Ketan Shroff

KETAN Shroff, managing director of Penta Gold Ltd, was arrested by Directorate of Revenue Intelligence (DRI) for evading customs duty to the tune of Rs. 27.5 crores. On Thursday Ketan Shroff was produced before Metropolitan Magistrate court where he was remanded to judicial custody till March 11, 2020.

According to DRI sources, Ketan Shroff, through his company Penta Gold Ltd, misused the Advanced Authorization Scheme (AAC), provided under the Foreign Trade Policy of India (FTPI). Under the said scheme, bullion dealer can import gold without paying duty on the same, if the same gold is turned into a product which is to be exported. An undertaking that the said gold will only be used as a raw material for exports is a pre-requisite for using this Advance Authorization Scheme for acquiring the said gold. But Ketan Shroff was misusing the said Foreign Trade Policy.

During the search of Penta Gold’s Office premises, DRI officials discovered gross irregularities pertaining to the Advance Authorization Scheme. Ketan Shroff has allegedly, through his company Penta Gold Ltd, illegally diverted imported Gold by selling the same in Domestic Market, which is against the law. The alleged diversion is to the tune of 560 Kgs of Imported gold having a value of Rs. 174 crores. The sources stated that Ketan Shroff has stated that he has already diverted the imported, duty – free Gold Bars to the Domestic Market.

Out of the said 560 Kgs, on searching the company’s office premises at Zaveri Bazaar and Factory at Sewri, only 7.6 Kgs of Gold was found at the office and no gold was found at the factory.

The DRI officials were conducting a search on Penta Gold’s Office since Wednesday and Ketan Shroff was finally taken to DRI office at early hours on Thursday.

It is interesting to note that Ketan Shroff also claims to be a Spokesperson for India Bullion and Jewellery Association, also called as IBJA, which is the oldest Bullion Association in the country.

Incidentally, Penta Gold is listed on National Stock Exchange (NSE)’s SME platform and as per the exchange data, it’s share price has moved from a low of Rs. 23.70 on January 29, 2020 to Rs 39.10 as of close of trading session on February 27, 2020, which signifies an upward movement of 65% in less than a month. However the number of shares traded are very low, due to which such a sudden jump in share price is surprising and highly unusual. However how the small investors of the company take the news of this arrest of this Company’s Managing Director remains to be seen. As per exchange disclosures, Ketan Shroff’s wife, Dipti Shroff was also listed as Non – Executive Director of the company, and had tendered her resignation on October 11, 2019. Further, the Company Secretary Dipika Singh and The Chief Financial Officer (CFO) of the Company, Rohit Sharma have also tendered their resignations to the company over past six months. Whether the resignations were routine in nature or otherwise is not known. Calls made to company’s registered number on their website for quotes went unanswered.

Apart from Ketan Shroff, Dilip Patodia Rajkumar, Anand Bhagwanji Chaturvedi and Ashid Hammeed Sayyed are also listed as Directors of the Company. Once again, attempts to reach them for their quote on Company’s registered number went unanswered.

As per disclosures made to the Exchange, Ketan Shroff himself owns 71.60% of Shares in his company Penta Gold Ltd, showing that he is a significant beneficiary due to the unusual price hike of the company’s stock. Ketan Shroff is also listed as Director in Pentax Properties Pvt. Ltd, Pentax Infraprojects Pvt. Ltd and Penta Infratech Pvt. Ltd. The registered address as per MCA is same for all the three companies and the registered E-mail address for all the companies is [email protected] which suggests that the above companies are also linked to Penta Gold Ltd. The Financials and books of these accounts should also be checked for alleged diversion and wrong doing. Incidentally, Dipti Shroff is also listed as a director in two of the above companies.

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[…] It may be recalled that DRI had earlier arrested Ketan Shroff of Penta Gold Ltd in February 2020, for his role in duty evasion of Rs. 27.50 Crores. Ketan Shroff has allegedly imported duty free gold and then diverted the said gold to domestic market, instead of exporting it, thereby causing a loss of customs duty to exchequer. ABI had published an article highlighting this on 28th Feb 2020 under the headline “DRI arrests Bullion Dealer Ketan Shroff for Import – Export Fraud, Duty Evasion of Rs 27.5 Crores.” […]