Dairy maker Kwality charged by CBI with Rs 1,400 crore bank loan fraud

The CBI has booked dairy major Kwality Ltd and its directors for allegedly cheating a consortium of 10 banks led by the Bank of India of over Rs 1400 crore through bloating of financial statements and diversion of loan funds officials said MondayNearly 11 days after registering an FIR in the case the CBI conducted searches on Monday at eight locations in multiple cities including Delhi Saharanpur Bulandshahr Uttar Pradesh Ajmer Rajasthan Palwal Haryana on the premises of the company and its directorsThe CBI has registered the case against Kwality Ltd which started as an icecream manufacturing company and diversified into milkbased products and its directors Sanjay Dhingra Siddhant Gupta Arun Srivastava besides other unidentified persons the officials saidThe agency has acted on a complaint by the Bank of IndiaIt was alleged in the complaint that the said accused had cheated the Bank of Indialed consortium comprising BOI lead bank Canara Bank Bank of Baroda Andhra Bank Corporation Bank IDBI Central Bank of India Dhanlaxmi Bank Syndicate Bank to the tune of Rs140062 core approx CBI spokesperson RK Gaur saidThey allegedly cheated the banks by way of diversion of bank funds sham transactions with related parties fabricated documentsreceipts falsified books of accounts and created false assets and liabilities etc Gaur saidIn its complaint the Bank of India the lead member of 10bank consortium has alleged that the company manipulated its financial statements by bloating its business operations through overstatement of the sales purchases debtors creditors and inventories to keep the fund flow from bank goingThe bank conducted a forensic audit of the company after it failed to repay loans Out of the total sale of Rs1314725 crore made by the company only Rs701723 crore was routed through the consortium accounts the BOI has alleged It said a considerable amount of trading sales and purchases were made without actual receipts of the same in factory premises and physical deliveries therefromSupplies have been effected directly by the suppliers of the Company to the customers of the Company These items being exempt from taxes they are also not covered under VAT and GST regimeThese suppliers and customers appear unorganised in nature and appear to have a weak financial base to support such large volumes of business the bank has alleged in its complaint which is now a part of the FIR The bank has alleged that a considerable amount of sales and purchases was settled without actual payments being received or made by the companiesBalance Confirmations in respect of receivables show huge deviations Against total outstanding of Rs 180757 crore parties have confirmed receivables of Rs 97282 crore Accordingly it indicates inflation of receivables by Rs 83475 crore it allegedThe bank has alleged that the accused directors acted dishonestly with the aid consent and active connivance of each other carried out the misappropriation and dishonest conversion of funds for their personal gainsThe accused persons have given the shape and effect to the forgeries and fabrication as a result of which window dressing and cheating of Bank has been carried out it allegedBy their acts of misappropriation cheating and frauds the money entrusted to the accused persons for the permitted business purpose have been utilized for their own benefit causing wrongful loss to the Bank of India Consortium it allegedKeep scrolling to read more newsCatch up on all the latest Crime National International and Hatke news here Also download the new mid day Android and iOS apps to get latest updates MidDay is now on Telegram Click here to join our channel middayinfomedialtd and stay updated with the latest newsThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever