Modus operandi: RP tells NCLT, Tecpro entered into transactions to defraud lenders

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Mumbai | May 17, 2018 2:31 AM

The resolution professional (RP) for Tecpro Systems has detailed the “modus operandi” of the company’s promoters to allegedly defraud its lenders.

The resolution professional (RP) for Tecpro Systems has detailed the “modus operandi” of the company’s promoters to allegedly defraud its lenders. Venkatesan Sankaranarayanan, the RP, has filed a petition with the Principal Bench of the National Company Law Tribunal (NCLT) seeking investigation into the matter.

The RP cited a forensic investigation report by EY for his findings. The report was commissioned by Edelweiss ARC which owns 84.7% of the company’s debt, “without the awareness of the promoters or employees of their audit so that the regular operations are not impacted anyway”.

The company owes banks around `7,000 crore and reported a net loss of `1,080 crore on the back of `273 crore in revenues in FY15 (latest available). While, the company had received bids from Kridhan Infrastructures, Eight Finance and employees of Tecpro, Kridhan’s bid was accepted by the committee of creditors (CoC). The company is promoted by Amul Gabrani (18.16%), Ajay Kumar Bishnoi (17.58%) and Fusion Fittings India (14.94%).

In his filing to the bankruptcy court, a copy of which has been reviewed by FE, Sankaranarayanan said that Tecpro used to secure contracts from the reputed customers and provide performance bank guarantees and would receive the advance amount by providing advance bank guarantees.

Tecpro, the document said, would then, place purchase orders for steel and other services from vendors and make payments much beyond scope. According to him, the materials were shown as delivered to the site but was not actually delivered as the vehicle numbers given for delivery of large quantities of steel are in fact the two-wheelers and three-wheelers or wrong numbers.

“The payments are made through letters of credit (LCs) in most cases based on such falsified documents and booked as costs and revenue recognised based on “% of completion method based on contracted costs”. As the revenues are recognised as unbilled revenue, there are no dispute from the customers at that time,” he said.

He explained that Tecpro’s customers, after certain period of time, would raise the lack of progress on their work despite payment of advances and encash the advance bank guarantee as well as performance guarantees. “The banks which issued the bank guarantees are forced to release the payments to the customers and they were forming part of the financial creditors,” he added.

Tecpro, modus operandi, rp, nclt

According to the RP, the EY report highlights the irregularities committed by the respondents specifically in relation to five projects awarded to the company in the year 2012. The five projects are Muzaffarpur Thermal Power Station Stage-II, 2X800 MW Sri Damodaram Sanjeevaiah Thermal Power Station (SDSTPS) Nellore, 160 MW gas-based combined cycle power plant in Rajasthan, 2X600 MW coal-based power plant in Orissa and BTPS ‘A’ (1X500 MW) project.

“These projects mainly relate to supply coal handling conveying systems. All these projects given to the company have been terminated by the awarding companies and performance bank guarantees have also been invoked,” the RP said, adding that the irregularities, as elaborated clearly demonstrate that the business of the company has been conducted in fraudulent manner and with the intent to defraud creditors.

“Further, the Respondents number one (Ajay Kumar Bishnoi, chairman, Tecpro Systems) and number two (Amul Gabrani, vice-chairman and managing director of Tecpro Systems) continued to conduct the business in wrongful manner knowing fully well their actions would result in loss of recovery by creditors of the company,” the RP explained.

According to the RP, the projects never fructified and during his examination of the records of the company, it was found that transactions were entered into and carried out with a design to cancel them to defraud the creditors. “No progress or work was initiated at the work sites of the clients of all the respective companies/ counterparties which had awarded the bids to Tecpro Systems, followed up by questioning as to why no progress was made,” he said.

While emails sent to the RP, Tecpro Systems, and Eight Capital remained unanswered, Kridhan Infra’s company secretary Jyoti Gade replied that Kridhan Infra Limited has no link with the bidding of Tecpro Systems and the bidding is being done by the promoter holding company in individual capacity. “The proceeding against the old promoter of Tecpro Systems has nothing to do with us or the promoter of Kridhan Infra Limited,” Gade said.

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