The Serious Fraud Investigation Office (SFIO) has initiated a probe into the recently liquidated firm Reid and Taylor India Ltd (RTIL) and its former promoter Nitin Kasliwal for alleged fraudulent transactions of over Rs 3,500 crore, sources told The Indian Express.
The probe was ordered following a directive by the National Company Law Tribunal (NCLT), after the resolution professional (RP) found multiple irregularities in the books of RTIL during its liquidation process. The findings of the RP are based on a July 2019 report by KPMG on RTIL, which was submitted to the RP this February.
The KPMG report, which analysed transactions of RTIL between October 2014 and April 2018, alleged that the company had sale and purchase transactions of about Rs 2,829 crore with at least 22 “non-operating” companies that are “potentially” linked to each other as they had common statutory auditors, registered email addresses and common witnesses — mostly students — to their memorandum of association as on December 2018.
The KPMG report also flagged two agreements signed by RTIL with offshore firms linked to its parent firm S Kumar’s Nationwide Ltd (SKNL) for the use of the 180-year-old Scottish brand Reid and Taylor in India. The consultancy firm said it was not able to find the reason for RTIL’s trademark agreement and technical know-how agreement with Reid and Taylor (International) Ltd in the Bahamas and Reid and Taylor (Holdings) Ltd in the British Virgin Island respectively. Both the offshore firms managed by Trident Trust Company have been linked to SKNL.
The report also alleged that the asset base of RTIL slipped from Rs 3,880 crore in 2013 to Rs 300 crore in 2016 as it spent its reserves and surplus in purchases, wrote off customer dues and wrote down the value of inventory.
For instance, the company wrote down its inventory worth Rs 748 crore in September 2014 to Rs 53 crore at the end of March 2016. According to the management of RTIL, this reduction was on account of deep discount sales to its 13 customers.
The KPMG report said RTIL has written off Rs 1,019.48 crore owed to it by these 13 “non-operating” firms as of March 2016. Apart from this, the report alleged that RTIL wrote off receivables of Rs 437 crore due to them from SKNL and other related parties.
Kasliwal did not respond to phone calls, and text messages. His secretary told The Indian Express that he is indisposed and cannot take any queries.
RTIL owes over Rs 4,100 crore to lenders, led by Finquest Financial Solutions. On May 14, RTIL — launched by S Kumars’s in India in 1998 and endorsed by actors Pierce Brosnan and Amitabh Bachchan — shut down its plant in Mysuru, rendering about 1,400 workers jobless. The official liquidator appointed by the NCLT, in a notice, said he tried to run the company as a going concern for 14 months since the start of liquidation but is left with no option than to shut operations.
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