Now Patheja gets the knock: banks start with seizing five Mumbai flats

Accoring to FI sources, two Patheja companies owe Rs 605 crore to banks and FIs. While Patheja Forgings owes Rs 375 crore, Patheja Brothers has defaulted by Rs 230 crore.

‘‘With the accumulated interest for the past four years, the total default should be over Rs 1,000 crore,’’ FI sources said, adding that the ‘‘the seizure was initiated after 75 per cent of lenders to the two Patheja companies have agreed to take possession of the assets of the company under the securitisation ordinance.’’

FIs had taken over the house of the Pathejas in Pune recently. The CBI had arrested one of the four sons of main promoter Man Singh Patheja last year. ‘‘The Pathejas were missing for a long time. The efforts of banks and FIs to recover their funds were stalled last year in the absence of promoters,’’ FI sources said.

The story of Pune-based Patheja Forgings is one of over-exertion in building capacities at the wrong time. The company incorporated in 1968 gradually became a public limited company by 1987. During its heydays, the company was the largest supplier of connecting rods to the two-wheeler industry and auto parts to Premier Auto, Telco, Maruti and Mahindra & Mahindra.

During 1996-97, the company increased its capacity of steel forgings by 28,000 tonnes to take the capacity to 75,000 tonnes per annum. But due to the general slowdown in the automobile industry, it made heavy losses during the year. As a result, the net worth of the company was totally eroded and it was declared sick.

The CBI’s Bank Securities and Fraud Cell had arrested Paramjit Singh Patheja in a foreign currency loan fraud of Rs 102 crore last year. Patheja was the promoter of the Patheja Forgings group which came under the CBI scanner last year for allegedly defrauding Indian and foreign banks. Patheja had taken foreign currency loans worth US $ 29 million in 1996, purportedly for importing machinery.

That never happened and the money disbursed by the banks in a syndicated loan was allegedly used by the borrower to partly pay his other liabilities while siphoning out the rest.