 "Wilful defaulter Winsome resigned to banks' decision on board nominee Tanwar's continuation")
Tanwar, a former State Bank of India officer inducted in the jewellery company’s board on September 27, 2013, but the company directors demanded his removal after he dismissed an audit report for FY2013 as “, non-transparent and unacceptable”.
“Since he made ‘frivolous remarks’ about the company in his letter which indicates that he started acting against the interest of the company, we sought Tanwar’s resignation from the lenders and their consortium. Now, it is up to banks to take a decision. We cannot take any action in case banks do not ask him to resign,” said Harshad Udani, Additional Director and spokesperson of Winsome Diamonds and Jewellery.
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Tanwar has also defended his actions, and ruled out resigning from the board. “India is a democratic country. Everybody is free for an opinion. As long as I have not resigned, which I don’t intend to, I am on the board as banks’ nominee,” he told Business Standard. “In fact, Standard Chartered, the fourth largest lender for Winsome after Punjab National Bank, has asked me to continue and hence, I am continuing.”
The issue erupted after Tanwar questioned “cash in hand” in the company despite having no actual business activity. He also questioned the existence of Winsome’s Dubai subsidiary – Forever - which the audit report for 2012-13 does not find any trace of because of non- availability of any official or activity.
Winsome promoter Jatin Mehta – who is settled in Dubai – is said to have set up a subsidiary there to tap untapped potential in jewellery sector in the Middle East and exported jewellery from India to many customers in the region.
Sources said that Tanwar raised questions on the existence of the subsidiary when the company promoter himself had interest in setting up the same.
The Winsome board has taken exception to Tanwar’s questioning of the company’s activities.
“The banks’ nominee is not above the company’s board and therefore, should respect board’s decisions. All decisions are taken in his presence. The banks’ nominee, therefore, cannot write and speak anything about the decisions taken by the board,” Udani said.
According to sources, Tanwar wanted to bring Mehta back on the company’s board. Mehta, who is responsible for borrowing Rs 6,800 crore from 15 Indian banks for Winsome and Forever, is also reported to be running a grown diamond business in Singapore and supplying laboratory-made synthetic diamonds to India. However Winsome's audit report could not find trace of that in past. Business Standard could not independently confirm these reports.
Meanwhile, Tanwar wrote a letter to the company on February 23 with strong comment on the audit report of 2012-13, an issue that continued to fester for the next three years. The company finally decided to file a suit against one of its ex-directors. According to Udani, Tanwar described the audit report as “weak genesis, non-transparent and unacceptable.”
Following this, Winsome wrote all its lenders and their consortium on March 28, 2016 seeking Tanwar‘s resignation.
“How can he comment like this?” asked Udani, “After all, no one is above the company’s board.”
Winsome is the largest wilful defaulter in jewellery sector, which according to industry sources, has changed banks’ perception towards the entire sector. The jewellery industry was in the forefront of lenders’ book until about a decade ago, but has now been pushed back onto the negative list.
Indian banks stood up as guarantors to global banks like Standard Chartered London and Scotiabank that supplied bullion to Winsome, resulting into a series of defaults to the tune of up to $1 billion.