Mumbai: The Enforcement Directorate (ED) has accused members of the Mandhana family of Mandhana Industries Ltd (MIL) of laundering over Rs300 crore through various shell companies. The textile firm and its directors are booked for causing a loss of over Rs900 crore to banks, including Bank of Baroda, by way of non-repayment of loans taken.
The firm’s chairman Purushottam Mandhana, in his statement to the ED, has claimed that they set up a factory unit at MIDC Tarapur, Boisar, in 2012. He claimed that they did not receive a permit from the State Pollution Control Board till 2014, when they finally received permission of zero discharge, which meant that waste generated out of fabric processing could not be drained.
Mandhana claimed that the business was impacted by the low operational capacity of the factory and therefore defaulted on its loan payment for the first time in June 2016. Thereafter, till December 2016, their loan accounts turned into non-performing assets.
As per Mandhana, funds to the tune of Rs1,000 crore were used for the construction of five factories at Tarapur and purchasing the machinery. As per the agency, though, he failed to explain the exact use of funds with corroborative evidence. The agency further claimed that Mandhana failed to provide a list of top buyers and vendors of MIL, but clarified how two shell companies – Swarathma Gartex Pvt Ltd and Azarel Fashions Pvt Ltd – were used to show inflated sales.
To show an inflated turnover and avail term loans from banks, a “grey fabric” was shown to be sold by a factory unit to Swarathma, which further sold it to Azarel, which sent it back to MIL for finishing as well as final sale. While the first order was executed in 2013, the last order was in 2016, during which an order of Rs200 crore was allegedly placed with Azarel.
As per Bank of Baroda, a joint lenders forum meeting was held on July 4, 2016 to open a TRA (trust and retention account) and route the entire turnover by July 15 that year but routed only Rs17.57 crore, even as the firm routed Rs420.39 crore from July 15, 2016 to September 30, 2017, violating the terms of the lenders forum.
Nephew Blames Uncle
Purushottam’s brother Biharilal Mandhana’s son Manish Mandhana has claimed that his uncle and cousin Priyavrat never allowed him to check on the accounts of the company. Manish, who too is an accused, was mainly handling marketing and business development of garment exports till 2010. In 2011, he created a license for ‘Being Human’ (Salman Khan’s brand), a retail division within MIL which was demerged in 2016. The demerged company was named Mandhana Retail Ventures Ltd (MRVL), which continued with the agreement with Being Human Foundation until March 2020.
Manish in his statement has claimed that finances and overall functioning of MIL were handled by Purushottam and his son Priyavrat, and he was never allowed to investigate the accounts and finances. Whenever he asked for the details, he was purportedly directed to focus on marketing and product development. As per Manish’s statement in the chargesheet, “he saw people with dubious reputation visiting the office and financial malpractices were revealed by a few employees of the accounts department, including Purushottam’s alleged bid to siphon company funds. As per the statement, Priyavrat enjoyed the funds and, in connivance with his father, misused the funds, investing them in the form of shares and securing loans from banks.
