CBI books Vizag firm Swetha Exports in Rs.11.33 cr bank fraud

Visakhapatnam: The Central Bureau of Investigation, Visakhapatnam, has registered a case against Swetha Exports India Private Limited for defrauding the Bank of India to the tune of Rs. 11.33 crore. The company submitted false stock statements, altered or forged/manipulated documents, and fake balance sheets.

According to the CBI, on 24 February, Nalabati Jejeswara Rao, the deputy zonal manager of Bank of India, Visakhapatnam, lodged a complaint against Swetha Exports India Private Limited (erstwhile Deb Fashions India Pvt. Ltd.) represented by its managing director Badigantla Srinivasa Rao, director Badigantla Satyanarayana, and other directors and unknown private persons.

It was alleged that Swetha Exports was a proprietorship concern of Badigantla Srinivasa Rao, a registered medical practitioner. He took up his family business more than a decade ago and developed it as a 100% export-oriented SSI unit to manufacture and export animal horn products like coat/shirt buttons, toggles, belt buckles, and spectacle frames. The firm had been enjoying credit facilities from Bank of India's Kakinada branch in East Godavari district since February 2002.

In view of the expanding market, Mr. Srinivasa Rao promoted Swetha Exports to manufacture buffalo horn buttons of all types and sizes. The firm availed credit facilities of Rs. 12 crore on 25 April 2009 from the Bank of India, Kakinada. The facilities were sanctioned in the categories of term loan, export packing credit, and rupee export credit and transferred to the current account for utilization.

The company had utilized the entire credit facilities of Rs. 12 crore during FY 2009-2010. During the financial year 2009-10, it made purchases of Rs. 12.12 crore and sales of Rs. 7.72 crore. But as per the statement, there were no substantial payments against the purchases and receipts against the sales. Owing to a delay in commencement of commercial operations, the account turned into a non-performing asset (NPA) with effect from 30 July 2010. As per the audited financials obtained from the ministry of corporate affairs, there were no purchases or sales from the financial year 2011-12 to 2014-15. However, the company submitted stock statements to the bank with the movement of stocks during those years. The company had misrepresented before the bank by submitting the stock statements as if there were operations in the company.

"The company misrepresented its stock in stock statements given to the bank. Further, as per the analysis of the financials and the bank statements, the majority of the amounts were transferred to related parties immediately after sanctioning of credit facilities without doing considerable business operations. These transfers are considered as diversification of funds," said the complainant.

The auditors of the company, in collusion with the company, prepared and signed two sets of balance sheets for the financial years 2009-10, 2011-12, and 2102-13 and submitted the altered, forged/manipulated documents, fake balance sheets, and stock statements with an intention to defraud the bank. Swetha Exports and its associated persons cheated the bank with criminal intention to make a wrongful gain for themselves and wrongful loss to the bank to the tune of Rs. 11.33 crore. The CBI registered a case under various sections of the IPC and PC Act 1988 against Swetha Exports.