The Indian Express has learnt that in August 2013, the consortium of banks increased the borrowing facilities of Choksi’s firms from Rs 3,610 crore to Rs 5,280 crore. The Indian Express has learnt that in August 2013, the consortium of banks increased the borrowing facilities of Choksi’s firms from Rs 3,610 crore to Rs 5,280 crore.

A preliminary investigation by probe agencies into firms associated with Gitanjali Gems promoter Mehul Choksi has found that a consortium of 31 banks lent Rs 5,280 crore to his firms between November 2010 and April 2014 against a collateral of only about Rs 100 crore, sources familiar with the development said.

Allbank Finance Ltd, a wholly-owned subsidiary of Allahabad Bank, is the custodian of securities in this case.

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Sources said probe agencies have told officials of Allahabad Bank and Allbank Finance to share details of the outstanding loans to Choksi’s firms and explain the reasons for the inadequate collateral against the loans.

Email, phone calls and text messages to Allahabad Bank and Choksi for comments did not elicit any response.

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Choksi took loans from Allahabad Bank, Andhra Bank, Bank of Maharashtra, Bank of Baroda, Bank of India, Central Bank of India, Canara Bank, Corporation Bank, Dena Bank, Export Import Bank of India, Indian Overseas Bank, ICICI Bank, IDBI Bank, IndusInd Bank, Karnataka Bank, Karur Vysya Bank, Punjab National Bank, Punjab and Sind Bank, Standard Chartered Bank, State Bank of Hyderabad, State Bank of India, State Bank of Bikaner and Jaipur, Syndicate Bank, Union Bank, United Bank, Vijaya Bank, State Bank of Mauritius, Catholic Syrian Bank, Lakshmi Vilas Bank, Jammu and Kashmir Bank and Oriental Bank of Commerce.

The Indian Express has learnt that in August 2013, the consortium of banks increased the borrowing facilities of Choksi’s firms from Rs 3,610 crore to Rs 5,280 crore.

At least 73 companies associated with Choksi have come under the scanner of the CBI, Enforcement Directorate (ED) and the Serious Fraud Investigation Office (SFIO) in the wake of the alleged Rs 12,700 crore fraudulent transactions at Punjab National Bank involving three of Choksi’s companies.

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An analysis of these 73 firms shows that Choksi diversified his business to unrelated sectors such as real estate, agriculture and dairy, telecommunications, information technology, financial services and stock trading. The financial records of these firms show that most of them had little success and some of them were even wound up in a few years.

Mehul Choksi (L) & Mehul Choksi (L) & Nirav Modi (R) are now being pursued by investigating agency in a loan fraud worth Rs 12700 crore. (File)

For instance, Parajika Multitrading Pvt Ltd, was set up in 2011 to deal in agricultural, commercial, industrial products, food products and farms and forest products but in 2012, Choksi changed the business of the firm to diamond trading and on November 21, 2014 shut the firm under the government’s fast-track exit scheme.

The scheme provides a fast exit route for companies that have been inoperative since incorporation or commenced business but became inoperative or defunct later under the Companies Act. The company had an authorised and paid-up capital of Rs 1 lakh each.

The business of another Choksi firm, Sanrishadel Mercantile Pvt Ltd, set up in 2003, was changed in 2012 and it began trading in goods and equipment including agricultural products, farm and dairy products, leather goods. The company was shut down in March 2013. Another firm, Sneaking Mercantile Pvt Ltd, was wound up in August 2010.

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Joyce Trading Pvt Ltd, a firm promoted by Choksi, changed its business in March 2016 to become traders of agricultural products, wool, silk yarn and other lifestyle products. According to records, Joyce incurred a loss of Rs 54,611 in fiscal 2016.

Apart from this, the losses of Choksi-owned software firm Ivida Technologies, set up in 2007, widened from Rs 60,167 in financial year 2015 to Rs 2.89 crore in 2017. Ivida in March 2015 changed its business from software service provider to become an e-commerce entity.

Another firm associated with Choksi, Mobilenxt Teleservices Pvt Ltd, which is in the business of marketing mobile phones, incurred a loss of Rs 37,509 as of March 2016. The company borrowed Rs 1.3 crore from its related party — Gitanjali Gems. The auditors of Mobilenxt have raised concerns over the “non-verification of inventory” and the sundry creditors of the company.

Naviraj Estates Pvt Ltd, the real estate firm of Choksi, made a profit of Rs 43,440 for fiscal 2016.

According to records, at least five firms associated with Choksi are in the business of stock trading and providing financial services. These firms included Decent Investment and Finance Pvt Ltd, Decent Securities and Finance Pvt Ltd, Eureka Finstock Pvt Ltd, N&J Finstocks Pvt Ltd and Audarya Investments Pvt Ltd. All these firms booked losses in the last three years.

While it is not illegal for promoters to diversify their business, diamond market experts say it is not normal for diamond traders to get into unrelated businesses.

“There are hardly any diamond traders in the country who have expanded their business to unrelated businesses. Diamond traders are a closely knit community with mostly family-run businesses. Not many venture out of this trade,” said a diamond trader who has been in the industry for over three decades.

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