The promoter of Housing Development Infrastructure Ltd (HDIL) Rakesh Wadhawan and Waryam Singh, the former chairman of Punjab & Maharashtra Co-operative (PMC) Bank Ltd, were not only colleagues at the real-estate company but had together started a firm that breeds race horses.
Wadhawan Livestock Pvt Ltd was set up in August 2007 by Wadhawan, Singh and Ashok Kumar Gupta, a former independent director of HDIL, to
“import, export, breed horses for racing” and has horses worth Rs 64 crore as on March 2018, according to the latest annual report of the company.
Waryam Singh was appointed as chairman of PMC Bank in 2015 for a period of five years. Before that Singh was on the board of HDIL for 10 years since 2005.
Both Wadhawan and Singh have been arrested by the Economic Offences Wing (EOW) of the Mumbai police for their involvement in the Rs 4,355.46-crore PMC Bank fraud.
According to the annual report of Wadhawan Livestock, the company made about Rs 3.19 crore in three years between financial year 2015 and 2017 from horse racing. While Wadhawan holds a majority stake in the company at 99.2 per cent, Singh held 0.4 per cent stake as on March 31, 2018. The company borrowed about Rs 122 crore through Inter Corporate Deposits (ICDs) and Rs 11 crore from Rakesh Wadhawan as on March 2018. Apart from this, Wadhawan Livestock also bought 1 lakh “unquoted shares” of PMC Bank for Rs 25 lakh.
An ICD is an unsecured borrowing by firms and financial institutions from other corporate entities.
However, it seems the financial crunch at HDIL, which began in 2013, caught up with Wadhawan Livestock too.
Wadhawan, who used to be one of the biggest horse owners at the Royal Western India Turf Club (RWITC), has not bought horses since April 2016. Also, Wadhawan Livestock has been booking losses. According to the annual report of 2017-18, the company made a loss of Rs 30.32 crore, marginally up from a loss of Rs 30.22 crore a year ago.
PMC Bank has an exposure of over Rs 6200 crore to HDIL. The real-estate firm is also facing bankruptcy proceedings at the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code.
PMC Bank is under regulatory restrictions after the Reserve Bank of India found out financial irregularities in its functioning, hiding and classification of loans given to HDIL.
In the FIR, police said the actions of the accused allegedly led to bank losses totaling Rs 4,355.46 crore. The ongoing investigation has found that there were nearly 44 accounts at the bank that were password-protected. Sources said that a lot of money has been diverted to these accounts, linked to the Wadhawans and HDIL-linked entities. The police is also probing as many as 21,049 dummy accounts created by the bank to hide its bad loans.