Kwality Limited, one of the country's most popular dairy product makers, has been charged with cheating a group of banks of Rs 1,400 crore in a case of fraud filed by the CBI. The investigating agency filed the case after searches at eight locations including Delhi on Monday.
Those named by the CBI include Kwality's directors Sanjay Dhingra, Siddhant Gupta and Arun Srivastava. They have been charged with cheating, forgery, criminal conspiracy and corruption by a consortium of 10 banks led by Bank of India, constituted in 2012.
The CBI started its investigations on a complaint by Bank of India, which alleged that Kwality Ltd had taken credit from the bank since 2010 but started defaulting on payments in early 2018. The account was classified as a non-performing asset in August 2018, it said.
"The forensic audit of the accounts showed that out of the total sale of Rs 13,147.25 crore made by the company, only 7,107.23 crore were routed through the consortium of banks. (Kwality) overstated its financial statements by bloating its business operations and indulged in manipulation of accounts by making reverse entries," the bank said in its complaint.
The CBI said Kwality is accused of cheating the banks by "diversion of bank funds, sham transactions with related parties, fabricated documents or receipts and falsified books of accounts" and creating false assets and liabilities.
"It was alleged in the complaint that the said accused had cheated the Bank of India-led consortium comprising Bank of India, Canara Bank, Bank of Baroda, Andhra Bank, Corporation Bank, IDBI, Central Bank of India, Dhanalaxmi Bank, Syndicate Bank to the tune of Rs.1400.62 core," CBI spokesperson RK Gaur said, according to Press Trust of India.
Besides Delhi, the CBI also carried out searches in Saharanpur and Bulandshahr in Uttar Pradesh, Ajmer in Rajasthan and Palwal in Haryana.
Kwality Ltd has been facing insolvency proceedings since December 2018. It owes around Rs 1,900 crore to creditors. The company was dragged to bankruptcy court by global equity giant KKR. In 2016, Kwality had raised Rs 520 crore from KKR India Financial Services through a structured finance transaction.