Simbhaoli Sugar, OBC tank on fraud probe by CBI

The Central Board of Investigation has booked the chairman and managing director (CMD) of Simbhaoli Sugar on charges of fraud against Oriental Bank of Commerce. The stock reacts sharply and was down by 20 per cent.

The Oriental Bank of Commerce had filed a complaint against Simbhaoli Sugar in November 2017. The fraud began with the company borrowing Rs. 148 crore for financing sugarcane farmers, the funds were fraudulently diverted for private use by the company. The loan was sanctioned according to a Reserve Bank of India Scheme to around 5,700 farmers supplying sugar to the company. The bank in May 2015 declared to RBI that the loan was a fraud of approximately Rs. 98 crore.

CBI in its FIR has alleged that the bank in January 2015 issued another corporate loan of Rs. 110 crore to the company to repay the previous loan of Rs. 98 crore. This loan turned NPA in November 2016. All this adds up to a roughly Rs. 200 crore fraud which the CBI is now investigating. The agency has registered a case against top executive of Simbhaoli Sugar including CMD, CFO and also some bank officials.

The stock of Simbhaoli Sugars reacted sharply to this news and at 12:55 hours was trading at Rs. 14.25 per share, down 15.43 per cent, while OBC was trading at Rs. 95.00 per share, down by 10.17 per cent on Monday.