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The Central Bureau of Investigation (CBI) has filed a charge sheet against Hanung Toys & Textiles Ltd., its directors, and promoters for allegedly defrauding a group of 12 banks, led by PNB, of an amount of Rs 2,040.63 crores.
Hanung Toys and Textiles was once a big name in the field of soft toys and home furnishings. It manufactured soft toys, plush toys, and home furnishings and had three production facilities: Noida, Roorkee, and Bhiwandi. It managed the two brands of 'Play-n-Pets' and 'Splash'.
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The company had major markets in Europe, the USA, Latin America, and Australia with sales in 30+ countries. Reports suggest that the company had export tie-ups with IKEA Sweden for soft toys/kids furnishings and had a subsidiary named Hanung (Shanghai) Ltd. in China.
In the charge sheet, the CBI included promoters and directors Ashok Kumar Bansal and Anju Bansal, alongside associated persons Rishu Agarwal, Manoj Kumar Garg, Kali Kant Jha, statutory auditor Piyush Jain and company secretary Arvind Kumar Gupta.
The company had been in trouble from as early as 2013 after which it tried to undergo a corporate restructuring scheme in 2015 but failed to do so. In November 2019, the promoters were held in Delhi airport when they were returning from Dubai after a lookout circular was issued by PNB.
At the time, Hanung toys owed Rs 2,300 crores to a consortium of 15 banks led by PNB, whereas the company owed Rs 599 crore to PNB alone. PNB had issued 13 LOCs including one against the promoter of Hanung toys. A month after the promoters' detention, Karnataka Bank had reported a fraud of Rs 40.39 crores by the company.
Investigations have revealed that the company had cooked its books by suppressing the actual derivative losses to make the company look financially healthy in order to obtain credit facilities from banks from 2008-to-2013. The volume of suppressed losses was reflected as fictitious debtors as well as stock, which led to an excess borrowing to the tune of Rs 478.35 crores.
Moreover, the company had inflated its turnover by engaging in false transactions with certain parties, done in circular transactions of nearly Rs 560 crores in order to siphon funds from the banks and divert them to the promoters. The report showed transactions of over Rs 11,257 crore were routed through a company called Almondz Impex Private Limited, which did not exist at the given address.
HTTL was listed on Indian bourses in October 2006. However, the company was subsequently delisted on October 17, 2019, as NSE said that HTTL alongside 9 other companies was under "liquidation". Its last traded price was Rs 0.8 per share.
For some reason or other, PNB has always found itself in the midst of financial frauds. Consequently, the share of the bank trades at Rs 28.90, registering a loss of 24% since the beginning of 2022.
Article by Aman Agarwal.
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