Winsome Diamonds faces insolvency proceedings

K Ram Kumar Mumbai | Updated on February 19, 2018 Published on February 19, 2018

NCLT greenlightslaunch of process; company owes lenders ₹4,700 cr

More trouble seems to be brewing in the jewellery industry with the National Company Law Tribunal (NCLT) ordering the commencement of corporate insolvency resolution proceedings against Winsome Diamonds and Jewellery Ltd.

As per a Debt Recovery Tribunal order of December 2016, the total amount payable by the company to creditors is about ₹4,700 crore. This comes even as the jewellery industry is reeling under the fallout of the scam involving Nirav Modi and Mehul Choksi, the promoter of Gitanjali Gems.

The corporate insolvency resolution process commenced for Winsome Diamonds (formerly Su-Raj Diamonds and Jewellery Ltd) on February 13 and creditors were asked to submit their claims by February 27.

Under CIRP, the insolvency professional (IP), who is appointed by the NCLT with the consent of creditors, puts together a resolution plan with the help of a committee of creditors to revive an ailing company within the maximum stipulated period of 255 days. If this effort fails, the company will have to be liquidated.

As per the latest limited review report submitted by Nautam R Vakil & Co, Chartered Accountants, to the Board of Directors of Winsome Diamonds and Jewellery, due to defaults, the company’s accounts have been classified as non-performing assets by banks.

The report states that the DRT had passed an order in December 2016 determining the total amount payable at ₹4,687 crore along with simple interest at the rate of 14 per cent from the date of original application with the Tribunal till the date of realisation of dues.

SFIO investigation

The report said Winsome Diamonds and Jewellery received summons from the Serious Fraud Investigation Office (SFIO) in July 2016 and “investigation under Section 212 of the Companies Act in August 2016”.

In respect of trade receivables amounting to ₹5,529 crore, the auditors said they have not received any confirmation from the company’s overseas parties.

The company has filed a suit against its defaulting overseas customers for non-payment of bills, at Sharjah Federal Court (UAE). The Court, as per the report, has appointed an expert to look into the affairs of the companies based in Dubai/ Sharjah.

The auditor observed that the Court has confirmed the debts payable to the company and ordered the overseas customers to pay along with interest at the rate of 5 per cent per annum.

In view of these Court orders pending legal proceedings, the auditors said: “We are unable to comment on the time frame of the realisability of the debts...”

Published on February 19, 2018
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