Jindal Poly Films Scam

 In 2022, Jindal Poly Films decided to transfer ₹690 Cr of "worthless" investments directly to its Promoters.

https://x.com/RahulRao_1992/status/1996939132179042719

The price? Pennies. Then, Ankit J (shareholder) & ors (others) sued the company for "fraudulent scheme" to divert ~₹760 Cr (& more) from public shareholders to promoters. Write-offs, cheap buybacks, and "consultancy" fees. Here's a quick primer on Jindal Poly's "siphoning" methods & how you can spot & Avoid it in your PF companies

The Setup: The Power Play Jindal Poly (Listed) invested heavily in a JV called Jindal India Powertech Ltd (incorporated in 2007). Jindal Poly invested approximately ₹305.40 Cr in equity shares. Further, between FY14-17, they poured in ~₹690 Cr via Preference Shares to fund a thermal power project. But here is where it gets murky. Instead of reaping returns, Jindal Poly wrote off the entire ₹690 Cr investment between FY17-19, claiming it was worthless. The Hook: Was it really worthless? Or was the value hidden?

The "Buy High, Sell Low" Trick After writing off the investment, Jindal Poly suddenly sold these "worthless" shares in March 2022 to Promoter entities (SSJ Trust & Jindal Finance). The Sale Price? ₹1.49 per share. The Catch? Just 7 months earlier (Aug 2021), Jindal Poly had acquired similar shares at ₹10.02 per share. The Math: • Acquired at: ₹10.02 • Sold to Promoters at: ₹1.49 SEBI says this valuation gap transferred huge value to promoters at your expense..

The Control Heist Jindal Finance (another listed group co) held 51% of the Power business. In 2023, the Power biz did a Rights Issue. Jindal Finance waived its right to participate. Who stepped in? CAAPL (a Promoter entity). The Result: Promoters grabbed control of the Power business for just ₹106 Cr. Why does this matter? Because the Power business had just turned profitable after a debt settlement!

The "Consultancy" Cash Cow It gets worse. Jindal Poly paid ₹366 Cr in "Management Consultancy Fees" to two related firms: Soyuz & Packflex. SEBI found: • These firms had no other clients. • No evidence of actual work delivered (no reports/docs). • Fees were simply a way to siphon cash from the listed co. Money for nothing?

The "Socialized Loss" SEBI calculated the total damage to minority shareholders: Loss on Pref Shares Write-off/Sale: ₹760.12 Cr Loss via "Consultancy" diversion: ₹366.12 Cr Total Wealth Erosion > ₹1,100 Cr+ While shareholders took the hit, promoters allegedly took the assets + cash.

Summary: • Listed Co invests in Power → Writes it off. • Promoters buy the "worthless" asset cheap. • Power asset turns profitable. • Promoters take control. • Consultants get paid for doing nothing. SEBI calls it a "scheme to defraud". If you found this forensic breakdown useful: Retweet the first tweet Follow me for more analysis of Indian stocks. (Disclaimer: For educational purposes only. Not investment advice.) Source: SEBI Intervention Application 2025.