Chapter 8: As the masks fall off

PK’s net worth of shares in Cox and Kings and his residency in posh London created the image of a reputed and fast-growing businessman who benefitted from meeting the needs of the average, aspiring middle-class citizens of India who wanted to see the world.

While in reality, PK’s family trust was sucking the resources of Cox and Kings that were raised from banks in India, in other words, honest savings of the citizens of the country. On the exterior, Cox and Kings maintained a very high credit rating from domestic rating agencies as it was reporting good financials – little did people suspect – those financials were craftily manufactured by the company and devoid of reality.

There were rumours that PK and UK where indulging in insider trading using the family trusts and other overseas entities for keeping the price of the stock high to ensure that they can keep siphoning off more and more funds from the company.

While the HBR acquisition was lucrative, the loans taken for the acquisition needed to be serviced which required the company to take more loans till HBR’s assets could be sold. The market was already making the distinction – valuation gap between Thomas Cook and Cox and Kings widened as equity markets perhaps suspected something was not right in Cox and Kings financials.

To manage the loans taken at the promoter level which was backed by shares of Cox and Kings, PK started supporting the stock price. This required a clever structure to move money from Cox and Kings to service debt at the promoter level or to raise resources at the promoter level to buy shares of Cox and Kings.

A self-fulfilling outcome was the destiny – compounded by fraudulent revenue booking to show the health of Cox and Kings in a better light than what it was. The heydays were over and the empire was standing on a needle; PK had no room to maneuver. However, having done such aggressive management for so long, PK started contacting Qatar Airways to invest in Cox and Kings. The banks and institutions were approached for the loan, in particular Yes Bank.

The Yes Bank had an exposure of INR 3600 Cr in the group – INR 563 Cr in Cox India (UK was MD), INR 1150 Cr in PEL UK (whose only directors where ABM Good and PK), INR 440 Cr in CKFS (RBI regulated), INR 1000 Cr in Ezeego (promoter company) and INR 493 Cr in Malvern UK (51% owned by PE with no board representation, yet PK gave PG for this loan). It was not just Yes Bank – there were other large lenders – Axis Bank, SBI Cards, Laxmi Vilas Bank, Indus Ind, Kotak, etc.

All in all, the total claim filed against Cox and Kings in bankruptcy was over INR 5600 Cr, and that began haunting the Kerkars. Watch this space for more

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