CBI GETS SANCTION TO PROSECUTE 6 OFFICERS AGAINST CHANDIGARH’S KUDOS CHEMIE AFTER LOAN DEFAULT
Five years after the registration of an FIR in an alleged Rs 1,300-crore scam involving Punjab National Bank’s (PNB) corporate branch here, the Central Bureau of Investigation (CBI) has received prosecution sanctions against six bank officers. The CBI has submitted the sanction orders in the CBI court here.
The CBI has already filed a chargesheet in the case against directors of company M/s Kudo Chemie Ltd Jitender Singh, Gurmeet Kaur and nine senior bank officials for offences punishable under Sections 420, 467, 468 and 471 read with Section 120B of the Indian Penal Code and under the Prevention of Corruption Act.
While the competent authority has given prosecution sanction against six officers, it has denied the same against three others.
The CBI had registered the FIR on a complaint filed by the Chief Manager, PNB, Sector 17-B, against the company and its directors in 2017 regarding the alleged fraud.
In the chargesheet, it alleged the company through its directors submitted various alleged fake bills for discounting. On some occasions, the firm generated an entire set of documents for exporting goods but canceled the same in order to raise capital from the bank in crores. The company secured various loans from the PNB and other consortium banks.
The company’s accounts were classified as a non-performing asset on March 31, 2016. The accused bank officials by allegedly abused officials positions to help the firm and its directors.
The chargesheet stated during investigation it was revealed 288 exports bills amounting Rs 373 crore of total 330 bills submitted by the firm had been established as forged and the company in criminal conspiracy with officials got discounted the forged bills, causing wrongful loss to the bank to the tune of Rs 1,301.67 crore. The chargesheet has been filed by the investigating officer, CBI’s Bank Frauds and Securities Branch, New Delhi.
Meanwhile, the accused have filed anticipatory bail applications in the CBI Court. The court has adjourned the hearing in the case till February 28. —…….. TNS
Rs 1,300-cr fake bill scam
- CBI had lodged FIR on a plaint filed by Chief Manager, PNB branch, Sec 17-B, against M/s Kudo Chemie Ltd and directors in 2017 regarding alleged fraud
- Firm is accused of securing various loans from PNB and other consortium banks through fake documents, in cahoots with nine bank officials
- Of 330 export bills submitted by firm, as many as 288 amounting to Rs 373 cr were established as forged, causing loss to the bank of Rs 1,301.67 cr
CASE DETAILS:
Government-owned Punjab National Bank has (PNB) filed a complaint with the Central Bureau of Investigation (CBI) against Chandigarh-based Kudos Chemie which has defaulted to a loan of Rs 1300 crore. The action against the company follows action by investigating agencies against IDBI Bank, UB group officials in January this year for a Rs 900-crore loan default by Kingfisher Airlines.
PNB officials said it has informed the Reserve Bank of India and its board of directors about the fraud. The bank said in 2016, Directorate of Revenue Intelligence had initiated action against the company for violation of the Customs Act and the account became a non-performing asset in March last year. In between, the bank tried to sell the loan to an Asset Reconstruction Company (ARC) but it failed to file a buyer. According to an ICRA rating report in July 2014, the company was placed in the default category after the company failed to repay banks.
In a statement on Sunday, the Central Bureau of Investigation said it has registered a case on a complaint from Punjab National Bank related to an alleged fraud. “It was further alleged that the said accused in criminal conspiracy with each other availed credit facilities i.e term loans, working capital limits etc from Punjab National Bank, Chandigarh. It was also alleged that the said firm got discounted forged and fabricated export bills and fraudulently siphoned off the disbursed bank funds. These discounted export bills remained unpaid and thus caused wrongful loss to the bank,” the CBI said. Searches were conducted today at three places including residence and official premises of accused at Chandigarh and Mohali which led to recovery of incriminating documents and electronic evidences, it said.
According to ICRA, in financial year 2014, Kudos Chemie incurred inventory loss on part- write-down of inventory of a new product as it would not meet the desired quality specifications and required further processing. For this, the company planned to set up additional facilities. “Inventory loss and sharp increase in the interest cost during the year adversely impacted the profitability and aggravated the liquidity position, which had historically remained stretched, resulting in delays in the debt servicing,” the rating firm said while raising the red flags. When and how the loans were disbursed and sanctioned is also under investigation.
According to the company’s filings, Jitendra singh, managing director, was holding close to 47 per cent in the company while director Mrs Gurmeet Sodhi and her family members held around 43 per cent, while associate company Kudos Agrohols held the rest. 54-year old Singh, a IIT graduate had floated Kudos in 1988 after working with Hollmuller AG.
Kudos Chemie has not filed its financial statements for the past three years. In Fy 13, the last declared financial results, Kudos made a profit of Rs 80.76 crore on sales of Rs 1,023 crore, up from a PAT of Rs 58.87 crore on a top line of Rs 778 crore the previous year. The company had reported interest and other financial expenses of Rs 166.78 crore in FY 13 up over 50 per cent from Rs 109.95 crore in FY 12. As per the ICRA report, in FY 2013-14, Kudos Chemie reported an operating income of Rs 1,088.06 crore and net loss of Rs. 58.51 crore.
The company had said it had plans to launch new products and wanted to set up a Singapore unit to address packing issues. “Looking ahead to 2013-14, the company plans to launch a few more new products like 5-Fluoro Cytosine and CAMP which are further intermediates for manufacture of major drugs used to treat HIV-1 infection and AIDS infected people. Also, in its endeavor to resolve the problem of finding good quality containers to meet requirements for our customers Coke and Pepsi, the company intends to establish a warehouse under its newly formed subsidiary named Kudos Chemie Pte Ltd in Singapore. Since Singapore is well connected with the rest of the World, the facility is expected to reduce the lead time to one month and also reduce our post shipment,” Kudos said in its directors report for 2013.
According to company filings, a CDR package was approved by the joint lenders forum led by PNB comprising State Bank of Patiala, Central Bank of India, OBC, UCO, IDBI and Corporation Bank in December 2014. Accordingly, the interest rates on term loans were cut to 10.5 per cent for a period till 2019 from the range of 13-15.5 per cent earlier.
Accordingly, while the banks made a sacrifice of about Rs 251 crore, the promoter was asked to bring in additional equity of Rs 63 crore (25 per cent of lender’s sacrifice). Following the restructuring, the term loans stood at Rs 393 crore, while the irregular portions of working capital limits and letter of credits were bundled into working capital term loans totaling about Rs 722 crore repayable in 32 quarterly installments with a two year moratorium.
Further overdue bills and future interest were bundled into working capital term loans of Rs 336.14 crore and Rs 300.97 crore, respectively, as per its filings.
Fresh fund-based working capital limits of Rs 507 crore and non-fund based limits of Rs 340 crore were also sanctioned by the JLF. The package was cleared in November 2014 and intimated to the company in December that year.
However, this plan seems to have failed too. An email sent to the company’s official id in February this year asking for details about the default and proceedings did not elicit any response. ……BS
