CBI Book Omkar Specialty Chemicals, Trustees For Suspected Fraud On 145.51 Crore Loans

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According to the first information report, the company diverted funds intended for short-term use to use them for long-term purposes.

The Central Bureau of Investigation (CBI) convicted Omkar Specialty Chemicals Limited and its eight directors for allegedly causing a loss of 145.51 crore to the Bank of Baroda.

The company, based in Maharashtra’s Thane, produces a diverse range of organic, inorganic and organo-inorganic intermediates. He had taken loans to the tune of 170.69 crore from the bank in the form of cash credit, domestic letter of credit and foreign letter of credit.

According to the first information report, the company diverted funds intended for short-term use to use them for long-term purposes; and of the 50 crore taken as a business loan, ₹ 14.54 crore was used for undeclared purposes.

Inventory

The bank alleged that the company’s audited balance sheet in 2016, 2017 and 2018 showed a significant difference in inventory status. The value of current assets as shown in the monthly inventory statements was less than the amount shown in the audited balance and the value of sundry creditors was also underestimated.

It turned out that as of March 31, 2018, the company had an outstanding debt of 35.49 crore yen with 105 customers and its 36 debtors appeared suspicious as their whereabouts could not be established.

In order to obtain a higher drawing power, the defendants made fictitious entries and also transferred certain amounts from the sellers ‘accounts to the loan accounts in order to reduce the creditors’ balance. The same amounts were then canceled. It is also alleged that the company maintained checking accounts with other banks and channeled the funds.

Since 2015, the company has benefited from a discount facility from Bank Axis without obtaining a no-objection certificate from Bank of Baroda.

Letters of credit issued for the purpose of purchasing commodities were opened to obtain commodities traded. He did not comply with the condition of maintaining an escrow account with the Bank of Baroda.

It wrote off 63.21 crore for impairment of work in progress (costs incurred to date on fixed assets under construction) during 2016-17.

As the company had not repaid the contributions, the loan accounts were declared non-performing assets in 2018 and reported as fraud to the Reserve Bank of India in September 2019.


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