FRAUD BHI AWARD BHI An objective and forensic investigative report of Kinetic Finance Ltd alias Ath ena

Financial Services Ltd Financial Scam / Fraud. SPECIAL INVESTIGATION REPORT http://wikileak-corp.blogspot.com Another Reebok & Satyam goes unnoticed & manages to get Padam Shri in 2012 The Million Dollar Question : Can an Indian Industrialist, who is facing severe criminal cases of fraud and cheating, filed by several Public Sector Bank s, eligible for Padma Shri Award in "Trade & Industry" category ? Specially when the cases involve diversion of "Borrowed Public Money" to t he tune of 100's of Crores of Rupees by fraudulent means. And also when the accused is unable to get any relief from Supreme Court of India and Bombay High Court in these cases. It is worthy of media trial due to the financial stake involved and set up a n example for other corporate houses to set their Corporate Governance in order. READ AND DECIDE YOURSELF Introduction : Mr Arun H. Firodia and his daughter Ms. Sulajja Firodia Motwa ni are prima-facie accused of allegedly masterminding diversion of 100's of cror es belonging to the Public Sector Banks from the accounts of Athena Financial Se rvices Ltd. (erstwhile Kinetic Finance Limited) by fraud and cheating and willfu l omission and concealment of facts. This gallantry achievement of Mr Firodia has been rewarded by the highest ci vilian award of India - Padma Shri in the year 2012. CONGRESS CONNECTION Arun Firodia's son Ajinkya A Firodia and CWG Scam tainted Congress MP from P une Sh. Suresh S Kalmadi's brother Sh. Shridhar S Kalmadi both are on board of P une based company ZF Steering Gear India Limited. ZF Steering Gear was initially promoted by Mr Arun Firodia in the year 1981. CENTER POINT OF THE CONTROVERSY Mr Arun H Firodia and his company "Athena Financial Services Limited" has be en under trial for allegedly committing a conspired misappropriation and willful default on repayment of working capital loans borrowed from a Consortium of P ubic Sector Banks led by SBI & also the funds borrowed from other Non Banking F inancial Institutions. In this notable achievement Mr Arun Firodia was assisted by Ms. Sulajja Firo dia Motwani, who is a recipient of numerous young achiever awards herself.Glare, glitter & glamor created by Ms. Sulajja Firodia Motwani diverted the media & pu blic attention from the financial irregularities being carried out in Athena Fin ancial Services Limited. Click to read the published news in media on it At the heart of the matter is the functioning of Athena Financial Services ( erstwhile Kinetic Finance Ltd) promoted jointly By Arun H. Firodia and Sulajja F irodia in 1990. Athena financed two wheelers manufactured by Kinetic Engineering Limited (KE L) & Kinetic Motor Company Limited (KMCL). THE SEQUENCE OF EVENTS In 2001-2002 Firodias started approaching Public Sector Banks in Pune an d also other Non Banking Financial Corporations for huge working capital loans i

n the form of cash credit limits. They availed of 144 Crores of the working capital loans from a Consorti um of 21 Public Sector Banks led by SBI vide an agreement dated 20-12-2001. Some more banks joined the Consortium in lending money to Firodias by si gning supplementary agreements later on. Firodias also signed a debenture trust cum mortgage deed for redeemable debentures amounting to 50 Crores vide an agreement dated 31.3.2003 and a supple mentary agreement dated 17.10.2003. The debentures were redeemable on 6.1.2004 and 9.7.2004. They were issue d to Canbank Mutual Fund A/c Cancigo, Bank of Baroda, BOB Mutual Fund Short term plan, UTI Bank Limited, UTI-CRTS (Charitable and Religious Trusts and Religious Societies) and UTI Unit Linked Insurance plan. Bank of Maharashtra, Shivajinagar, Pune was appointed as the debenture t rustee by the Firodias. Athena Financial Services Limited, started defaulting on loan repayments to the banks and by Firodias' own admission, is believed to have reported net l osses amounting to nearly Rs. 220 Crores in 03-04 & 04-05 put together. That in itself is not something shady. However, the manner in which the company was shown to have ran into loss es in order to divert the funds to other group entities & elsewhere by using fra udulent means is what lies at the center of the controversy. In 2004 Banks approached DRT (Debt Recovery Tribunal) vide application N o. 38/2004. The consortium of banks had actually smelled rat much before that and co nducted special investigation audit of the company's operations in 2002 and foun d that company has been committing the following acts of fraud and cheating to m isappropriate the banks' money in a planned manner : FINDINGS OF THE SPECIAL AUDIT CONDUCTED BY THE BANKS AA Kinetic Finance Limited was fraudulently showing and projecting good profits by : a. Allegedly manipulated profits over the years in the b alance sheets. b. c. d. e. Showing cash which was non existent Allegedly manipulated PAT (profit after tax) Increasing sundry debtors each year Trying to writing off sundry debtors after some years

BB Kinetic Finance Limited default in regular repayment of the debts & e vasion of submission of monthly stock statements. CC A stock audit conducted by SBI on 30.11.2002 showed inflated stock po sition by inclusion of non-performing assets and overdue account. DD The hire purchase agreements of Kinetic Finance Limited were not sign ed by the authorized signatory on behalf of the company. EE Hire Purchase proposal forms and other documents were not filled up completely. FF Non-deposit of proportionate amount in the account of the Banks in t he form of installments received from the hirers on the hypotheticated vehicles . GG Company mooted the CDR (Corporate Debt Restructuring) proposal to dis tract the consortium member banks and to hide the acts of cheating and fraud in the accounts to defer & inordinately delay in repayment of the existing liabilit ies.

HH Shift the focus from "fund based business" to "fee based business" by forming JV with Citigroup thus breaching the terms of agreement which showed t he dishonest intention of the accused to divert the funds acquired from the Bank s and NBFCs to the benefit of the accused thus committed fraud and cheating und er Section 415 and punishable under Section 420 of IPC. II Company on 6/12/2003 had disclosed a projected write off of Rs.100 crores of its existing receivables, without the consent of the lender Banks. I t was the write off of assets generated out of the Banks money. Misappropriation of funds generated by the Banks money, amounted to offenses under Sections 403 and 405 of IPC. JJ The company had fraudulently violated the terms and conditions of al l the loan agreements jointly and severally with the intention to defraud the C onsortium bank members. Following acts and omissions of company revealed the di shonest intentions through its Directors actions and decisions (i) Company had entered into a joint venture agreement with the Citibank to finance the two wheelers, four wheelers and other consumer goods breaching the agreemen t with the lending banks. (ii) Company has made a payment to the ext ent of Rs.2,576 lakhs to Kinetic Engineering Ltd. since April 2003 against the s uppliers credit by the promoters of M/s. Kinetic Engineering Ltd. KK These acts showed the dishonest and fraudulent intention and the acts of the company also amounted to offenses under Sections 421 to 424 of IPC. LL Kinetic Finance Ltd. had a current account with Centurion Bank much prior to the execution of Working Capital Consortium Agreement. The total collec tion for the period from October to December 2003 at Pimpri Branch of the Centur ion Bank was shown in the audit report as under: Oct' 2003 - Rs.111.03 lakhs, Nov' 2003 - Rs.124.88 lakhs, Dec' 2003 - Rs.106 .76 lakhs MM Consortium members asked the Company to stop its account with Centuri on Bank, the Company refused to do so with the ulterior motive to misappropriate the funds. The said acts committed by the Company amounted to criminal breach of trust, cheating and criminal misappropriation of the dues belonging to the consortium members and the same are offenses under Sections 403, 405, 415 and 421 to 424 of IPC and punishable accordingly. NN Company had misrepresented and fraudulently concealed the material fa cts from the Banks right from the beginning and obtained the loans fraudulently . OO In 2002-03 the Company disposed of a hypothecated Wind Mill valued at Rs. 3,21,15,000.00 without the permission of the Banks Consortium and dishones tly and fraudulently disposed off the hypothecated properties with a malafide in tention to prevent the consortium members from realizing their dues. The said acts of the Company constitute serious offense under Section 421 re ad with Section 34 of IPC and are punishable accordingly. PP The changing of the accused Company s name from Kinetic Finance Limited to Athena Financial Services Ltd. showed their malafide intention as they wante d to crawl out of their responsibility and disassociate the Company from the Kin etic Group and save the Kinetic Group from defamation in the eyes of the public so the business activities of the other Group companies will not be adversely a ffected and also no burden would be cast on them, of the financial liabilities accruing from Athena Financial Services Ltd.

QQ The resignation of the promoters from the Company made the Consortium members aware that Consortium members would not have advanced any credit faci lities and parted with huge sum, if they knew in advance that the promoters will resign. The willful omissions deliberately done to cheat the Consortium members and these acts of the Company have also caused harm and damages to the property of the Consortium members and it is fraud on the Consortium members, thus amounting to the offense under Section 415 punishable under Section 420 of IPC RR The other Company Directors by giving consent to the activities and b y participating in the fraudulent, dishonest acts of theirs, have abetted in al l the criminal acts and have misused the power and authority and, therefore, the y are also responsible for all the offenses mentioned above. SS Several banks filed Criminal cases of Fraud & Cheating on them apar t from the regular Civil Suits of recovery. NONE OF THE COURTS GAVE RELIEF TO MR ARUN FIRODIA 1. Criminal Case No.1391 of 2005, filed against them. The Judicial Magi strate, First Class, Court No.4 at Pune Case Search 2. Criminal Revision Application No.416 of 2005 - Addl. Sessions Judge P une vide order dated 11/10/2005 Case Search 3. Special Civil Suit Spl Civil Suit 56 of 2007

4. Criminal Writ Petition No. 2851 of 2007 - Hon'ble Bombay High Court Criminal/2007/WP 2851 - Mr Justice B.H.Marlapalle. 5. UNI news report link UNI News Report. 6. Criminal Writ Petition No. 2281 of 2008 Bombay High Court Mr. Justice D.G. Karnik on 17 Nov 2009. Order - Maintained issuance of process against Firod ia. 7. The Supreme of 2010 of theirs was Hon'ble Dr. Justice 008 of The High Court Court of India - Special Leave Petition * (Criminal) 1474 dismissed on 26/2/2010 by Hon'ble Mr. Justice Aftab Alam & B.S. Chauhan. ( In order dt 17/11/2009 in WPCRL No. 2281/2 of Bombay)

FIRODIAS ARE ALLEGEDLY ACCUSED OF THE FOLLOWING OFFENSES IPC ntion IPC 403 Dishonest misappropriation of property IPC 405 Criminal breach of trust IPC 406 Punishment for criminal breach of trust IPC 415 Cheating IPC 417 Punishment for cheating IPC 420 Cheating and dishonestly inducing delivery of property IPC 421 Dishonest or fraudulent removal or concealment of property t o prevent distribution among creditors IPC 422 Dishonestly or fraudulently preventing debt being available for creditors IPC 423 Dishonest or fraudulent execution of deed of transfer contai ning false statement of consideration IPC 424 Dishonest or fraudulent removal or concealment of property 34 Acts done by several persons in furtherance of common inte

COMPANY NAME CHANGED FROM KINETIC TO ATHENA To save loss of face in public, save defamation of the Kinetic group name & hide fraud so that business of other Kinetic group companies is not effected. Old Name Kinetic Fincap Ltd 6th Jan 2004 Kinetic Finance Ltd 1st July 2004 PROMOTER DIRECTORS RESIGN To hide their fraudulent actions & dissociate themselves from Athena and ge t away from their financial & legal responsibilities. Original Directors of Athena (13th AGM held on 18 Oct 2003) Chairman & Promoter - Arun H Firodia MD & Promoter - Sulajja Firodia Motwani CEO & ED - R R Mohan Khanna COO & ED - Ajay Raina Director (Finance) - Nagendra Rao ED VSR Swamy H. Moolgavkar (Air Chief Marshal Retd.) AP Bhagwat PC Jain VS Mehta AH Munot VR Saboo New Directors of Athena (Appointed in May 2004) M S D M G I S M S S Kochar Nahar Shingavi Nair Kulkarni New Name Date of Change Athena Financial Services Ltd Athena Financial Services Ltd

SOURCES OF INFORMATION 1. Ministry of Corporate Affairs, Govt. of India Index of Charges Name of Company- Athena Financial Services Limited CIN/FCRN/LLPIN/FLLPIN- U65921PN1990PLC057955 2. CIBIL SUITS website CIBIL Suit File Cases 3. Moneycontrol website Athena Balance Sheets 4. Reportjunction website 04-05 Annual Report pdf file 5. Hon'ble Bombay High Court website Case Search 6. Hon'ble Pune Courts website Case Search 7. Hon'ble Bombay High Court - Company Petitions Company Petition 8. Other references regarding liquidation & adjudication - Ministry of Corpo rate Affairs website : Ministry of Corporate Affairs CIBIL SUIT FILES CASES AGAINST KINETIC ATHENA FOR WILLFUL DEFAULT

Sr 1 2 4.82 3 4

Name and Branch of Bank (Rs in Cr) Tamilnad Mercantile Bank, Pune 4.15 State Bank of Hyderabad, Kothrud, Pune IDBI Bank, Laxmi Road, Pune 5.57 , 9.27 Allahabad Bank, Sada-shiv Peth, Pune J&K Bank, Pune 6.18 UTI Mutual Fund, Mumbai 21.68 Bank of Maharashtra, Asset Recovery Branch, Pune Bank of Maharashtra, Pimpri, Pune 15.66, 18.01 United Western Bank, Laxmi Road, Pune

1.21 5 6 7 26.84 8 9 5.57 10 Bank of India, Asset Recovery Branch, Pune 8.51, 9.06, 9.46, 12.60 11 Development Credit Bank, JM Road, Pune 2.55 12 Union Bank of India, FC Road, Pune 6.91 13 Catholic Syrian Bank, Pune 2.76 14 Bank of Rajasthan, Pune 4.00, 2.45 15 Punjab National Bank, Camp, Pune 4.11, 3.68 16 UTI Bank Limited, Pune 17.09 17 State Bank of India SAMB, Pune 17.21 18 Bank of Baroda, Nariman Point, Mumbai 4.38 19 Corporation Bank, Pune IFB Branch 1.62, 1.14, 1.00 20 ICICI Bank, Pune 2.45 INDEX OF CHARGES ON ATHENA FINANCIAL SERVICES LTD (Source - Ministry of Corp. Affairs, Govt. of India) No. Charge ID Dt of Charge Charge Holder Creation/ Modification 1 90086412 02/06/2003 Ltd, Pune 2 90088602 03/04/2003 ent Credit Bank Ltd, Pune 3 90092114 24/03/2003 shna Bank Ltd, Pune 4 80023042 11/03/2002 100,000,000.00 60,000,000.00 100,000,000.00 50,000,000.00 IDBI Bank Developm Lord Kri The Vya Charge amt

24.86,

sa Bank Ltd, Pune 5 80026599 11/03/2002 sa Bank Ltd, Pune 6 90082281 15/05/2001 * aharashtra, Pune 7 90085960 04/07/2002 * bai 8 90088464 25/11/2003 * Mumbai 9 90085935 28/11/2001 td Mumbai 10 90091716 28/11/2001 ank of Hyderabad, Pune 11 90082280 08/09/2000 * rashtra, Pune 12 90085700 20/03/2001 ed, Mumbai 13 90085651 15/02/2001 rust Bank Ltd, Pune 14 90085623 25/01/2001 Bank Ltd, Pune 15 90085593 29/12/2000 Madura Ltd, Pune 16 90091436 18/07/2001 * Madura Ltd, Pune 17 90088354 22/12/2000 d Mercantile Bank, Pune 18 90085396 18/07/2001 * Madura Ltd, Pune 19 90082279 03/12/1999 * aharashtra, Pune 20 90091239 08/04/2000 ent Credit Bank Ltd, Pune 21 90091232 31/03/2000 mos Co-op Bank Ltd, Pimpri 22 90084921 30/10/1998 Overseas Bank Ltd, Pune 23 90088143 12/10/1998 Financial Services Pvt Ltd, Delhi 24 90352588 27/09/1997 Baroda, Pimpri 25 90084696 08/09/1997 td, Mumbai 26 90352567 08/07/1997 ank Ltd, Pune 27 90352559 13/06/1997 Bank of Hyderabad, Chennai 28 90090298 28/06/2001 * nk of India, Pune

50,000,000.00 150,000,000.00 1,445,600,000.00 1,445,600,000.00 150,000,000.00 50,000,000.00 100,000,000.00 200,000,000.00 150,000,000.00 30,000,000.00 50,000,000.00 50,000,000.00 30,000,000.00 10,000,000.00 100,000,000.00 50,000,000.00 50,000,000.00 10,000,000.00 50,092,133.00 20,000,000.00 30,000,000.00 7,500,000.00 5,000,000.00 1 2,000,000.00

The Vya Bank of M SBI, IFB Mum SBI, IFB, Sicom L State b Bank of Maha ICICI Limit Global T The J&K Bank of Bank of Tamilna Bank of Bank of M Developm The Cos Bharat AVCO Bank of Sicom L IDBI B State Union Ba

BALANCE SHEET OF ATHENA FINANCIAL SERVICES LIMITED Allegedly manipulated profits Non existing cash Allegedly manipulated Increasing sundry debtors each year Trying to writing off sundry debtors after some years BALANCE SHEET Rs. in Crores Mar '05 Mar '04 Mar '03 Mar '02 Mar '01

12 mths Sources Of Funds

12 mths

12 mths

12 mths

9 mths

Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves -206.65 Revaluation Reserves Networth -192.41 Secured Loans 190.53 Unsecured Loans 15.21 Total Debt 205.74 225.67 Total Liabilities 13.33 Mar '05 Mar '04

14.24 12.60 0.00 1.64 -84.23 0.00 -69.99 214.07 11.60 188.00 155.68

14.24 12.60 0.00 1.64 12.49 0.00 26.73 183.46 4.54 244.59 214.73 Mar '03 12 mths

14.24 12.60 0.00 1.64 43.11 0.00 57.35 197.52 47.07 236.15 301.94

14.24 12.60 0.00 1.64 41.06 0.00 55.30 188.17 47.98 291.45 Mar '02 12 mths

14.24 12.60 0.00 1.64 0.00

Mar '01 9 mths

12 mths 12 mths Application Of Funds

Gross Block 13.98 Less: Accum. Depreciation Net Block 2.46 6.57 Capital Work in Progress Investments 0.01 Inventories 0.67 Sundry Debtors 40.11 Cash and Bank Balance Total Current Assets Loans and Advances 9.98 Fixed Deposits 0.23 Total CA, Loans & Advances Deffered Credit 0.00 Current Liabilities Provisions 0.00 0.00 Total CL & Provisions Net Current Assets 10.79 Miscellaneous Expenses Total Assets 13.33 Contingent Liabilities Book Value (Rs) -153.54

20.82 11.52 7.52 0.00 0.01 5.73 147.72 1.06 41.84 21.80 1.16 52.05 0.00 41.26 0.00 41.26 148.93 0.07 155.69 10.53

21.36 14.25 10.09 0.00 1.09 125.84 62.52 3.97 157.42 44.52 3.78 180.38 0.00 31.45 0.00 31.45 205.79 0.18 214.74 10.54 -56.68

24.40 13.84 9.60 0.00 3.59 189.61 54.74 15.34 203.70 66.41 1.38 252.00 0.00 46.21 1.19 46.21 287.46 0.34 301.94 11.88 19.85

32.81 14.31 0.00 4.87 199.56 34.23 12.22 256.57 47.79 0.53 324.36 0.00 36.90 36.90 276.22 0.80 291.43 10.44 44.08

23.21 0.00

10.65 244.44 292.76 15.35 16.54 0.74 6.14 42.46

Profit & Loss Account Mar '05 12 mths Income Mar '04 12 mths Mar '03 12 mths Mar '02 12 mths Mar '01 9 mths

Sales Turnover Excise Duty Net Sales 11.37 Other Income Stock Adjustments Total Income Expenditure

11.37 0.00 6.66 -28.14 0.00 -16.77

6.66 0.00 61.74 7.50 0.00 14.16

61.74 0.00 81.70 6.76 0.00 68.50

81.70 0.00 59.86 0.20 0.00 81.90

59.86 0.00 1.65 0.00 61.51

Raw Materials 0.00 0.00 Power & Fuel Cost 0.00 0.00 Employee Cost 4.28 5.89 Other Manufacturing Expenses Selling and Admin Expenses 98.04 Miscellaneous Expenses 1.04 Preoperative Exp Capitalised Total Expenses 103.36 71.71

1.21 0.00 6.90 0.00 64.05 1.77 0.00 21.64

0.00 0.00 7.20 0.00 11.52 2.01 0.00 26.49

0.00 0.00 5.08 0.00 15.22 4.07 0.00 19.90

0.00 11.61 3.21 0.00

0.00 0.00

Mar '05

Mar '04

Mar '03 12 mths -65.05 -57.55 43.04 -89.54 0.79 4.57 0.03 -122.41 1.18 -122.42 103.36 0.00 0.00 0.00

Mar '02 12 mths 55.21 55.41 32.01 8.03 2.70 0.62 2.28 -0.01 -94.97 2.58 -96.72 20.43 0.00 0.00 0.00

Mar '01 9 mths 39.96 41.61 9.60 4.02 0.46 4.71 -0.09 2.27 1.10 26.49 0.00 0.94 0.00

12 mths 12 mths Operating Profit -91.99 PBDIT -120.13 Interest 1.70 31.99 PBDT -121.83 Depreciation 0.61 Other Written Off 0.00 Profit Before Tax -122.44 Extra-ordinary items PBT (Post Extra-ord Items) Tax 0.00 1.75 Reported Net Profit Total Value Addition Preference Dividend Equity Dividend 0.00 Corporate Dividend Tax Per share data (annualised)

40.10 46.86 47.38 3.82 1.01 0.53 -94.90 -0.07 2.00 71.71 0.00 0.00 0.00

5.12 -0.03 4.62 2.71 19.90 0.14 0.11

5.09 2.54

Shares in issue (lakhs) 126.39 126.39 126.39 Earning Per Share (Rs) -96.86 -76.52 0.87 Equity Dividend (%) 0.00 0.00 0.00 Book Value (Rs) -153.54 -56.68 19.85 Cash Flow Mar '05 Mar '04 Mar '03

126.39 2.14 0.00 44.08

126.39 1.90 7.50 42.46

Mar '02

Mar '01 9 mths 5.12 -39.11

12 mths 12 mths 12 mths 12 mths Net Profit Before Tax -122.45 -95.28 1.21 4.70 Net Cash From Operating Activities 7.09 -53.05 55.74 -4.17 Net Cash (used in)/from

Investing Activities 3.61 1.65 5.32 0.02 Net Cash (used in)/from Financing Activities -14.54 6.56 38.41 Net (decrease)/increase In Cash and Cash Equivalents 5.52 2.42 5.70 Opening Cash & Cash Equivalents 5.13 19.12 13.60 Closing Cash & Cash Equivalents 1.29 5.13 19.12 Posted 22 hours ago

6.41 37.42 -3.84 11.18 13.60

-55.55 -13.99 5.48 11.18