A news report on thewire.in on Sunday questioned why a company owned by the son of the BJP national president Amit Shah mysteriously shut down last year after recording a 16,000-times increase in turnover, up from ₹50,000 to a whopping ₹80.5 crore.
But what is more interesting is Kusum Finserve, a limited liability partnership incorporated in July 2015 with Jay Shah owning a 60% stake in it, secured a loan of ₹10.35 crore from Indian Renewable Energy Development Agency (IREDA), a miniratna PSU. IREDA comes under the Ministry of New and Renewable Energy. Piyush Goyal was the minister when the loan was sanctioned. He should answer as to how a company which used to trade in stocks was suddenly extended such a loan in complete violation of IREDA’s own rules and norms as documents in the possession of National Herald clearly show.
The document showing Jay Amit Shah’s Kusum Finserve securing a loan of ₹10.35 crore from IREDA.
According to the norms of IREDA, as can be seen on its own website, it can sanction projects only up to 1 Megawatt where as Jay Shah’s company submitted a proposal for a 2.1 Megawatt plant in Ratlam, Madhya Pradesh.
On the top of that, as can be seen from the screenshot of the IREDA website, it is clear that such loans can only be given for a maximum of 70 per cent of the total project cost. Now since the total project cost of the Kusum Finserve windpower project was ₹ 15 crore, it is clear that the ₹10.35 crore is almost near the 70 per cent cap.
If the project cost of a 2.1 MW plant is Rs 15 crore, that of a 1 MW plant should be around ₹7 crore. Seventy per cent of that works out to ₹4.9 crore. So, it is clear that while a company is eligible for a maximum loan of ₹4.9 crore from IREDA, Jay Amit Shah’s company got ₹10.35 crore.
The thewire.in report quotes Jay Amit Shah’s lawyer in its article: “ ‘The loan taken from IREDA for setting up a 2.1 MW wind energy plant is based on the equipment prices prevailing at that point of time as per industry standards (approx ₹14.3 crore) and duly appraised and sanctioned in the normal course of business. The outstanding loan as on 30-06-2017 is ₹8.52 crore and interest and repayment of loan are regular,’ says Shah’s lawyer.”
So was he deliberately trying to mislead reporters investigating the case or was he unaware of IREDA norms?
A screenshot of the IREDA website clearly mentions that loans can be given for Equipment Financing Schemes for projects up to 1 MW only and for a maximum of 70 per cent of total project cost.
What has been also interesting to note that none other than senior Union Cabinet Minister Piyush Goyal held the press conference to come to the defence of a common citizen. Is there a connection here since Goyal headed the Ministry of New and Renewable Energy when this loan was sanctioned flouting IREDA rules and norms. One expects a clarification from Goyal as to why the government broke IREDA rules and transferred the loan to Jay Amit Shah’s company.
Earlier on Sunday, the news report, linked on the top, revealed that Temple Enterprises Pvt Ltd, a firm promoted by Jay Amit Shah, had revealed a revenue of just ₹50,000 in 2014-15 and a profit of ₹18,728 in its returns submitted to the Registrar of Companies.
But the very next year, i.e. 2015-16, the company’s turnover grew to a whopping ₹80.5 crore from the ‘sale of products’. This was also the year when the company secured an unsecured loan of ₹15.78 crore from KIFS Financial Services, owned by Rajesh Khandelwala, the samdhi of Parimal Nathwani, an independent member of the Rajya Sabha and a top Reliance executive.
Curiously, KIFS Financial Services, in its filings, the report alleged, did not reveal the loan it had extended to Jay Amit Shah’s company. In any case, the report wondered how KIFS extended a loan of Rs 15 crore when its own revenue was only Rupees seven crore for that particular year.
In July, the Bharatiya Janata Party had been forced to issue a press statement to justify the sudden increase in the assets of Amit Shah himself as revealed by him to the Election Commission. In 2012, Shah had disclosed moveable assets worth ₹1.90 Crore. This year, he declared moveable assets worth ₹19 Crore.
Similarly, Shah’s immoveable assets also grew in this period from ₹6.63 Crore to ₹15 Crore. BJP in July, 2017 explained away the spurt by claiming that the party president had inherited property following his mother’s demise in 2013.
But now the meteoric rise of his son’s companies, one out of many one presumes, and its sudden closure has raised eyebrows.
Congress leader and former Union Minister Kapil Sibal demanded an independent inquiry into the affairs of this company. “Only an inquiry will reveal why this company was allowed loans worth several crores of Rupees without any mortgage or security,” Kapil Sibal tweeted.
Addressing a press conference on Sunday afternoon, Sibal took a jibe at the NDA Government and said everybody knew which companies would be investigated by agencies like CBI and ED and which companies would be spared. But still he dared the Prime Minister to order an investigation into the affairs of Temple Enterprises Pvt Ltd.
Meanwhile, the lawyer of Jay Amit Shah, Manik Dogra, reported thewire.in, had threatened the media of consequences if adverse reports about the company imputing motives etc. get published.
The controversy could not have come at a worse time for the BJP. With Assembly election in Gujarat barely two months away and Prime Minister Narendra Modi on the backfoot following slowdown of the economy, this fresh controversy is likely to make a further dent into their credibility.
The controversy has been trending on Twitter all through Sunday. Some of the tweets were the following :
BJP changed slogan from Vikas ki Jai to ‘Jay ka Vikas’! Hardly any difference. Now we know where ‘Vikas’ is hiding #AmitShahKiLoot
KIFS Financial Services has a revenue of 7 crores but it lends 15 crores to Jay Shah's Temple Enterprise. #AmitShahKiLoot
Every new business turns with Nil turnover?
Later on Sunday afternoon, the BJP IT cell jumped to Shah junior’s defence. In a series of tweets, Amit Malviya, BJP’s IT cell chief, tried to deflect the charges. In one of his tweets, he said that every new business starts with a nil turnover. But he forgot to mention that the company in question was incorporated in 2004, showed losses till 2013-14, took a substantial loan in 2015, made a killing in the market and shut down shop in 2016.
Malviya’s tweets :
(The story was updated on October 10 at 03:05 PM)