SREI Equipment Finance says auditor found fraudulent transactions worth Rs 3,000 crore during FY20-21

Bankrupt SREI Equipment Finance Corp on June 13 informed the stock exchanges that an externally appointed auditor, BDO India LLP, has found fraudulent transactions amounting to Rs 3,025.73 crore on the NBFC’s book between FY20 and FY21.

“The Administrator of the Company received an initial report from the professional agency appointed as the transaction auditor, indicating that there are certain transactions which are fraudulent in nature, as per Section 66 of the Code,” the notice said

As per the transaction auditor report shared with the Administrator, fraudulent loan transactions amounting to Rs 2,512 crore were undertaken by the company while notional loss stood at Rs 513.67 crore.

The loss was on account of the NBFC fraudulently charging a lower rate of interest to certain entities, the notice said.

“The Application has been filed against 14 respondents, including Power Trust, M/s Kanoria Foundation and its trustees, India Power Corporation Limited, India Power Corporation (Bodhgaya) Limited, Tuticorin Electricity Supply Private Limited, Bhaskar Silicon Private Limited, Green Utility Private Limited, Environ Energy Corp. India Private Limited, Meenakshi Energy Limited, Devi Trading and Holding Private Limited and certain other entities as reported by the transaction auditor,” SREI Equipment Finance said.

The troubled NBFC has filed an application before the Kolkata Bench of National Company Law Tribunal regarding the fraud, it added.

The Reserve Bank of India had on October 4 superseded the Board of Directors of Srei Infra and Srei Equipment Finance Limited, owing to governance concerns and defaults by SREI Group Companies.

In March, 14 suitors submitted EOIs under the insolvency and bankruptcy code to buy SREI Group firms, CNBC TV-18 reported. Among those who submitted EOIs were asset construction companies such as JM Financial ARC, Asset Reconstruction Company of India Limited (ARCIL), and Prudent ARC.

Further, the deadline for submitting bids for SREI Infrastructure Finance Limited and SREI Equipment Finance Limited has been extended to June 30, the channel reported on June 7.

Of the Rs 34,223.14 crore of claims submitted by financial creditors to SREI Equipment Finance as on November 15, a total of Rs 31,867.75 crore has been admitted for resolution while Rs 1,605.98 crore of claims have been rejected.

Major lenders to the group include UCO Bank, Axis Bank, State Bank of India and Union Bank of India.