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CBI files Rs. 1,400cr fraud case against dairy firm Kwality

Siddhant Pandey
·2-min read

CBI files Rs. 1,400cr fraud case against dairy firm Kwality
CBI files Rs. 1,400cr fraud case against dairy firm Kwality

21 Sep 2020: CBI files Rs. 1,400cr fraud case against dairy firm Kwality

The Central Bureau of Investigation (CBI) on Monday has filed a case of fraud against Kwality Ltd., one of the country's most popular dairy product makers.

The firm allegedly defrauded a consortium of banks led by the Bank of India.

The probing agency conducted searches at eight locations, including Delhi, where the firm's headquarters are located.

Here are more details.

Details: CBI names directors Sanjay Dhingra, Siddhant Gupta, Arun Srivastava

The CBI has named Kwality's directors Sanjay Dhingra, Siddhant Gupta, and Arun Srivastava in connection with the fraud case.

They have been charged with cheating, forgery, criminal conspiracy, and corruption, according to NDTV.

Before filing the case, the probing agency had conducted searches in Delhi, Saharanpur and Bulandshahr in Uttar Pradesh, Ajmer in Rajasthan, Palwal in Haryana, among other locations.

Accusations: Kwality accused of diverting bank funds, sham transactions, etc.: CBI

The CBI registered the case based on Bank of India's complaint.

The bank had alleged that Kwality had taken credit in 2010, but the firm started defaulting on payments early-2018.

The CBI said the firm is accused of "diversion of bank funds, sham transactions with related parties, fabricated documents or receipts and falsified books of accounts" and creating false assets and liabilities.

Complaint: 'Kwality overstated financial statements by bloating business operations'

The bank had stated in its complaint, "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 was routed through the consortium of banks."

It added, "[Kwality] overstated its financial statements by bloating its business operations and indulged in the manipulation of accounts by making reverse entries."

Fact: Canara Bank, Bank of Baroda, Andhra Bank, etc., comprised consortium

CBI spokesperson RK Gaur told PTI that Kwality had allegedly cheated the consortium of banks comprising Bank of India, Canara Bank, Bank of Baroda, Andhra Bank, Corporation Bank, IDBI, Central Bank of India, Dhanalaxmi Bank, and Syndicate Bank, of Rs. 1400.62 core.

Background: Kwality facing insolvency proceedings since 2018

Kwality Ltd. has been facing insolvency proceedings since December 2018.

The firm, which used to be one of India's most popular ice-cream makers, owes roughly Rs. 1,900 creditors to creditors.

Global equity giant KKR had moved a bankruptcy plea against the dairy firm in 2018. Back in 2016, Kwality had raised Rs. 520 crore from KKR India Financial Services through a structured finance transaction.