Winsome Diamonds' finance head resigns ahead of board meet

The finance director of Winsome Diamonds and Jewellery, Ramesh Parikh, resigned ahead of a board meeting on Friday over a delayed plan of action to be announced by the company's promoter, Jatin Mehta.

The jewellery manufacturer and exporter, which defaulted on loans worth Rs 6,200 crore along with its sister company Forever Precious Jewellery & Diamonds, had adjourned its board meeting twice, not having come up with a promoter's statement for restructuring the company. After a debt restructuring proposal was rejected last year, lenders led by Punjab National Bank, have been seeking an action plan from the promoter. While Winsome was declared defaulter for Rs 4,380 crore last April, Forever owes various banks Rs 2,041.50 crore.

“We informed the promoter about the requirement. But there has been no response from him. The past two board meetings were adjourned due to that,” said a Winsome executive who did not wish to be named.

Winsome sought and was granted a six-month relaxation for filing its audited financial statement for 2012-13. But the company missed the extended deadline on November 30, 2013, and will now have to file a statement for the 18 months ending September 2013 with the stock exchanges by March 31, 2014. This deadline might be a stretch considering the Securities and Exchange Board of India needs 21 days of notice and another 10 days for printing and distributing copies among shareholders.

“Hence, as finance head, the only option for Parikh was to step down,” said the official.

When lenders started scrutinising the alleged diversion of funds at Winsome, a couple of teams visited Dubai to probe Mehta's operations there but they did not come up with anything concrete. The lenders then asked Winsome to step up efforts to recover funds from its companies abroad, largely in the Middle East.

Interestingly, Mehta bought one of the world’s largest lab-grown diamond manufacturers and retailers, the US-based Gemesis Company (S) Pte Ltd, which he renamed Ila Technologies Pte Ltd and shifted to Singapore to cater to Asia and the Middle East.

Lenders fear that Mehta used funds for his foray into lab-grown diamonds where Ila Technologies, according to informed sources, has become the largest supplier in the world.

When the board was restructured early last year following default declaration, a handful of members had raised apprehensions. Mehta resigned from the board last year.

"A couple of us had told the promoter that we are not competent enough to hold such post. But, Mehta insisted we stick on, saying that a complete revival plan was on the cards by September 2013. It is unfortunate that nothing has come from him so far," said the official.

Lenders asked Mehta to bring an upfrontmoney for considering any revival or restructuring plan which he failed.