The Central Bureau of Investigation (CBI) has booked Chandigarh-based Best Foods Limited, its chairman, managing director and others for allegedly cheating a consortium of banks to the tune of ₹1,006.46 crore.
The FIR was registered on a complaint by the State Bank of India (SBI), which was part of the consortium, and it names the company, its chairman Mohinder Pal Jindal and managing director, Dinesh Gupta, as accused. Unknown bank officials are also under the scanner.
The alleged fraud came to light during a forensic audit of the records from April 2015 to March 31, 2018. The audit report, submitted in October 2018, raised suspicion about diversion of loan funds and other serious irregularities.
Best Foods was selling rice under the “Best” umbrella brand with various names, including “Best Premium”, “Best Super Premium”, “Best Select” and “Best Special”. The company had an installed capacity of 101 metric tonnes per hour of paddy milling, and 149 metric tonnes per hour of rice sorting and grading. It had emerged as one of the largest processors of premium basmati rice in the country.
The company had its own captive power plant of 4 MW, and another plant of 6 MW, both rice husk based, to meet its power consumption needs. Under the consortium arrangement, 10 banks extended credit facilities of ₹1,740 crore to it. However, the company defaulted on repayments and the account turned into a non-performing asset (NPA) in September 2016.
According to the FIR, the forensic audit revealed that the accused persons had not provided supporting documents, like delivery challans and acknowledgement slips, in 991 of the 1,170 purchase transactions, and 175 of the 1,159 sales transactions. The same transporter was used in most cases and the lorry receipts were in a continuous series, raising suspicion. There was a mismatch in the truck loading capacity, types of vehicles and other related records.
The auditors, on physical verification, could not locate 18 vendors and two customers of the company, as shown on paper. Three purported vendors and five customers could not provide the required documents to establish their existence. Owners of all these parties were not available at the given addresses.
Sales worth ₹363.15 crore to 19 customers were made during April 2015-March 2018, allegedly without recovering the due amounts. Enquiries from the Resolution Professional team, appointed as part of the insolvency process, revealed that there was either no reply or the notices were returned undelivered to 36 of the 44 debtors. The total outstanding from these parties was ₹631.30 crore.
It is alleged that advances/excess payments were made to many vendors and customers without any basis. In all, 869 vendors had an outstanding of ₹92.94 crore, which included excess payments of ₹82.10 crore. Besides, ₹37.51 crore in interest was shown to have been paid to 3,796 vendors, of which ₹17.13 crore was made to vendors from whom no purchases were made.
The auditors found that the value of company’s inventory as on March 31, 2018 had apparently been inflated by ₹736.54 crore.