In a startling annual general meeting speech two weeks ago, Singh summarised the dire straits he faced when he took charge of the coal company on October 28, 2013.
“After that I realised that the company was in much worst state with outstanding of over hundred million dollars to creditors including statutory payments; mines were not in production; bankers’ interest payments and repayments were grossly overdue; employees were not paid for almost five weeks; almost six months of superannuation were not paid; several statutory demands, statement of claims and legal demands were issued including a winding up application against the company; almost $11 million receivable under coal sector job package was cancelled; and worst of all, the company’s bank accounts were ceased and garnished by Australian Tax Office,” he said.
“That was the darkest period in the history of the company and we needed focus, time and liquidity to see the light.”
With the NSW Supreme Court dismissing the last outstanding winding-up proceeding against the coal company a week ago, Singh has resolved the financial problems mainly through large liquidity injections plus some operational and staff cutbacks.
“In less than a year Jindal Steel and Power has invested around $240 million in the Company. $66 million in placement deal; $135 million as equity by participating in all four rights issues that company has conducted and around $44 million as a loan,” he said.
“Jindal Steel and Power has also provided your company with a short term cash advance facility to withdraw up to $75 million against which it has withdrawn around $44 million.”
This level of financial commitment far outweighed what Jagatramka said was necessary when he approached Jindal in early July last year, according to Singh.
“Even then he was not transparent enough and informed that a sum of $50 million would be sufficient to bring the company back on track when the company was actually in need of more than $200 million.”
Singh said that the primary reason the coal company faced a liquidity crisis was because it did not receive money for coal supplied to Gujarat NRE Coke in India.
“As we speak today, the Gujarat Group owe net of around $70 million to the company.”
Singh also accused Jagatramka of various acts of misconduct when Jindal provided $42 million of cash to the coal company ahead of a key Jindal share purchase deal in October, 2013.
“While this deal was happening and the company was receiving money from Jindal Steel and Power, Arun caused the company to sell its $10 million residential property at 64 Cliff Road Wollongong for mere $3.75 million and that also to a company whose sole director seems to be related to Arun and used that $3.75 million to repay its own group of companies.
“To the best of my knowledge, Arun and his family are still using that property.
“At that same time, Arun made a deal with a third party to sell almost half a million tonnes of coal at extraordinary low value and almost $5 million out of advances received were used by him to pay his own group of companies.”
Jagatramka has since denied Singh’s allegations he sold the Cliff Road mansion to a relative to The Australian this week, and further said it was independently valued at $3.75 million.
On Singh’s coal sale allegations, Jagatramka said the coal was sold at the best price possible to coal trader Noble Resources.
He clarified the quality “was inferior owing to its high content of ash”
“Perhaps the most serious of the Mr Singh’s allegations is that Mr Jagatramka, while the Wollongong operation was on its knees, transferred almost $US10m to Gujarat NRE Coke via Hong Kong once it had started receiving cash from Jindal,” the newspaper reported.
“The Australian understands that a complaint was made to the NSW Police alleging that the signature of a company secretary was forged in order to authorise one of the payments.
“Jagatramka said the Australian Securities & Investments Commission, had not been in touch with him and that he had attended NSW Police to assist in inquiries regarding a single forgery alleged by the company and expect the police to take no further action.”
“He went on to say the transfer of the funds was completely appropriate and in line with cash security and corporate guarantees provided by the parent company.”
Singh promised Wollongong Coal’s shareholders he would seek to recover lost funds.
“I would like to assure you all that your company and its new management is totally determined to take all necessary actions against Arun and Gujarat NRE Group to recover around $70 million owed,” he said at the AGM.
“We have already commenced various legal actions against them including one to recover residential property at 64 Cliff Road Wollongong and won’t hesitate to take further legal actions as and when suggested by our lawyers.”
In June Wollongong Coal confirmed that Jagatramka, its Rolls-Royce-driving former chairman, was on a million dollar base salary last year despite the company’s financial challenges at the time.
