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Varun Inds 1st big defaulter to be liquidated


Varun Industries, which failed to repay loans worth over Rs 2,000 crore, has become the first big-ticket defaulter to go into liquidation following a Bombay high court order. The country's infamous league of deadbeat borrowers is led by high-profile Kingfisher Airlines and Winsome Diamonds. 

The high court had ordered to wind up the stainless steel home products maker if it failed to stick to a court-directed repayment schedule beginning February 25, to which the company had agreed. On Monday, Varun Industries informed the BSE that the liquidation proceedings have been initiated, according to the HC order, since it had failed to pay instalments. "The company is in the process of taking necessary legal action before the appropriate court for setting aside the said order," a company notice said. 

The company and its promoters had secured loans aggregating about Rs 2,000 crore from 11 public sector banks (PSBs) and other lenders though its net worth was just Rs 300 crore, court papers showed. Two promoters of the company—CMD Kiran Mehta and MD Kailash Agarwal—also face allegations of forgery to secure loans from S E Investments, an Agra-based company. The two had gone into hiding in early December when the Agra police reached Mumbai to arrest them. 

Varun Industries stands at 11th spot on the list of top loan defaulters, owing a total of Rs 1,100 crore to PSU banks alone. The list has been prepared by All India Bank Employees' Association (AIBEA). Most of the other large defaulters, including Kingfisher Airlines, Winsome Diamond and Zoom Developers, are face winding-up petitions from lenders but are yet to be ordered to be liquidated. Kingfisher Airlines, the biggest defaulter on the list with nearly Rs 2,700 crore outstanding against PSBs alone, is fighting a winding-up petition by United Bank of India. 

Court papers also showed that Varun Industries is owed Rs 1,800 crore by two UAE companies—White Impex General Trading and Al Rad International—to which the Mumbai firm exported goods but never got paid. Although the amount was due for over three years, the promoters and the company filed suits against the UAE firms only in early 2015 when it faced legal heat from lenders. 

In both the companies, the foreign partner and one of the Indian partners are common. Lenders claim these were fronts of Varun Industries, and that's why it never insisted on payments. One of the employees of Varun Industries claimed in his online profile that White Impex was an office run by the company. An e-mail sent to Varun Industries compliance officer for comments was not answered.

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