The Central Bureau of Investigation on Monday filed a fraud case against Delhi-based dairy products company Kwality Limited for allegedly cheating a Bank of India-led consortium of Rs 1,400 crore, PTI reported. The investigative agency also conducted searches at eight locations, including Delhi, Haryana and Uttar Pradesh.
A case has been filed against the company’s directors Sanjay Dhingra, Siddhant Gupta, Arun Srivastava and other unidentified persons. “It was alleged in the complaint that the said accused had cheated the Bank of India-led consortium comprising BOI [lead bank], Canara Bank, Bank of Baroda, Andhra Bank, Corporation Bank, Industrial Development Bank of India, Central Bank of India, Dhanlaxmi Bank, Syndicate Bank to the tune of Rs 1400.62 crore approximately,” CBI spokesperson RK Gaur said.
The central agency 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.
Bank of India has alleged that Kwality Limited had taken credit since 2010, but started defaulting on payments in early 2018, according to NDTV. Their account was classified as a non-performing asset in August 2018. “The forensic audit of the accounts showed that out of the total sale of Rs 13,147.25 crore made by the company, only Rs 7,107.23 crore were routed through the consortium of banks,” its complaint said. “Kwality overstated its financial statements by bloating its business operations and indulged in manipulation of accounts by making reverse entries.”
Kwality is one of India’s oldest and most popular ice-cream makers. The company, which owes around around Rs 1,900 crore to creditors, has been facing insolvency proceedings since December 2018. Global private equity player KKR had filed an insolvency plea before the National Company Law Tribunal in October 2018. Kwality had raised Rs 520 crore from KKR India Financial Services in 2016 via a structured finance transaction.