The Central Bureau of Investigation (CBI) on Thursday conducted raids at the premises of the promoters of Diamond Power Infrastructure Ltd (DPIL) after filing a case for defrauding banks of ₹2,654.40 crore.
In its FIR, dated March 26, the CBI has named Diamond Power Infrastructure Ltd (DPIL), Vadodara, its founder Suresh Narain Bhatnagar; Amit Bhatnagar, MD; Sumit Bhatnagar, Joint MD; and, unknown public servants of various banks.
The searches were conducted in Vadodara at the residences of the promoters, two factory premises and corporate office of DPIL, which has operations in electrical equipment and distribution cables.
The CBI charged the promoters for criminal conspiracy along with the unknown bank officers of various banks (who abused their official positions) for cheating the banks by misappropriating public funds through falsification of accounts, creation of false documents, forgery of records, knowingly using such records as genuine.
The FIR states that it was alleged that DPIL, through its management fraudulently got credit facilities from a consortium of 11 banks (public and private sector) since 2008, leaving behind an outstanding debit of ₹2,654.40 crore as on June 29, 2016. At the time of formation of consortium in 2008, Axis Bank was the lead bank for the term loan and Bank of India was the lead bank for CC Limits. FIR mentions that the company, with the active connivance of officials from various banks has managed to obtain enhancement in credit facilities.
The FIR says DPIL submitted false stock statements, extensively utilising cash credit limits for obtaining large number of Letters of Credit and many of which could not be honoured by the company. Since 2008, about 1,000 such LCs issued by Bank of India alone devolved, which included at least 16 LCs amounting to ₹110.79 crore issued in the name of Ruby Cables (Sister Concern of DPIL).
The FIR states that in spite of repeated failure to achieve the inflated figures of estimates in turnover, the Bank of India officials while conducting the credit review, did not decrease the cash credit limit, but kept it unchanged at ₹480 crore even though such figures were based on grossly exaggerated sales figures.
During 2011 when DPIL had projected turnover of ₹2197.60 crore for 2012 whereas the actual turnover was ₹1267.60 crore only for 2011 and DPIL got the credit facilities enhanced from ₹285 crore to ₹480 crore.
In the next year, against the projected ₹2197.60 crore, DPIL achieved a turnover of ₹1740.38 crore as on March 31, 2012, which was lower by ₹457.22 crore from the projected turnover figure, in spite of fact that the company fulled availed of the CC limit.
The company managed to get the credit facilities despite appearing in the RBI's Defaulters List and ECGC Caution List at the time of initial sanction of Credit Limits by the Consortium.
Bank of India has the maximum exposure of ₹670.51 crore followed by Bank of Baroda (₹348.99 crore), ICICI Bank (₹279.46 crore), while Axis Bank's exposure stands at ₹255.32 crore.
DPIL accounts in Bank of India and Bank of Baroda were declared NPA on February 16, 2016. Other banks declared company's accounts NPA from December, 2017.
The lenders had converted the debt into equity to hold 70 per cent stake in the company under strategic debt restructuring scheme. In March, 2017, DPIL had informed that the lenders had in principal agreed to a proposal received from Chinese CKP Group to infuse ₹1,200 crore in the company. But there was no progress on that front till date.
As per the December 2017 filing by DPIL, promoters hold 11.41 per cent in the company, while financial institutions including Bank of India, Bank of Baroda, ICICI Bank, Axis Bank, Allahabad Bank among others hold 73.31 per cent as Public share holder institutions.