CBI books Omkar Speciality Chemicals, directors for alleged ₹145.51-crore loan fraud

According to the First Information Report, the company diverted the funds meant for short-term use to use them for long-term purposes.

The Central Bureau of Investigation (CBI) has booked Omkar Speciality Chemicals Limited and its eight directors for allegedly causing a loss of ₹145.51 crore to the Bank of Baroda.

The company, based in Maharashtra’s Thane, is into production of varied range of organic, inorganic and organo-inorganic intermediaries. It had taken loans to the tune of ₹170.69 crore from the bank in the form of cash credit, Inland Letter of Credit and Foreign Letter of Credit.

According to the First Information Report, the company diverted the funds meant for short-term use to use them for long-term purposes; and of the ₹50 crore taken as corporate loan, ₹14.54 crore was used for unstated purposes.

Stock statement

The bank alleged that the company’s audited balance sheet in 2016, 2017 and 2018 showed significant difference in the stock statement. The value of current assets as shown in the monthly stock statements was lower than the amount shown in the audited balance and the value of sundry creditors was also understated.

As it turned out, the company had an outstanding debt of ₹35.49 crore from 105 customers as on March 31, 2018, and its 36 debtors appeared to be suspicious as their whereabouts could not be established.

In order to get higher drawing power, the accused persons made fictitious entries and also transferred certain amounts from the vendors’ accounts to the loan accounts to reduce creditors’ balance. The same amounts were later reversed. It is also alleged that the company maintained current accounts with other banks and routed the funds.

Since 2015, the company had been enjoying discounting facility from the Axis Bank without obtaining a no-objection certificate from the Bank of Baroda.

The letters of credit issued for the purpose of procuring raw material was opened for getting traded goods. It did not comply with the condition of maintaining escrow account with the Bank of Baroda.

It wrote off ₹63.21 crore as impairment loss in capital work in progress (costs incurred to date on fixed under-construction assets) during 2016-17.

As the company had not been repaying the dues, the loan accounts were declared non-performing assets in 2018 and reported as fraud to the Reserve Bank of India in September 2019.

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