SFIO probe report lists lapses in 13 loans given by IL&FS to ABG group

The Serious Fraud Investigation Office (SFIO) probe report on the IL&FS group has listed 13 loan accounts of the beleaguered ABG conglomerate, including a personal loan amounting to Rs 29 crore to Anupama Agarwal, promoter Rishi Agarwal's wife — all given at the behest of the top management of the infrastructure financier without following the due process. 

Some money taken on loan from IL&FS Financial Services (IFIN) was used to prevent ABG’s accounts from turning into non-performing assets.

The SFIO has termed the transactions an “evergreening exercise”. IFIN extended credit facilities to the ABG group, owned and controlled by Rishi Agarwal, since 2010, the combined exposure being around Rs 1,080 crore. 

The amount was classified as NPA in September 2018. 

Even the Reserve Bank of India (RBI), in its report for FY15, pointed out insufficient security cover in the case of exposure to ABG International, and later for Onaway Industries during FY17. 

Following the RBI objections on some accounts, Deepak Pareek, chief operating officer of IL&FS Financial Services (IFIN), sent an email on November 20, 2017, to Ravi Parathasarathy, Arun Saha and Hari Sankaran, all part of the erstwhile IL&FS top management, with a copy to Ramesh Bawa, also part of the same team.

The SFIO has found within these 13 loan accounts money was rotated to pay the dues arising on older accounts. For instance, PFS Shipping India was given a loan of Rs 52 crore. To repay the loan, Rs 6 crore was used out of Rs 65 crore received by ABG Cement Holdco Pvt Ltd from IFIN. Another Rs 9 crore was paid out of Rs 105 crore extended to ABG International Pvt Ltd. 

The Rs 105-crore repayment by ABG International (ABGIL), in turn, was made from a Rs 220-crore loan extended to Onaway Industries, another ABG company. Both PFS Shipping and ABG Cement Holdco are fully owned subsidiaries of ABG International.

A detailed questionnaire sent to the ABG group remained unanswered.

Rishi Agarwal was in direct touch with Parthasarathy on email. The SFIO charge sheet has detailed Bawa’s involvement in extending credit to various ABG group entities.“The whistleblower in its letter dated March 3, 2017, has pointed out the connivance of the management of IFIN and also of Ravi Parthasarathy and Ramesh Bawa to release the security cover in the case of ABG,” said the SFIO.

PFS Shipping India had a very high loan-to-value ratio with “inadequate asset cover”, the SFIO said its first charge sheet filed in the IL&FS case. Besides, there was non-availability of no-objection certificates from the existing lenders of the company. 

In another account, IFIN subscribed to debentures worth Rs 160 crore of ABGIL in June 2012, with the objective of acquiring shares of ABG Shipyard and other corporate purposes. Though ABGIL’s provisional net worth was Rs 800 crore on March 31, 2012, corporate guarantees issued were over Rs 2,400 crore, which were three times its net worth.

There were group companies like Pallav Trading and Parlay Infrastructure that had just Rs 1 lakh as paid-up capital. IFIN extended loans of Rs 280-crore to Pallav Trading and Rs 180 crore in December 2016.

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