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Home News Reports 'The Wire' spins another lying web, this time, to target Piyush Goyal

‘The Wire’ spins another lying web, this time, to target Piyush Goyal

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Ashutosh Muglikar
Articles on Corporate Laws, Policy, Economics and Politics. Maverick. Lover of Ideas. Slayer of Hoaxes.

The leftist propaganda website ‘The Wire’ and its “ace journalist” Rohini Singh have developed a penchant for peddling baseless stories and branding it “investigative journalism”. Their modus operandi is simple. They take unrelated facts, throw in some well-worded insinuations and quote incomplete reports to make the reader believe they have stumbled upon proverbial gold when what they have is worse than ash. They did it with Jay Shah for which they are facing a 100 crores defamation suit, they did it with Shaurya Doval, and now, their latest target seems to Railway Minister Piyush Goyal.

In an article titled “Promoter of Company in default of Rs. 650 crore has ties to Piyush Goyal, family” they seem to have stuck to their shoddy modus operandi.

The headline of the article itself is intriguing. They insinuate that Piyush Goyal and his family have business ties till date with a defaulting company. Nothing could be further from the truth if one looks at the facts.

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In the first paragraph itself, the direction of their shoddy story becomes clear.

“At a time of mounting public concern over the bad debt of banks, does a minister have a responsibility to declare his interest in a company of which he had been director when it was under financial stress and which later, after he exited, defaulted on loans totalling Rs 650 crore?”

Their intention is to hold Piyush Goyal answerable for a company he is no longer associated with. As per documents accessed by us, Piyush Goyal, as per official records, resigned from the company in 2010 of which he had become a Director in 2008, which incidentally, even the author of ‘The Wire’ story concedes to.

Piyush Goyal in this letter says that due to his election as Member of Parliament (Rajya Sabha), he will have to resign from ‘Shirdi Industries Private Limited’ since he will have to spend most of his time in Delhi. The resignation came to effect on 1st July 2010. When the ‘The Wire’ says that Piyush Goyal hasn’t declared, that would be termed an absolute lie considering all papers of his previous association is in the public domain.

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In fact, the defaults they speak of, happened much after Piyush Goyal resigned as the directed.

The article says :

The company is the Mumbai-based laminates maker Shirdi Industries. Its chairman until July 2010 – a period when loans were raised and delayed payments first red-flagged by Crisil – was Piyush Goyal, now railways minister and the Modi government’s chief troubleshooter

Shirdi Industries is in existence since 1993 and as per CRISIL Report (an independent professional body) is one of the leading manufacturers of manufacturing and marketing of medium density fibre (MDF) and particle boards in India. The loans were taken even before Piyush Goyal was appointed as a Director. It is pertinent here to note that the same CRISIL report which the Wire quotes state that the payments were being made on time.

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The Wire then writes :

Even as they defaulted on the money they owed government banks, Shirdi’s promoters also extended an unsecured loan via another entity to a company run by Goyal’s wife, Intercon Advisers Pvt Limited. This loan, they told The Wire, was granted “out of friendship.” The last statutory filing done by Intercon for FY 2016 shows an outstanding amount of Rs 1.59 crore to Asis Industries, a company owned by Shirdi promoters. Even as Asis lent money to Goyal’s wife’s firm, Shirdi also had a Rs 4 crore provident fund default.

The loans were taken by Shirdi Industries Limited. The loans extended to Piyush Goyal’s firm were by another entity owned and managed by the Promoters of Shirdi Industries. The fact here is that the loans (inter-corporate deposits) were given at a market rate of 12% per annum and that the same was repaid, regular TDS deductions were being made and proper accounting was done. The loans were given in 2012 which The Wire amusingly fails to point out.

In fact, in the same article, they link to claim “they have a 4 crores provident fund default” they conveniently miss mentioning that in that same article it has been mentioned that the 4 crores will be paid between March 2022 and 2024 as per NCLT settlement. They also fail to mention that the said article is from 2018, whereas, Piyush Goyal resigned in 2010.

The Wire then writes :

Shirdi Industries has not only defaulted on loan repayments but was also referred to the National Company Law Tribunal where its creditor banks agreed to take a 60% haircut – banking parlance for a part write-off – on the debt owned by the company.

The Company was not referred to NCLT directly. The Wire has failed to do its due diligence. The company was registered as a sick company with BIFR in December 2013 and was declared a sick company in September 2015. Subsequently, the credit facilities of the company were restructured in July 2015 with the support of nearly 82% of financial creditors. Since then the operations of the company have been reasonably stabilized and is in the process of optimisation. The company has paid over Rs. 30 Cr to its financial creditors since the completion of the restructuring.

Upon repealing of SICA, the registration of the company with BIFR was abated in November 2016 and the company filed an application for Insolvency and Bankruptcy Code before the NCLT, Mumbai in April 2017. The case was admitted by NCLT on 18/5/2017.

What is pertinent to note is that these issues have occurred much later after Piyush Goyal exited the Company as a Director in 2010. Nearly three years later.

The Wire then, after making some obvious remarks and veiled insinuations, goes on to peddle half-truth yet again. It says :

Unusually, the NCLT, in a landmark order last December, allowed the promoters to bid for the company because its lenders  – most of which are government owned – reposed faith in them. The NCLT order is in contravention of the Modi government’s November 2017 ordinance on non-performing assets, which barred existing promoters from bidding for their own company if their loans were classified as non-performing assets for more than a year.

This is a half-truth. The NCLT order was not in contravention of the Modi Government’s Ordinance. The Ordinance was not “retrospective”. After NCLT admitted the company’s case the promoters were the only bidder for the company. The whole Resolution process is managed under the watchful eyes of the NCLT and independent professionals submit their reports to the Tribunal Bench based on which orders are issued. It is pertinent to note that there is absolutely no involvement of the government or specifically Mr Piyush Goyal in this whole process. The Order is available on NCLT website for anyone to read and understand. In fact, these issues have got nothing to do with Piyush Goyal per se as he has no pecuniary interest in the Company since 2010 and these matters relate to 2013 and later.

They said :

The NPA ordinance was designed to ensure promoters did not get to borrow money from banks, run up huge debts and then have those debts written off only to come back and take control of their (now financially healthy) companies once again at a cut price.

This para although factual somehow seems to point that there is a wrongdoing in the NCLT process. These reasons clearly show that the promoters of Shirdi Industries had incurred genuine business losses and were not run of the mill cheats as is being hinted. There was no Goyal in any of this process. Yet The Wire is trying to make fake connections. Clearly, it believes that by linking a high profile minister through trial by association, it can wash the sins of the UPA which is responsible for the current mess in the banking sector. Modi has already called NPAs as the biggest scam of the UPA era. Perhaps the supari givers believe they can stop the government from exposing them by weakly linking a minister to an NPA.

In fact, if one reads the NCLT order, third-party forensic auditors confirmed that there was no wrongdoing and the proposal was accepted by 99.43% creditors.

Firstly, since the entire process happened much after Mr Piyush Goyal resigned, it has no bearing on him. Secondly, The Wire words their article to project this entire process as some sort of grand conspiracy when documents suggest everything was done in accordance with the law of the land and even external auditors concluded that there was no wrongdoing on the part of the company.

In fact, the article linked by The Wire itself makes the picture entirely clear. But propaganda must rule over facts, and hence, the pesky details were either left out or spun in a manner to insinuate wrongdoing, that too, much after Piyush Goyal resigned.

The Wire again states incomplete facts to insinuate a connection :

In 2010, when Shirdi Industries had filed for an IPO with the market regulator, Securities and Exchange Board of India (SEBI), it had listed Piyush Goyal as its chairman and non executive director.

While Piyush Goyal may have reflected as a non-executive director when the company filed for IPO, The Wire fails to mention that firstly, he resigned soon after, and secondly, even as per the very article they have linked, the IPO was delayed by for over 27 months which is how the company incurred debts.

‘The Wire’ tries to insinuate conflict of interest between Piyush Goyal being the Director in SBI and him being involved with Shirdi Industries. What they fail to tell its readers are the dates. The important, pesky little dates.

As per this Annual Report, it is clearly mentioned that Piyush Goyal ceased to be the member of the board of SBI and in his place, Dr (Mrs) Vasantha Bharucha became a part of the SBI board with effect from 25th February 2008.

Now, according to documents accessed, Piyush Goyal gave letter accepting the directorship of Shirdi Industries on 15th April 2008.

If Piyush Goyal retired as a member of the Board of SBI in February and became the Director of Shirdi Industries in April, how The Wire can insinuate conflict of interest is incomprehensible.

The Wire says :

That’s not all. According to filings made with regulators, Intercon Advisors Private Limited – a company wholly owned by Piyush Goyal’s wife, Seema, and son, Dhruv Goyal – lists an outstanding unsecured short-term borrowing of Rs 1.59 crore from Asis Industries in FY 2016 – an “inter corporate deposit repayable on demand” at 12% interest.

Agarwal denied there was anything untoward in his company – whose subsidiary was defaulting on money owed to government banks – making an unsecured loan to a company owned by a minister’s wife and son.

A Piyush Goyal resigned from the post of Executive / Whole-time Director on 30th September 2009 and served as Non-Executive Chairman till 26th July 2010. In 2012-13, a good two years after he left the company, Asis Industries Limited (a group company of Shirdi Industries) extended inter-company deposits (ICDs) of around Rs 3 crores, to his company Intercon Advisors Private Limited (IAPL). The terms were commercial – 12% interest rate per annum – hardly very exciting terms. It is strange why the writers at The Wire are getting all hot and bothered about this.

IAPL repaid Rs 2 crores on 12 December 2013 and the loan was serviced as per law. In addition, it has been regularly recognizing interest cost on these ICDs every year and is also following Tax Deducted at Source norms. The current outstanding is Rs 1.8 crores

The Wire again insinuates impropriety on the part of Piyush Goyal on the basis of his being the member of SBI Board.

In 2010, Goyal was made the treasurer of the BJP and nominated to the Rajya Sabha. He was nominated to the parliamentary committee of finance the same year. This is the committee that oversees the performance of financial institutions, including banks.

This is again half-truths to make stuff look shady. Shirdi Industries availed credit facilities of Rs 245.11 crores from a consortium of lenders including Rs 35 crores from SBI in 2010. Piyush Goyal was not a director in any bank at that point in time. So clearly he could not have taken a decision to lend Shirdi Industries such a sum of money.

The article then goes on to talk about some unrelated recent developments, to which, the only response can be derision because once Piyush Goyal resigned in 2010, he has absolutely nothing to do with anything that goes on with the company.

This article holds no water and is a half-baked and shoddy attempt at maligning Piyush Goyal perhaps because he has been doing a stellar job, first with electrification and then with the railways. The Wire either needs to hire better journalists, or a better Editor who can vet stories and differentiate between fact, fiction and bold face lies.

(This article has been co-authored by Nupur J Sharma)

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Ashutosh Muglikar
Articles on Corporate Laws, Policy, Economics and Politics. Maverick. Lover of Ideas. Slayer of Hoaxes.

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