The Mumbai Police has arrested three directors
of city-based Parekh Aluminex Ltd (PAL), as part of an ongoing
investigation into the non-payment of dues estimated at Rs 4,000 crore, several
media reports said.
Following a complaint by Axis
Bank against PAL for defrauding it of Rs 250 crore, the Economic
Offences Wing (EOW) of the Mumbai police arrested Bhawarlal Bhandari, Premal
Goragandhi and Kamlesh Kanungo on Friday on charges of cheating, forgery,
breach of trust and criminal conspiracy, The
Times of India reported.
As many as 20 private lenders including the State Bank of India (SBI),
Indian Overseas Bank (IOB), are also seeking the recovery of their dues.
According
to Sify, Axis Bank's internal
investigation found that directors of PAL cheated and manipulated the
system to obtain loans and fraudulent letters of undertaking
(LoU). The arrested directors have reportedly been raising fake invoices
and issuing manipulated bills through bogus companies.
Between 2011 and 2013, the accused availed a number of short loans and credit facilities from Axis Bank, totalling Rs 290 crore, according to Hindustan Times.
Between 2011 and 2013, the accused availed a number of short loans and credit facilities from Axis Bank, totalling Rs 290 crore, according to Hindustan Times.
“The
bank’s internal probe concluded that the loan amount given to the firm was
diverted to the company’s loan accounts maintained with other banks and was
used for purposes other than what it was taken for. To get the loans, the names
and documents of many firms were misused by the accused,” an investigation
officer told Hindustan Times on the condition of anonymity.
Recent
bank loan frauds
|
|
Persons,
entities involved
|
Rs
crore
|
Nirav
Modi- Mehul Choksi-PNB scam
|
12,700
|
Vijay
Mallya-Kingfisher bank loan fraud
|
9,000
|
Sterling
Biotech-Andhra Bank scam
|
5,000
|
Parekh
Alluminex - Axis Bank scam
|
4,000
|
Rotomac-Vikram
Kothari-BoB scam
|
3,695
|
RP
Info System-Shibaji Panja-Canara Bank-scam
|
515
|
Simbhaoli
Sugars-OBC scam
|
109
|
Total
|
35,019
|
PAL's
dubious record
In
August 2017, the Securities and Exchange Board of India (SEBI) had barred
PAL from the securities market and issued show-cause notices to its statutory
auditor and a former executive director for alleged accounting fraud, diversion
of funds and understatement of loans by over Rs 1,000 crore. The SEBI action
followed a SBI complaint, filed with the CBI, which alleged that PAL and its
directors had defrauded and cheated a consortium of banks.
The
complaint filed by SBI had alleged that PAL and its directors fraudulently
availed credit facilities from a consortium of banks including SBI, misused
such credit facilities with an intention to defraud and cheat the banks,
thereby causing losses to the tune of 122.07 crore and interest and other
charges to SBI, the SEBI order had said.
Parekh Aluminex debt stands at Rs 2,545 crore at
November 2015
According to documents reviewed by The Indian
Express, at least 22 banks and financial institutions have lent Rs 2,545 crore
through fund-based and non-fund based facilities. The banks include — Indian
Overseas Bank (Rs 292 cr), SBI (Rs 148 cr), Bank of Baroda (Rs 100 cr), Union
Bank (Rs 75 cr), Punjab National Bank (Rs 125 cr), Exim Bank of India (Rs 13
cr), Axis Bank (Rs 327.75 cr), Dena Bank (Rs 209.47 cr), Central Bank (Rs 159
cr), SBT (Rs 147 cr), Allahabad Bank (Rs 109 cr), Vijaya Bank (Rs 103 cr),
Kotak Mahindra Bank (Rs 111 cr), Dhanalaxmi Bank (Rs 110 cr), Canara Bank (Rs
81 cr), Corporation Bank (Rs 89 cr), South Indian Bank (Rs 78 cr), Uco Bank
Bank (Rs 71 cr), Federal Bank (Rs 66 cr), IDBI Bank (Rs 62 cr), ICICI Bank (Rs
24 cr), LIC (Rs 39 cr).
The Deloitte report on Parekh Aluminex found
irregularities in the firm’s inventories record, provision for doubtful debts,
insurance of plant and machinery, cash and bank balances and drawing power
calculations.
For instance, the audit report said loans of Rs 1,314.78 crore given by Parekh
Aluminex to seven private firms and a few related entities as on December 2012
were without any documentation defining the terms and conditions and security against
which the loans were disbursed. Out of this, at least Rs 869.25 crore was
extended to these firms as interest free loans. The seven private firms are JK
Shah Group, Kamlesh Kanungo Group, Kirti Kedia-Transcon Group, Orbit Group,
Shanti Dalal, Vishal Sharma Group, YA Mamaji Group. The audit report also raised concern about
the company’s Rs 27.46 crore interest free loans to three related parties — AAP
Entertainment Ltd, Arsenel Bulls Securities and AAP Realtor Ltd.
“Loans amounting to Rs 38.16 crore extended
to companies trading in bullion were adjusted against expenses not directly
attributable to company’s business,” said the Deloitte audit report. The report
also found that the actual inventory of the firm was 97 per cent less at Rs
26.57 crore in December 2012 from Rs 918.25 crore in November 2012. It added
that the company inflated its records to avail maximum drawing power from the
lenders.
In December 2015, SBI, submitted the Deloitte audit report on Parekh Aluminex
with the Securities and Exchange Board of India (Sebi). Sebi investigated the
firm and in August 2017, barred it from securities market and issued show-cause
notices to its statutory auditor and a former executive director for alleged
accounting fraud, diversion of funds and understatement of loans by over Rs
1,000 crore.
At least six banks — SBI, Dena Bank, State
Bank of Travancore, Corporation Bank, IDBI Bank and Indian Overseas bank — have
filed a complaint with the CBI between 2015 and 2017 alleging fraud by Parekh
Aluminex and its directors.
The banks alleged that the company “had
borrowed many times more than its possible annual turnover” and “diverted
around Rs 1,400 crore out of the total bank finance of Rs 2,000 crore. They
have also alleged that the firm “consistently” showed inflated sales, stock
holdings and trade debtors. “Book debts statement was given with the assumed
and artificial figures with intention to cheat the bank. Names of debtors were
not mentioned by the company which shows their fraudulent intention of non
verifiable source to the bank and have more drawing power/ funds with actual
sales,” said one of the complaints filed by the lead banker of the consortium
of lenders, Indian Overseas Bank, with the CBI in May 2017.
SBI complaint stated that the company had a
“drastic” reduction in assets in December 2012 and had diverted loan money to
entities that had business activities in sectors (iron and steel, real estate)
that were not the core business of Parekh Aluminex. Allahabad Bank has declared
Parekh Aluminex as a “wilful defaulter”, a tag the firm has challenged in the
High Court. ICICI Bank has filed a winding up petition against the firm in the
National Company Law Tribunal.
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