Pramod Mittal spent 60 million Euros on daughter's lavish wedding?
Moneylife Digital Team 10 December 2013

Pramod Mittal represents but one example of the quiet, high-stakes game of rich, influential bank defaulters that often misuse the CDR route without a slight change in their lavish lifestyle or spending

Pramod Mittal, the younger brother of steel tycoon Lakshmi Mittal, owes a lot of money to Indian banks. However, instead of repaying bank loans, both Pramod and his brother Vinod Mittal have managed to use the corporate debt restructuring (CDR) route repeatedly to escape unscathed. Surprisingly, despite being a bank defaulter, Pramod Mittal has reportedly spent 60 million Euros (about Rs505 crore) for his daughter’s lavish wedding in Barcelona.


According to a report from Vanitatis (Spanish news portal), the wedding of investment banker Gulraj Behl and Shristi Mittal, the 26-year old daughter of Pramod Mittal and exercise director of Global Resources of Europe, could become one of the five most expensive weddings in history, as per the figures. "One of the employees of the municipality that is well connected to high places told us that probably the figure among all parties, lodging, rental of premises, hotel rooms and other expenses to be determined, could exceed 60 million Euros. So, according to Forbes, this wedding would be located in the second, between Mohammed bin Zayed Al Nahyan, ruler of Abu Dhabi, and Princess Salama, where it cost 76.25 million Euros in 1981 and of the Prince of Wales, for which 53 million Euros was paid in that year also. For now, Lakshmi Mittal's daughter, Vanisha, holds third place when she married in 2004 with Amit Bhatia, the Indian billionaire and disbursed no more and no less than 46 million Euros," the report says.


Pramod Mittal wanted discretion for this wedding but his ostentation made news. Mumbai Mirror, using quotes from Spanish media had said politicians and prominent citizens trashed the whole affair (the Mittal wedding) as 'obscene display of wealth' for which 'the national pride was on sale'.


Coming back to Pramod Mittal's outstanding bank dues, as reported by Moneylife, during the end 2010, State Bank of India (SBI) gave a fresh loan worth Rs130 crore to Ispat Industries (it was controlled by the Mittals at that time) adjusting Rs30 crore against earlier dues.


So, why would the bank sanction a fresh loan if it has to take back part of the money? Apparently, SBI was indulging in what is called ‘evergreening’. By getting back part of the money, SBI has avoided classifying the loan as 'bad' which would have forced a series of actions. But SBI's action is in violation of the spirit of the Reserve Bank of India (RBI) guidelines. When Moneylife contacted them about this largesse, both SBI and Ispat Industries kept mum at that time.


Ispat Industries has failed to live up to every commitment it made as part of the corporate debt restructuring package so generously approved by lenders in 2003.


Pointing out that the credit appraisal committees of public sector banks (PSBs) had powers to sanction single loans up to Rs400 crore in the case of large banks and up to Rs250 crore in the case of small banks, Vishwas Utagi, general secretary, Maharashtra State Bank Employees Federation, an affiliate of All India Bank Employees' Association (AIBEA), alleged that promoters of large defaulting companies diverted bank loans into real estate and floated cricket outfits for competing in domestic league matches.


According to the bank employee union, over the past seven years, there are fresh bad loans worth Rs4.95 lakh crore only in PSBs, while during the same period, these lenders wrote off band debts worth Rs1.4 lakh crore. Top four defaulters of state-run banks constitute Rs23,000 crore of NPAs, the AIBEA said.


On 15 September 2010, Ispat shares soared in the foolish hope of a lender-blessed takeover, but fell immediately when the company denied as ‘baseless’ a report claiming that lending institutions had threatened to sell Ispat’s debt-converted-to-equity to rivals such as Arcelor Mittal or Tata Steel. The Mittals claimed in a statement that “the lenders have reposed tremendous faith in the company since its incorporation”—a fact that ought to trigger a full-fledged government investigation.


This was just repetition of earlier scene. In July 2006, when Ispat wasn’t repaying lenders, a media report said that ICICI Bank wanted to force Ispat’s merger with Jindal Steel. At that time, it was already clear that the Mittals had squandered an excellent opportunity to ride the commodity boom and take advantage of the massive write-offs granted to all steel companies under what was to be a one-time CDR exercise. Within hours, the Mittals denied the report and the lenders didn’t attempt to change the management either. Instead, they quietly cleared an unprecedented second CDR, which was officially disallowed under the Reserve Bank of India (RBI) rules unless it was accompanied by a change in management.


In the same year, the lenders watched silently as Ispat’s losses continued to mount but the Mittals splurged 14 million Euros to acquire a Bulgarian football club.


Quoting business analyst and author Alam Srinivas from Governance Now, the Hindustan Times, said, “Instead of trying to get back their money lent to Ispat, the banks helped the promoters to continue their unviable ways."


As on 30 June 2010, Ispat Industries owed over Rs7,200 crore to 15 lenders and had overdues exceeding Rs400 crore while its consolidated loss stood at Rs323 crore for a 15-month period.


However, both Pramod and Vinod Mittal ran out of their luck by the end of 2010. Three things sealed the fate of Ispat as it was taken over by Sajjan Jindal-led JSW Steel. Firstly, pressure from government agencies, especially the Income Tax department that conducted nationwide raids/searches on the company and its promoters. Secondly, lenders were under severe pressure because they would have to declare over Rs10,000 crore of outstanding borrowings as bad loans if some solution was not found before 31 March 2011. Also, with the loan-for-share scam having badly burned lenders such as Life Insurance Corp of India (LIC) and LIC Housing Finance, even the most sympathetic lenders were scared to bend the rules for the Mittal brothers once again. Finally, Ispat was unable to pay salaries and utility bills and it was clear that any delay in selling the plant would have led to vandalisation and reduced value.


Ispat Industries got their debt restructured in 2003 and 2009, with promises to complete unfinished parts of their steel projects and even sell expensive flats.


Samar Halarnkar wrote in his article in Hindustan Times, that "In small towns, we found angry workers and rusting factories, but the owners led unchanging, caviar lifestyles. We found heated swimming pools, rooftop helipads, foreign homes, fast cars — and humungous loans."


"It was only in 2010, when the Mittal brothers asked for another debt restructuring that banks — after more than a decade of throwing good money after bad — forced them to sell the company. A year later, in an Istanbul palace, Pramod organised for his daughter one of the biggest, fattest Indian weddings the Turks had ever seen," the report says.


In short, while lenders use all methods to recover dues from aam admi or the common man, when it comes to rich, influential and resourceful defaulters, there are different rules for extending the debt line and life.

jaideep shirali
5 years ago
The question us, now what will follow? Will the so called clean government, which 'does not tolerate corruption' act, or will Pramod Mittal join the club of crony capitalists ? The properties and assets of these people must first be seized and they should be entangled in so many court cases that require their physical presence, that they should regret cheating the Indian taxpayer, as that is what the case is really about. For those who are arrogant because of their money, the elimination of this wealth must be the first priority.
shadi katyal
7 years ago
It is well knonw that Indian Banks will need $ 70-80 billions in next few years to stay afloat but such rate of default and no one to follow the money,one can see the results.
After all all these new Maharahs with stolen funds can show their splendor as they wish
Why has such fraudesters been allowed to get away and one wonder how many others in high posts took the advanage of it.
The list of guest should tell us who was there and what his rank was in the Govt.
It is unfortunate that such loot can be wasted instead of invested into some educational or research and industry to provide education.
Indian Govt is impotent as greed rules and one can buy majority of these officers with right amoiunt of money
Greed Rules India and not Laws
Ravi Sharma
7 years ago
Pramod Mittal is a crook who uses his connections with underworld and politicians to stymie the investigation and hood wink its employees. About 400 employees of Global steel are still to get their dues for working under tough conditions in Libya, Nigeria etc while these promoters are having a ball
R Nandy
9 years ago
Some questions: Is Ispat a corporation or a privately held company of the Mittals? If Ispat is a Corporation do the promoters have unlimited liability for the company? Isn't a promoter of a corporation just a shareholder with liabilities limited to his investments in the corporation?

I think we are mixing up issues here,whether it is Mallya or Mittal.How they use their private wealth is their own business.The question is did they mismanage the companies if yes? can they be prosecuted under company law?
Veeresh Malik
9 years ago
Here's a copy of one of the RTI Application filed by me which people are welcome to check and read on status as it proceeds.

dtd 23dec'13

To the Department of Financial Services.

Please provide me with the following information:-

1) Full details of outstandings from ISPAT PROFILES LTD to State bank of Bikaner and Jaipur including names & designations of the board members and bank officials responsible for these outstandings.

2) Full details of outstandings from ISPAT PROFILES LTD to Dena Bank including names & designations of the board members and bank officials responsible for these outstandings.

3) Full details of outstandings from ISPAT PROFILES LTD to Indian Bank including names & designations of the board members and bank officials responsible for these outstandings.

Thank you.
Gopalakrishnan T V
Replied to Veeresh Malik comment 9 years ago
Banks have umpteen ways to camouflage bad loans and write off of loans. Pramod Mittal is one case that came to light because of his display of wealth for his daughter's marriage.There are several other cases where the Companies are defaulters and sick but the men behind them are strong and financially very sound and healthy. As this sort of loot was going on unchecked, I had with an intention to have a lasting solution to this ever increasing menace did a research and got my Ph D awarded from Madras University. The solution suggested was found simple practical,easily implementable without any scope for bias, favour and corruption. It was an inbuilt mechanism to discipline borrowers and lenders as well.The solution was appreciated by the top barons of banking and ended with that. Had they shown some inclination to prevent this NPA formation, the solution could have been implemented in the year 2003 and by now, this festering problem would have been contained to a great extent for the benefit of the economy, banks borrowers and other stakeholders of the economy who include the Government first and many others.Now RBI has come out with a discussion paper to beat about the bush and without any scope for minimising the menace.The means proposed would not justify the ends as the procedures involved are cumbersome,expensive and not result oriented. The authorities do not want any solution as they have their own axe to grind if the system in vogue is in chaos.
Happy to note that the subject has attracted attention and through money life lot of discussion takes place.
Dayananda Kamath k
Replied to Gopalakrishnan T V comment 9 years ago
does bankers dont know these methods. it is being deliberately flauted so that the pockets of the concerned can be lined up. there was a case where the textile company was being given almost 100% of its limits as concealed tod by the branch because of systemic failure. they were enjoying and running the business mainly on this free fund. they provided safari suit to all executives of the bank and bank employees were given a 20% discount at their showroms.when it was detected and reported in internal audit report bank was forced to stop this practice and within 2 year bank has to writeoff the loan.
pushkar kulkarni
9 years ago
seems like Pramod Mittal is in wrong profession.
he should be in politics, in the august company of Kalmadi / lalu's and of course Vijay Mallya.

Living life kingsize or jumbo size., at Indian tax payer's expense.

the Indian government would of course sleep on it , as usual.

Normal Indian person who does not pay tax or does not transfer ST/ ED is penalised while the likes of PM/ VM are getting scotfree.
Veeresh Malik
9 years ago
More information on understanding the Pramod Mittal group of companies, especially Global Steel Holdings Ltd. and Ispat. "Red Marks this bunch" . . . but that's on our taxpayer funding!
Veeresh Malik
9 years ago
And here is more information on Pramod Mittal's activities in context with what he really uis and does.

Ofcourse, there are volumes online!!
shadi katyal
9 years ago
One wonders that how big brother Mittal who is well known as Steel Czar feels about this loot by his brother's copy. Does he appreciate that he has looted India's banks or India??
Has Indian Govt taken any action after reading this lavish wedding with Bank's loot.
What is so great if one has stolen money from others. How can any honest person even attend such event???
Replied to shadi katyal comment 9 years ago
Do you think that Indian Govt will ?
c r paranjape
9 years ago
When all his businesses in India have been incurring huge losses year after year and have accumulated huge NPA loans to the Indian banks how come these London based businessman have so much wealth? The truth is his wealth is generated by siphoning the funds from the companies to the tax heavens like Man of Isle.
Mahesh S Bhatt
9 years ago
Crass show of wealth,degrading Values of our times.Sad & Bad.

That's the price we pay for revering rich & disrespecting/not honouring honest/prudent people.

This shall grow till some poor shall bring revolution.
Gopalakrishnan T V
9 years ago
Looting banks through big loans has been going on for decades and the loss on account of bad loans has been borne by the tax payers and the banks stakeholders who include depositors, employees and shareholders. To prevent this loot and to improve the banks credit management system, their balance sheets and also to discipline the borrowers, i did a research and brought out a very practical and easy solution to contain the formation of NPAS. The statistical model suggested was experimented on some banks advances portfolio and it proved to be very practical and useful to improve the conduct of credit portfolio of banks and discipline the borrowers without giving scope for any corrupt practices. The solution was appreciated for its merits but as is always the case in our system discipline is either not wanted or not encouraged because of ulterior motives.As long as the burden on account of bad loans can be easily passed on to innocent stakeholders who do not have any voice to protest no solution would be attempted even in our corrupt system. If the bad loans written off by banks particularly public Sector banks since nationalisation of banks in the early 1970s had been avoided, the economy would have been in far superior position than what is today. The loots are going on with the blessings of authorities is a well known secret. The loss on account of bad loans to the economy is something mind boggling and recurring by nature without any incremental benefits .
Veeresh Malik
9 years ago
Here's a relevant article on the same subject from another newspaper, HT, by Samar Halarnkar
S K Agarwal
9 years ago
Banks can kill their employees even for a slight lapse. The top executives of Banks go scot free despite committing any big mistakes knowingly and in connivance with corporates
Dayananda Kamath k
Replied to S K Agarwal comment 9 years ago
because they are protected by their appointees the rbi, primeministers office, and cvc. other wise their decision to appoint them is proved wrong.
9 years ago
Mittal, Mallayya with F! and all those Bank defaluters and the Finance Ministry sleeps.It goes to high court for equal treatment for deaf and dumb disabled as according the Babus they do not deserve that much sympathy like other disabilities. This same argument applied to Mentally ill who do not thank even thank the donors but none care when they eat their own shit in front of temples.
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