MS Shoes has gone to the cleaners

MS Shoes’ promoter Pawan Sachdeva, through his lawyers, is vociferously repeating one word: Revival. He even gives a timeline: One year.

This public-school lad from Punjabi Bagh in the Capital took over his father’s business of shoe export and floated his company MS Shoes in 1986. His exports were mainly to Western Europe.

In the early Nineties, Sachdeva decided to enter the game of stocks. He roped in an advertising agency, prepared an attractive prospectus, and money from the small investors and banks kept on coming. By 1995, his company was a Government of India-recognised trading house with 100-per cent export income.

Investors are welcome to believe the word of a man against whom the list of cases reads like an ideal scamster’s bio-data:

Rigging the market to hike his share prices: MS Shoes started trading at Rs 24 in 1993; it was Rs 502.5 in January 1995. A few weeks later, the dream run was over. CBI picked up Sachdeva after registering an FIR. They had to drop the case for lack of evidence.

According to the lawyers, the money raised from the market was used for 100-per cent export projects that were implemented on time.

Diverting funds from bridge loans: Sachdeva has been accused of diverting Rs 20 crore borrowed from Allahabad Bank and using the bridge loan for speculation. The CBI has reopened investigation in this case after a gap of over two years. According to CBI sources, the investigating agency has enough evidence to file a chargesheet in the coming months. Sachdeva, through his lawyers, denies that the loans he took were used for speculation. He claims that the company obtained Rs 100 crore worth of bridge loans which were used exactly as per the agreement.

Violating the Companies Act: The CBI has accused him of using company money to buy the company’s shares, cheating, breach of trust and abuse of authority under the Indian Penal Code (IPC) and the Prevention of Corruption Act.

Sleeping with Sebi: The CBI also accused him of colluding with officials of the Securities and Exchange Board of India (Sebi) and SBI Capital Markets, the merchant bankers, and allowing a gap of 90 days between MS Shoes’ public issue and a rights issue. The CBI said in its FIR that this gave Sachdeva time to divert funds running into Rs 1 crore. Investigations were dropped due to lack of evidence.

Now, Sachdeva spends most of his time in court attending to numerous civil and criminals cases against him. He too has filed numerous cases against his underwriters, ranging from stockbrokers to banks for recovery of amounts up to Rs 300 crore. According to Sachdeva’s lawyers, he has filed a whopping 250 suits against various individuals for recovery of amounts.

One by one, he has gone in for out-of-court settlements.

On CBI reopening the case, Delhi High Court lawyer Anuradha Dutt defends her client. ‘‘The same complaints were made earlier and all these complaints have been investigated. They haven’t found anything against my client so far. He’s paid back and offered compromise proposals,’’ says Dutt.

She adds that Sachdeva had paid off all his investors and some of his properties had also been auctioned to pay back banks.