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Panama Papers: Textile major Bhilwara Group has firm in BVI, says it is a lawful investment

The Bhilwara group is a leading yarn and textile manufacturer and exporter. It has also diversified into areas of power generation and infotechnology.

Written by Ritu Sarin
New Delhi | Updated: May 5, 2016 7:51:42 am
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Data from Panamanian law firm Mossack Fonseca show that the Jhunjhunwala family, who own the Bhilwara group of companies, incorporated an offshore entity, Cresthold Investments Limited, in the British Virgin Islands (BVI) in 2004. It was the year the Reserve Bank of India (RBI) announced a new Liberalised Remittance Scheme (LRS), allowing a resident Indian to take $25,000 abroad every year.

The Bhilwara group is a leading yarn and textile manufacturer and exporter. It has also diversified into areas of power generation and infotechnology.

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An eight-month investigation by The Indian Express, in collaboration with the International Consortium of Investigative Journalists (ICIJ), into the Mossack Fonseca files shows that Laxmi Niwas Jhunjhunwala (who founded the LNJ Bhilwara Group in 1961), son Ravi Jhunjhunwala and grandson Riju Jhunjhunwala, besides several other members of the family, have been/are shareholders of Cresthold Investments Limited.

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The family’s Friends Colony residence in New Delhi is listed in all Mossack Fonseca records. For instance, records for 2008 show a list of seven members of the Jhunjhunwala family as shareholders of Cresthold Investments Limited, variously holding between 250 and 1,000 shares each.

Incidentally, email exchanges between company officials and Mossack Fonseca staff state that the objective of the offshore entity is “building wealth”.

Watch Panama Papers: Who Went Offshore Before RBI Eased Forex Limit?

A February 2013 email states “the principal object of the company is to hold investments through its banking facility in Switzerland. The investments include participation in US-based funds for which formalities have been completed”. The accounts and records of the offshore company have been kept with a “coordinator” in the Isle of Man.

Watch Video | Panama Papers: How Mossack Fonseca Help Stash Away Billions Of Dollars 

In repose to queries from The Indian Express, Riju Jhunjhunwala, Managing Director of RSWM Limited, the flagship company of the LNJ Bhilwara Group, said in an email: “In February 2004, Reserve Bank of India published the Liberalised Remittance Scheme by which residents in India were permitted to remit money abroad for various purposes. We invested as per the said scheme and the money was remitted through a scheduled bank in India, as per guidelines in the scheme. Our investment still continues from time to time and all remittances have been done through a scheduled bank in India.’’

Watch Video | Explained: What Do The Panama Papers Reveal

”The investment has been declared in our Income Tax Returns and the Tax authorities are fully aware of the same. Several assessments have also been completed. No specific permission of the Reserve Bank of India was required as general permission was granted by the above LERMS. The investment is fully in compliance of all laws including FEMA and Income Tax Act,” he said.

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