Calcutta: The promoters of Binani Cement have been sucked into an alleged fraud of around Rs 2,400 crore at the bankrupt firm that has been unearthed after a forensic audit of its books carried out at the behest of a resolution professional.
The latest development will now complicate the process to steer the stressed cement maker, which owes banks Rs 6,469 crore, out of the bankruptcy process that was initiated last year before the Calcutta bench of the National Company Law Tribunal.
Resolution professional Vijaykumar V. Iyer submitted a stack of documents before the NCLT on March 14 that revealed a skein of suspect transactions involving the corporate debtor (Binani Cement) and related parties.
Haribhakti & Co LLP, the Mumbai-based chartered accountancy firm, had carried out the forensic audit and submitted its report on March 12. The forensic auditor's report flagged several transactions during the review period of July 1, 2015 to November 30, 2017 as "potentially suspect".
In his application before the tribunal, Iyer said Binani Cement was involved in a number of suspect transactions that were "preferential, undervalued, extortionate credit and/or fraudulent in nature".
The resolution professional has urged the tribunal to direct federal sleuths to "investigate the directors of the corporate debtor (Binani Cement) and the counter-parties to these transactions".
The application also urged the tribunal to levy an appropriate rate of interest on these suspect transactions and pass any other order that it "may deem fit in the facts and circumstances of the case in the interest of equity, injustice and good conscience".
Binani Cement has emerged as a prized asset that the Dalmia Bharat group and Kumar Mangalam Birla-owned UltraTech have been vying for. With an offer of Rs 6,700 crore, the Dalmia Bharat group scored the highest when the bids were opened last week. However, UltraTech stunned the market by entering into a privately negotiated agreement with the promoters of BCL, Binani Industries Ltd, to take over the firm.
The UltraTech board on Monday issued a "comfort letter" to BIL agreeing to pay Rs 7,266 crore to settle nearly all creditors of BCL, provided the firm comes out of bankruptcy proceeding.
Asked to comment on the forensic audit, a Binani Cement spokesperson said he was unaware of the report.
An UltraTech official said the content of the report has not been shared with the company and demanded that the IBC process be scrapped. "The content should have been made available to all bidders in the data room. If there is such a thing (suspect transactions), the IBC process should be stalled," said Atul Daga, chief financial officer & whole time director of UltraTech.
The board of UltraTech was not aware of the forensic audit report content when it met on Monday to extend the "comfort letter" to Binani, Daga added. The next hearing of the Binani case before the NCLT is on Thursday.
Suspected transactions
Haribhakti & Co LLP listed several transactions that could raise a stink (see chart).
For instance, BCL is yet to recover a sum of Rs 487.75 crore from Sarswati Sales Pvt Ltd (SSPL) against cement sales. The auditor suspected that SSPL could be "potentially related" to the corporate debtor and the Binani Group "through common" past directors.
Moreover, the forensic audit showed that Binani Cement had extended an inter-corporate deposit of Rs 1,148.57 crore to its parent - BIL -that continued to remain outstanding as on November 30, 2017.
"The ICD was utilised by BIL for payment of loan and payment of interest of an aggregate of Rs 552.06 crore...the loan was taken by BIL for the buyback of shares of the corporate debtor," the forensic audit report said. The remaining amount was utilised for interest payment on the ICD to the corporate debtor and repayment of other loans.
Further, Binani Cement had waived the interest chargeable on the ICD extended to BIL since April 2015. The forensic auditor has calculated interest foregone on this account at Rs 382.81 crore.
