According to the MCA records, Nu-Power made steadily widening losses between April 2012 and March 2017
While the Central Bureau of Investigation (CBI) is probing the Rs 3,250-crore ICICI Bank-Videocon loan case, the Ministry of Corporate Affairs (MCA) records show that NuPower’s valuation came at Rs 700 crore post the investment of DH Renewables of Rs 398 crore for a 55 per cent stake which defies sense considering its financials, according to a report in The Economic Times.
This investment made DH Renewables largest stakeholder of NuPower.
What do MCA records reveal?
According to the MCA records, NuPower made steadily widening losses between April 2012 and March 2017. However, the firm’s revenue rose almost four-fold in the year to March 2013.
The company’s miscellaneous expenses also rose and in FY16, Nu-Power recorded Rs 78 crore in such expenses with revenue of Rs 160 crore and a loss of Rs 100 crore.
Supreme Energy accounted for NuPower as its subsidiary in FY11 when Venugopal Dhoot also transferred 99 per cent of equity in the firm to director Mahesh Pungalia, also a director in NuPower. The equity capital of Supreme Energy was Rs 1 lakh and it had no other notable staff to pay, as per MCA filings.
The company’s reserves and surpluses were negative until FY15 after which it got a boost from notional profit made on conversion of preference shares and debentures into equity. The company has reported cash equivalents of around Rs 25-40 crore, in its MCA filings between FY14 and FY17.
NuPower’s valuation
Nu-Power’s valuation, at the time of Mauritius investment, had EY’s stamp of approval and subsequent audits by KPMG too had approved it.
DH Renewables received equity by way of conversion of preference shares at Rs 2,000 each for 500,000 equity shares, while the remaining stake was for Rs 1,161 apiece. Debentures worth Rs 7.1 crore issued to Deepak Kochhar were converted at Rs 1,166 a share.
The EY Merchant Banking Services unit had valued the company at Rs 1,092 crore on March 31, 2014. According to a person with knowledge of the matter, EY based its estimate on enterprise value and not equity value.
The person explained, first is the total value of the company including all debts obligations, excluding cash and cash equivalents. Second is equity value which doesn’t include the outstanding debt but takes cash and cash equivalents into consideration.
What is the controversy?
ICICI Bank shareholder Arvind Gupta accused Kochhars of amassing ‘wrongful personal gains’ after the private sector lender sanctioned loans worth Rs 3,250 crore to various private companies belonging to the Videocon Industries Limited.
Deepak Virendra Kochhar, who finds himself at the centre of this controversy, is the co-founder and Chief Executive Officer of NuPower Renewables which was set up in December 2008.
NuPower Renewables was originally founded as a 50-50 JV between Videocon Group’s Venugopal Dhoot family and Kochhar and Advani families (Chanda Kochhar’s brother, Mahesh Advani). Around that time, Chanda Kochhar was the CFO and Joint MD at ICICI Bank.
The RBI had also undertaken a scrutiny in mid-2016 after the Prime Minister’s Office referred to it allegations of ICICI Bank CEO Chanda Kochhar’s husband, Deepak reaping windfall gains from his association with businessman Venugopal Dhoot, whose Videocon Group is a large debtor to ICICI.
Apart from inquiries that the Central Bureau of Investigation (CBI) is making, the income-tax department has sought details of the investments made by Mauritius companies First Land and DH Renewables in NuPower.
Source: moneycontrol
