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Shrenuj Seeks Legal Opinion Over Bank Action

Jul 3, 2016 10:35 AM   By Rapaport News
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RAPAPORT... Shrenuj & Co., a Mumbai-based diamond and jewelry manufacturer, is challenging an order by India’s second-largest bank to seize its assets and restrict the travel of its promoters.

ICICI Bank on May 16 appointed a receiver for Shrenuj Far East Limited, the company’s Hong Kong subsidiary which has a $15 million credit limit with the bank, Shrenuj said in a note to the Bombay Stock Exchange (BSE). ICICI then pursued an order from India’s debt recovery tribunal to add Indian inventories to the assets that Shrenuj Far East had already given up to the receiver.

“In its apparent over-enthusiasm, ICICI Bank Limited approached the DRT-III [debt recovery tribunal] in India and sought an ‘ex-parte’ order for attaching all the inventories in India and placing restrictions on the international movement of the promoters,” Shreyas Doshi, chairman of Shrenuj, said. “This order was sought on frivolous grounds, far from the factual situation.”

Doshi, along with group executive director Vishal Doshi, were named by The Economic Times as the people who have been prevented from leaving India. He stressed the bank’s action will not impact the company’s current operations but it does jeopardize the rights of the other 18 banks who form the lending consortium in India.

“The company is in the process of seeking a legal opinion to challenge this ex-parte decision of DRT-III and take remedial measures,” Doshi said.

The news followed Shrenuj’s decision to “rationalize” its workforce after annual revenue slumped 34 percent and the company swung to a loss. The gem cutter has faced “severe liquidity pressure,” accountants Rajendra & Co wrote in an independent auditors’ report May 28.

ICICI Bank did not immediately respond to a request for comment. The BSE has requested further clarification from Shrenuj about the matter.
Tags: Banks, finance, ICICI Bank, India, lending, manufacturers, manufacturing., mumbai, Rapaport News, Shrenuj, Shrenuj & Co.
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