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The story of the Wadhawan brothers. How they built a solid business only to run it aground

The Wadhawan brothers sparkled with success till the tinsel deserted them 

Taloja is 50 km away from Mumbai and, often, the first association with the location is its jail. It has housed the likes of gangsters such as Abu Salem and Arun Gawli. One of its more recent occupants is Kapil Wadhawan, former promoter of DHFL, who has been there since this April. The CBI has charged Kapil and his brother Dheeraj with siphoning off money from the housing finance company, with the help of Rana Kapoor (Yes Bank’s co-promoter).

This is how their quid-pro-quo arrangement seems to have worked. The bank invested, CBI’s FIR alleged, Rs.37 billion in DHFL’s short-term debentures and Kapil paid a kickback of Rs.6 billion in the form of a loan given by DHFL to DOIT Urban Ventures, a Rana Kapoor group company. A similar favour seems to have been returned to Kapil’s family from Yes Bank: The bank had sanctioned a loan of Rs.7.5 billion to RKW Developers, DHFL’s group company and beneficially owned by Kapil and family. This loan was for DHFL’s Bandra reclamation project in Mumbai, but the investigating agency believes the entire amount was siphoned off by Kapil (and his brother Dheeraj) through their shell companies.

After the IL&FS crisis that shook the entire NBFC sector, the Yes Bank probe sounded the death knell for Kapil’s empire. Under pressure, he has had to sell much of what he owned just to stay afloat. Today, the core housing finance business that he created is on the block while he has landed in prison.

To Kapil, who is fighting hard to prove his innocence, this must seem like a nightmare. His grand story of creating a robust financial services conglomerate has diminished fast into a tragedy, with value erosion at all levels.

Outlook Business sent emails to DHFL and Kapil’s communications agency, and neither of them responded.


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