Essar Invests in Chanda Kochhar's Husband Firm After ICICI Loan Scam

Amidst the CBI probe on ICICI bank for the sanctioning of Rs 3,250 Crore, Essar Group promoter's kin invested Rs 325 crore into Chanda Kochhar's husband Deepak Kochhar firm NuPower Renewables. Chanda Kochhar is the Chairman cum Managing Director of ICICI Bank, India's largest private sector bank. An Indian Express report stated that the investment into Deepak Kochhar's firm began soon after the Essar group's venture Essar Steel Minnesota LLC was awarded a loan of $530 million by ICICI Bank. The loan was later declared a non-performing asset (NPA). If a company fails to pay loans for 90 days, then the account is declared NPA. Indian banks are laden with NPAs of Rs 8.41 Trillion which in turn have affected their capacities to extend loans and generate revenue.

Nishant Kanodia, the son-in-law of Essar promoter Ravi Ruia, through his firm Firstland Holdings, invested in NuPower Renewables several times after Essar Steel was awarded the loan. The first investment of Rs 49.90 crore was done just two days after the loan was granted on December 29. The second instalment of investment came on August 3, 2011, when it invested Rs 8.69 crore in the same firm. The investments continued when NuPower Renewables received amounts worth Rs 99.25 crore and Rs 166.5 crore on October 3, 2011, and March 21, 2012, respectively.

The group first claimed that it did not have any relations with Kanodia's firms. But the paper trail reveals an entwined web of investments into the firms owned by Nishant Kanodia and Essar Group. The group, with the debt of 1.38 Lakh crore, invested Rs 163.54 crore in Matix Chemicals and Fertilisers, one of the subsidiaries owned by Nishant Kanodia. ICICI Bank also remained mum on the question of whether Chanda Kochhar had informed the board about her husband's financial dealings with the kin of Essar Group before approving the loan .

The present revelation also reveals a pattern of transactions where the firms of Chanda Kochhar's husband received huge sums of money after approval of loans. The complaint registered by CBI stated that Videocon was granted a loan of Rs 3,250 from ICICI Bank in April 2012 and the husband of Chanda Kochhar received a sweet deal from the company owned by Venugopal Dhoot. The conflict of interest arose when the firm of Deepak Kochhar received a loan of Rs 64 crore by a firm owned by Videocon promoter Venugopal Dhoot. Interestingly, the loan had a repayment obligation of Rs 9 Lakh. Videocon group could pay only 14 percent of the loan and ICICI Bank declared the Videocon account NPA.

Now, questions are being raised about the timing of approvals of these loans. The Videocon group was already debt ridden when the loan was granted. Secondly, Chanda Kochhar headed the board which approved loans. The answers for any financial conduct have to found by CBI and the regulator Securities and Exchange Board of India (SEBI).