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Lenders Serve Legal Notices on Winsome Diamonds

Jan 15, 2014 6:22 AM   By GJEPC
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Press Release: Public sector lenders, including Punjab National Bank (PNB) and Central Bank, have served legal notices on Winsome Diamonds to recover loans. A senior official from one of the lenders to the company confirmed legal proceedings had been initiated for the recovery of loans and he added  that serving a legal notice was the first step in that regard.

"Yes. We have received legal notices from banks," said a senior Winsome Diamonds official.

In November 2013, banks had served notices on Winsome Diamonds and its sister concern Forever Precious Jewellery with the intention that the two companies be declared willful defaulters, following which an inquiry by the Central Bureau of Investigation (CBI) could be initiated. The Reserve Bank of India defines a willful defaulter as a borrower that is able but unwilling to pay, and has diverted loan proceeds toward ends other than the initially stated use or has overstated profits to secure a loan.

So far, bank officials and investors haven't been able to contact Jatin Mehta, the company's promoter. When contacted, Ramesh Parikh, the company's director, said, "As the matter is subjudice [under judgment], we will not be able to comment."

Winsome has received notices from at least three public sector banks. "It is a concerted effort and, therefore, all 15 lenders must have sent legal notices to Winsome Diamonds," said one bank official quoted earlier.

In March 2013, Winsome Diamonds' foreign clients had failed to pay their accounts. Following this, foreign banks encashed  letters of credit given by Indian banks, which now have bad loans of $618 million (INR 38 billion) on this account. Forever Precious Jewellery has defaulted to the tune of $276.6 million (INR 17 billion).

Foreign clients who owe more than $870 million to Winsome Diamonds and about $370 million to Forever Precious have promised to take all steps possible to repay.

At a board meeting of the company on January 10, there was a consensus that to the extent possible, media queries would be replied to only after being referred to the company's board.

Sources said in Singapore, Jatin Mehta had set up one of the largest lab-grown diamond (LGD or synthetic diamond) facilities in the world. He had also acquired a majority stake in Gemesis, a US-based synthetic diamond company.

"Mehta's sons are associated with a company engaged in the manufacture of lab-grown diamonds. We do not have any information on the level of activity or the countries where LGDs are exported by this company," said a company official.

Rapaport News is not responsible for, and does not endorse, the content of any third-party press release. This is not a Rapaport Press Release. It has been provided as additional information for our clients.

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Tags: diamonds, GJEPC, India, Jewelry, lenders, winsome
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