‘Funds were transferred to several entities for non-business purposes’
The CBI has booked Rama Krishna Knitters Private Limited, which once enjoyed the status of an “export trading house” as recognised by the Directorate General of Foreign Trade (DGFT), for allegedly cheating a consortium of four banks to the tune of ₹161.91 crore.
Among the accused persons named in the FIR are Shallu Gupta and Narinder Chugh. The case has been registered on a complaint lodged by the Punjab National Bank on behalf of the lenders, alleging that the fraud was committed from August 2010 to March 2016.
According to the FIR, Rama Krishna Knitters — incorporated in February 2007 — was engaged in the manufacture of knitted readymade garments, with a production capacity of 50,000 to 60,000 pieces per day. The company had units in Ludhiana and Preet Vihar. It was exporting goods mainly to South American countries, the U.S., the United Arab Emirates, Armenia, Tajikistan etc. Its products were well accepted in the international market.
The company’s status was later upgraded to “export trading house” by the DGFT of the Central government, said the FIR. In 2010, the company through its directors approached the Punjab National Bank for credit facilities to expand its business. Under the consortium arrangement, it was sanctioned loans.
After the death of its then managing director in November 2014, another person took over. The lenders agreed for restructuring the credit facilities. However, the accused persons did not comply with the conditions. The account was classified as non-performing asset in March 2016.
A forensic analysis revealed several financial irregularities. As it turned out, funds were transferred to several entities before April 2013 for non-business purposes. Advances to the tune of ₹38.71 crore were received from different customers/parties to whom no sale had been made. Most of these firms also figured in the “outstanding receivables” list but the funds in question were not adjusted against the outstanding amount.
The banks alleged that this was done to inflate the “outstanding receivables” position to ensure higher drawing power.