SFIO is corporate fraud investigating agency in India and falls under the Ministry of Corporate Affairs. It mainly focuses upon tax evasion, diversion of funds, money laundering, misleading accounting, misuse of Information Technology, customs duty evasion, company law violation, funds embezzlement and corporate frauds.
It was set up in 2003 as a federal agency. In 2017 the agency had been given powers to arrest a person.
On 9/8/18, SFIO made its first arrest. It arrested Neeraj Singhal, earlier promoter and managing Director of Bhushan Steel Limited. The charge against him is siphoning off of funds over Rs. 2000 cr. Over 80 companies were used for availing these loans in a fraudulent manner.
Bhushan Steel Limited was identified as one of the 12 large loan defaulters. These 12 companies make as much as 25% of the total NPAs of the Indian Banking Sector. Immediate bankruptcy proceedings were started against these companies. Overall, 500 defaulting companies were identified. While for the next 488, a time of 6 months was given to pay up or to restructure their respective debt.
We are giving below a gist of these 12 companies:
Bhushan Steel Ltd: Bhushan Steel, the largest manufacturer of auto-grade steel in India, has a loan default of Rs 44,478 crore. The State Bank of India (SBI), the lead bank of the consortium of lenders, had moved the NCLT for recovery of its loan. The NCLT had given its judgement in favour of Tata Steel Ltd.
Lanco Infratech Ltd: Lanco Infratech, once listed among fastest growing in the world, has a loan default of Rs 44,364 crore. IDBI has already initiated the process under the Insolvency and Bankruptcy Code against company’s loan defaults.
Essar Steel Ltd: Essar Ltd, one of the biggest in India and abroad in the steel sector, has a loan default of Rs 37,284 crore. While there were 11 other companies staring at same fate as Essar Steel, it chose to challenge RBI’s direction in the Gujarat High Court, which was later dismissed. Essar claimed it belonged to 488 companies which were given six months time to restructure their debt.
Bhushan Power & Steel Ltd: Bhushan Power and Steel, a sister company of Bhushan Steel, also has a loan default of Rs 37,248 crore. Bhushan Power and Steel was dragged to the NCLT by the Punjab National Bank. The NCLT has also reserved its order on the plea. Tata Steel, JSW Steel and Liberty House have emerged as the three largest bidders for this ailing company.
Alok Industries: Alok Industries, which is a Mumbai-based textile manufacturing company, has a loan default of Rs 22,075 crore. The NCLT, in July, admitted insolvency proceedings against the company filed by State Bank of India for recovery of its Rs 3,772 crore loan. Other lenders include Punjab National Bank, Bank of Baroda, IDBI Bank, Standard Chartered Bank etc. Reliance Industries Limited has submitted its bid for the company.
Amtek Auto Ltd: Amtek Auto, one of the largest integrated component manufacturers in India, has a loan default of Rs 14,074 crore. SBI had moved the NCLT for bankruptcy proceedings against the bank, which was admitted by the Chandigarh bench. Liberty House of UK has successfully bid for this company.
Monnet Ispat and Energy Ltd: Monnet Ispat and Energy, one of India’s steel producers have a loan default of Rs 12,115 crore. The bankruptcy proceeding against the company was approved by NCLT in July. AION Capital / JSW Steel consortium has successfully bid for the company.
Electrosteel Steels Ltd: Electrosteel Steels is an Indian water infrastructure company based in Khardah near Kolkata. The loan default by the company stands at Rs 10,273 crore. Consortium leader SBI had initiated insolvency proceedings, which was admitted by NCLT.
Era Infra Engineering Ltd: Era Infra Engineering, one of India’s infrastructure companies, has a loan default of Rs 10,065 Crore. Union bank had moved the NCLT against the company, but the tribunal reserved its order over jurisdiction issues. There are many winding-up petitions pending in the Delhi High Court against the company which has superior jurisdiction over NCLT.
Jaypee Infratech Ltd: Jaypee Infratech is a subsidiary of conglomerate Jaypee Group founded by Jaiprakash Gaur. It has a loan default of Rs 9,635 crore. In August, NCLT had admitted insolvency petition filed by IDBI bank, but the Supreme Court stayed the order after home buyers filed petitions against the move. The company is now seeking to sell Yamuna Expressway to raise Rs 2,500 crore to compensate homebuyers.
ABG Shipyard Ltd: ABG Shipyard, an Ahmedabad-based shipbuilding company, has a loan default of Rs 6,953 crore. The company is one of the two companies among the 12 which has agreed to loan default and bankruptcy proceedings initiated by the banks.
Jyoti Structures Ltd: Jyoti Structures, a power transmission and distribution company, has a loan default of Rs 5,165 crore. The company became the first among the 12 companies to face the bankruptcy proceedings. The petition for insolven
Bhushan Steel Limited has since been auctioned off under the Insolvency and Bankruptcy Code (IBC), 2016 and its control now lies with Tata Steel Limited.
