2 Reliance-linked shell firms gave Rs 50 cr to BJP, ‘dabba trader’ gave Rs 22 cr to BRS

The financial statements of a few unlisted obscure firms suggest an ostensible round tripping of funds.

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In the electoral bonds data uploaded by the Election Commission of India, there are various unlisted obscure firms next to big corporations. Their balance sheets are baffling.

The financial statements of a few of these donors point to ostensible routing entities, entire revenues dedicated to political donations, zero allocation for staff remuneration, and entities breaking even and making large profits in the year they purchased bonds.

Last week, speaking at the India Today conclave, union finance minister Nirmala Sitharaman was asked whether loss making firms or shell companies should be allowed to donate to parties. “There are issues on that front. We need to look into them. You cannot have shell companies and loss-making companies doing this,” the minister said.

In its verdict terming the electoral bonds scheme as unconstitutional last month, the Supreme Court had also underlined that it was necessary to distinguish between profit-making and loss-making companies making donations. The court struck down amendments to the Finance Act and the Companies Act over concerns around shell companies being potentially misused to make donations.

But let’s first take a look at some of the companies we found.

Honeywell Properties and Chander Commercials Pvt Ltd

Chander Commercial Pvt Ltd, incorporated on December 12, 2007, has its registered address on the fourth floor of Court House, Lokmanya Tilak Marg, Dhobi Talao in Mumbai. Honeywell Properties, incorporated on August 14, 2006, is located on the fifth floor in the same building. 

That’s not all that they have in common.

Both firms claim to be real estate players. Both made no revenue and remained in loss from the financial year 2015-16 to 2020-21. Both spent no amount on remuneration of staff during this period. Both earned Rs 50 crore of total revenue in FY 2021-22 – and donated this amount to the BJP the same year. 

And both are linked to Reliance affiliates. According to the ministry of corporate affairs website, both have the same email address at *****ar.kothandaraman@ril.com – ril.com is the website domain of Reliance Industries Limited.

Satyanarayanamurthy Veera Venkat Korlep is a common director in these firms, apart from Sridhar Kothandaraman as the second director in Chander Commercials – his  LinkedIn profile describes him as a company secretary at Reliance Retail. Praveen Ramesh Baser is the second director in Honeywell Properties apart from Korlep. 

In the years preceding the purchase of bonds, financial years 2018-19, 2019-20 and 2020-21, Honeywell incurred losses to the tune of around Rs 4 lakh, Rs 4.3 lakh and Rs 10.5 lakh, respectively. In the same period, Chander faced losses around Rs 6.5 lakh, Rs 6.9 lakh and Rs 6.9 lakh, respectively. The same amounts were listed as “other expenses” by these entities which had spent no money on remuneration and had no trade activity.

But in the next financial year, Honeywell and Chander earned Rs 30 crore and Rs 20 crore in revenue, respectively, and bought bonds worth the same amount on April 8,  2021. The BJP encashed it through the New Delhi branch of SBI on April 12. 

Honeywell and Chander have the same firms as shareholders: Reliance Ambit Trade Pvt Ltd, Ashwani Commercials Pvt Ltd, Centura Agro Pvt Ltd, and Carin Commercials Pvt Ltd. While Reliance Ambit is a subsidiary of the Reliance group, the rest have three directors in common – Sridhar Kothandaraman, Satyanarayanamurthy Veera Venkat Korlep, and Sudhakar Saraswatula. 

Kothandaraman, Korlep and Saraswatula are also directors in over 20 companies of Reliance Industries, including Reliance Mahanadi Exploration and Production Pvt Ltd, Reliance KG Basin (Exploration and Production) Pvt Ltd, Reliance Upstream, Reliance Oil and Gas (Exploration and Production Pvt Ltd), Reliance Styles India Ltd, Reliance World Trade Pvt Ltd, Reliance Chemicals Reliance Polymers ( India) Ltd, Reliance Energy and Project Development Ltd, Reliance Universal Commercial Ltd, Reliance Global Commercial Ltd, Reliance Ethane Pipeline Ltd, etc. 

Honeywell and Chander, apart from eight other firms, also have a shareholding of 10 percent each in Teesta Retail Pvt ltd, which also has Tapas Mitra as a director – he is also a director in several Reliance firms such as Reliance Oil and Petroleum.

All these 10 entities that have a share in Teesta, including Jaipur Enclave Private Limited, Honeywell Properties Private Limited, Chander Commercial’s Private Limited, Prakhar Commercials Private Limited, Kaniska Commercials Private Limited, Netravati Commercials Limited, Lakshita Commercials Limited, Creative Agrotech Private Limited, Anagh Commercials Private Limited and Starfish Commercials Private Limited claim to operate from the same building.

Tapas Mitra’s name, meanwhile, featured in previous reports on the purchase of EBs by Reliance linked entities, including Qwik Supply Chain Pvt Ltd that donated around Rs 410 crore to parties. Reliance dismissed these allegations, issuing a statement denying that Qwik is its subsidiary.

Teesta’s connection doesn’t stop at Honeywell and Chander, as the entity listed below suggests.

L7 Hitech Pvt Ltd

Owned by the Nagpur-based L7 Group, which claims to have a wide set of interests ranging from hospitality to information technology, LT Hitech is headed by Ravi Agrawal. The company and Agrawal have often faced agency action and been accused of bucket trading – illegal stock trading outside the purview of the stock market which is an offence under Securities Contracts ( Regulations) Act, 1956.

Incorporated in 2014, L7 HiTech had zero revenue and a loss of Rs 17,800 in the first year, zero revenue and a loss of around Rs 5,000 for the financial year 2015-16, and the same revenue and a loss of about Rs 5,000 in the year 2016-17, according to its filings. The company made zero sales, zero income and suffered losses to the tune of Rs 5,688 and Rs 5,118 in financial years 2017-18 and 2018-19, respectively. 

But its revenue suddenly rose to Rs 472 crore in 2019-20, over Rs 2,384 crore in 2020-21, and Rs 2,864.9 crore in 2022-23.

This amount was gathered through “sales for the year”. But the company’s annual returns, director’s report, and financial statements offer no explanation about what the company precisely sold. In other words, the trading activity was not defined. It’s unusual for a company making such large revenues to not disclose its product of trade.

On May 10, 2023, the L7 Group was raided by Income Tax officials over alleged dabba trading. Five months later, the company purchased electoral bonds of about Rs 22 crore. This was encashed by the BRS.

In 2016, the economic offences wing of the Nagpur police, along with officials from the Securities and Exchange Board of India, searched premises linked to Agrawal in Nagpur and Mumbai. Agrawal absconded until he secured interim bail from the Nagpur bench of the Mumbai High Court while his brother Neeraj Agrawal was arrested.

From July 2022 to January 2023 – the financial year preceding the fresh official action and the purchase of bonds – L7 Hitech took at least Rs 55 crore worth of zero percentage fully convertible debentures, an instrument that converts the loan amount to equity for the lender in case of non-repayment.

But zero percentage FCDs are typically transacted between entities known to each other. And in this case, L7 HiTech received them from Teesta Retail. As on March 31, 2023, the value of these FCDs had grown to Rs 655 crore, as per the list of debenture holders seen by us.

In January 2023, Ravi Agrawal was among the prime organisers of a Bageshwar Dham event where top leaders of the BJP, including union minister Nitin Gadkari and Maharashtra deputy CM Devendra Fadnavis, were present.  

Kamna Credits and Promoters 

The unlisted company’s net profit for the financial year 2021-22 was Rs 2.97 crore, just 60 percent of the amount it allocated for bonds – it spent Rs 5 crore and Rs 5 lakh on donations to the BJD and the Congress, respectively, in January 2022. 

Its net profit for the year 2022-23 was Rs 1.1 crore but it purchased Rs 25.5 crore of bonds in October 2023. Of this, BRS got Rs 7 crore, the Congress got Rs 11.5 crore, the Trinamool Congress received Rs 6 crore and Rs 1 crore to the BJP.

The company is owned by Shyam Khetawat and is based out of Kolkata. Its other directors include Arun Khetawat and Vishal Lohiya. It was listed as a high risk non-banking financial corporation by the Financial Intelligence Unit  of the Ministry of Finance in 2018 over alleged non-compliance of the Prevention of Money Laundering Act. Soneko Securities Pvt, another firm linked to the Khetawats, was also listed as a high-risk financial institution by the FIU.

Kamna Credits saw a massive jump in revenue in the financial year it first bought EBs – from Rs 53 lakh and Rs 36 lakh in revenue in 2020 and 2021, respectively,  to  Rs 8.5 crore by March 2022. It credited most of this – about Rs 8.2 crore – to the sale of shares, mutual funds and interest on unsecured loans for this rise in revenue. 

It was the same year it bought bonds, but the company’s balance sheet (for 2021-22) did not mention any major expense except the political donation.   

According to its balance sheet, the firm spent a total of Rs 5.03 crore, including Rs 5 crore on bonds, Rs 3 lakh on “accounting charges”, Rs 12,000 on “auditor remuneration”, Rs 1,000 on “certification fees”, Rs 29,000 on “rates for taxes”, and Rs 4,000 on “general charges”.

It did not spend any amount on remuneration for staff the years it bought the bonds.

In 2022-23, the company’s revenue as well as expenses dropped drastically to Rs 1.37 crore and Rs 11 lakh, respectively. It spent Rs 6.5 lakh and Rs 2 lakh on consultancy and accounting, respectively. 

Westwell Gases Pvt Ltd  

Incorporated in 2013 and earlier known as Sudershana City Developers Pvt Ltd, the company had zero revenue in 2021-22 and 2020-21, and Rs 1,419 revenue in 2019-20, before it increased to Rs 97 crore in 2022-23 – the year it purchased bonds worth Rs 5 crore, which were encashed by the Trinamool Congress. 

In 2023-24, its revenue increased to Rs 1,308.98 crore, and it purchased bonds worth Rs 28.5 crore, including Rs 15.4 crore to the TMC, Rs 8 crore to the DMK, and Rs 5.1 crore to the RJD. Its profit too rose from Rs 45 lakh the year before to Rs 10 crore in 2023-24. 

In the company’s press statement uploaded by a credit rating agency in September last year, Westwell tried to attribute the lack of a revenue to remaining “dormant” until it began a liquor distribution business in West Bengal in February 2022 (financial year 2021-22).

"Westwell Gases Pvt Ltd (WGPL) was incorporated in March 2013 for the purpose of carrying on business of dealer, trader, distributor etc. of all types of foreign liquor, country liquor, alcoholic drinks, beer, canned beer etc. However, it remains dormant and started a distributorship business of Indian Made Indian Liquor and Indian Made Foreign Liquor in the state of West Bengal from February 2022,” it said.

The company is run by Rajesh Kumar Prasad, Prashant Jaiswal and Aakash Jain. Amit Jain, Mukesh Kumar and Ashok Jaiswal are among the promoters. 

The company’s annual reports were not available.

Satyanarayan Iyer, a financial analyst, said, “The question to ask when a company is gaining such surreal revenue growth is what product or service it is selling. Such growth should always be backed by an underlying asset. Although the company’s growth has come on a small base, there still should be strong reasons for such growth. It does raise a lot of eyebrows and to know that it is financially solvent, there needs to be more investigation.”

On entire revenues being used to buy bonds, he said, “If a company’s entire revenue was only used for donations and not for business, salaries etc., it is clear. This is round-tripping of funds. There is no other fathomable explanation.”

We reached out to all the five companies through email. This report will be updated if they respond.

This report is part of a collaborative project involving three news organisations – Newslaundry, Scroll, The News Minute – and independent journalists.

Project Electoral Bond includes Aban Usmani, Anand Mangnale, Anisha Sheth, Anjana Meenakshi, Ayush Tiwari, Azeefa Fathima, Basant Kumar, Dhanya Rajendran, Divya Aslesha, Jayashree Arunachalam, Joyal, M Rajshekhar, Maria Teresa Raju, Nandini Chandrashekar, Neel Madhav, Nikita Saxena, Parth MN, Pooja Prasanna, Prajwal Bhat, Prateek Goyal, Pratyush Deep, Ragamalika Karthikeyan, Raman Kirpal, Ravi Nair, Sachi Hegde, Shabbir Ahmed, Shivnarayan Rajpurohit, Siddharth Mishra, Sumedha Mittal, Supriya Sharma, Tabassum Barnagarwala and Vaishnavi Rathore.


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