ED Raids 6 Sites In Hyderabad Over Rs 621 Crore Scam Linked To Highway Project

The Enforcement Directorate (ED) on Tuesday conducted searches across six locations in Hyderabad in connection with a Rs 621-crore bank-fraud case against the promoters and directors of a company and its associate firms.

The investigation was based on an FIR registered by the Central Bureau of Investigation (CBI) against SEW LSY Highways Limited and others for allegedly siphoning off loan funds, cheating, and criminal misconduct, resulting in the loss of public money, the probe agency said in a statement. 

The raids targeted SEW Infrastructure Limited (SIL), Prasad & Company (Project Works) Private Limited (PSPWPL), their group firms, and directors, the ED said. 

SEW LSY Highways Limited was incorporated as a special purpose vehicle (SPV) for the execution of a highway project assigned by the Uttar Pradesh State Highway Authority to a consortium of SIL and PSPWPL.

The project was backed by a Rs 1,700-crore term loan from a consortium of 14 banks led by Punjab National Bank, of which Rs 603.68 crore was disbursed.

The ED's probe revealed a complex scheme of intra-group sub-contracting where work was passed on at successively lower values, primarily through SEW Transport Networks Ltd (STNL) and then to PSPWPL. It alleged that part of the loan funds was diverted to PSPWPL, which then infused these funds back as the promoters' contribution, violating loan conditions.

 "However, the project was not completed and the term loan became a non-performing asset, resulting in an outstanding amount of Rs 621.78 crore to the banks," the ED said.

Additionally, 33 bank accounts belonging to SEW Infrastructure Limited, as well as their directors and relatives were frozen during the search operations. 

SEW Infrastructure Ltd. was founded in 1983 by Vallurupalli Nageswara Rao and is based in Hyderabad.