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Last Updated : Mar 19, 2019 08:44 PM IST | Source: Moneycontrol.com

Whistleblower's letter alleges evergreening of loans by SREI; company refutes charges

The letter, dated December 19, 2018, was sent to Additional Commissioner, CGST, with copies to Reserve Bank of India and Serious Fraud Investigation Office.

Tarun Sharma @talktotarun
Representative image
Representative image

Kolkata-based SREI Equipment Finance Limited has come under the scanner of various agencies after a whistleblower's letter alleged that the financing firm had restructured loans to prevent them from becoming non-performing assets (NPAs).

The letter, dated December 19, 2018, was sent to Additional Commissioner, CGST, with copies to Reserve Bank of India and Serious Fraud Investigation Office.

"Company regularly restructured bad loans to escape NPA/launder money through the hawala route. RBI guidelines are systematically bypassed…" said the letter.

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Moneycontrol has seen the letter.

The GST department, sources told Moneycontrol had separately called SREI's Chief Executive Officer DK Vyas for questioning, following raids in the company’s Mumbai office for alleged GST violation.

A senior officer in GST department added that the agency is examining loans that SREI had given to infrastructure and real estate companies. “The loans were given on the basis of sale deeds between inter-company transfers. As of now, we have not received any invoice generation receipt”.

Responding to queries sent by Moneycontrol, SREI said: "It has come to our notice that an individual pretending to be a whistleblower is spreading rumours and misinformation about Srei Group anonymously. The claims made in the unsigned letter, which is being circulated anonymously, are false and baseless. We believe that this is being done to malign SREI Group's impeccable reputation and is a feeble attempt to blackmail and extort money."

The company added that it is making complaints to authorities "for criminal conspiracy and attempted extortion".

Adding that the company has a "well laid out framework" in accordance with RBI guidelines for sanctioning and disbursing loans, SREI said: "We emphatically refute all the allegations… proposals are thereafter approved/rejected by empowered committees and not by any individual; the company is regularly audited by several regulatory agencies and reputed auditors."

Nirmal Lifestyle loan

Moneycontrol has seen one intra-company sales deed of Rs 22.5 crore between Mumbai-based real estate firm Nirmal Lifestyle and its unit Nirmal Lifestyle Kalyan Private Limited, where  - as the whistleblower letter had alleged – the loan seemed to have been ‘restructured.’

According to the sales deed papers, Nirmal Lifestyle got a loan of Rs 22.5 crore from SREI Equipment to buy construction equipment from its unit on March 16, 2018.  But within 12 days of getting the loan, Nirmal Lifestyle repaid loans worth Rs 22.5 crore, which many of its units, including Nirmal Lifestyle Kalyan, owed SREI Equipment. This despite the authorization letter mentioning that the money sanctioned can’t be used in re-payment of loan.

Both, SREI and Nirmal Lifestyle Limited, have refuted the charges.

“We have taken this loan from SREI against various assets/properties/Land owned by Nirmal Group and the said loan of Rs. 22.5 Cr has been availed by Nirmal Lifestyle against the assets owned by Nirmal Lifestyle only,” said Nirmal Lifestyle, in response to Moneycontrol’s query.

“The value of the securities provided under the loan agreements are more than the required assets cover. We have various existing loans with Srei and repayment is done regularly as a part of our contractual obligation,” it added.

SREI Equipment claimed that it had extended the loan to Nirmal Lifestyle against its existing assets.

"We would like to deny that Rs 22.50 cr was financed by us to Nirmal Lifestyle to buy construction equipment from its subsidiary Nirmal Lifestyle Kalyan. We have all the necessary documents corroborating these facts. Further the security charge created in our favour can be verified in CERSAI and with ROC."

It added:

"Therefore, your assumption that we have financed to Nirmal Lifestyle for buying of Construction equipment from its subsidiary Nirmal Lifestyle Kalyan is factually incorrect.

“We would also like to emphasise that providing financing solution to our customers with judicious security cover of various security mix and also timely collection of dues thereafter, is our normal course of business and in Nirmal Group of Companies too, there is nothing out of the normal which is worth highlighting”.

The whistleblower letter concludes by asking the Director of SFIO to conduct a forensic audit, "so that we do not become the next IL&FS."

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First Published on Mar 19, 2019 06:10 pm
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