Melstar Information Technologies, Birla transasia Carpets, Birla Precision Technologies, and nearly ten others.
Ironically, it was the brother of Yash Birla's great-grandfather (Rameshwar Das Birla) who found the bank. United Commercial bank established in 1943 was found by Ghanshyam Das Birla (GD Birla).
RBI rules suggest that Birla Surya's promoters indicted of wilful default cannot be offered financial assistance in the form of any additional facilities by banks unless the company clears its arrears. Also, the firm is restricted from opening newer ventures for five years and lenders can initiate criminal proceedings against the company and its directors.
Naming Yash Birla is UCO Bank's way of recovering defaults. The bank is reported as issuing a list of 665 wilful defaulters with names such as Zoom Developers (NPA amount of Rs 309.50 crores), First leading Company of India (142.94 crores), Moser Baer India (122.15 crores), and Surya Vinayak Industries (107.81 crores) featuring among the top of the list.
Also Read: The will that threatened the Birla empire