The High Court on Tuesday denied bail to the Group Finance Director PVR Murthy of Yash Birla Group, compounding the woes of group which has defaulted on repayment of deposits.
Murthy was arrested on January 31, after a case was registered against him, chairman Yashovardhan Birla, director Rajesh Shah and 11 other officials including president of corporate affairs Anant Vardhan (who is also under investigation for alleged possession of narcotic drugs) for default on repayment of deposits.
"Murthy was heading the finance of all Yash Birla Group of companies and has substantial information on flow of funds within and outside, he is still under custody and his investigation is helping us to establish money trails related to fixed and inter-corporate deposits which the group companies had raised," Rajvardhan Sinha, additional commissioner of police (economic offences wing), who is leading the investigations told dna. Sinha declined to give details on interrogations as the charge-sheet in the case is yet to be filed.
The police is recording witness statements and is trying to establish how the funds raised through deposits were siphoned off. Sinha said that so far they have registered complaints for Rs 57 crore worth of fixed deposit from investors and of Rs 210 crore for inter-corporate deposits. Birla Power has also been defaulting on interest payment. The company seems to have raised money from around 8,800 investors.
According to some media reports which quoted police sources, Birla Power Solutions shifted Rs 106 crore to Birla Surya as equity. Birla Surya is one of the defaulters of the United Bank of India, which had extended about Rs 70 crore to the company for a project to make solar photovoltaic cells.
Birla Power have also seemed to transferred Rs 16 crore to Birla Shloka Edutech Ltd for buying land in Oshiwara, Mumbai, Rs 10 crore to Zenith Birla for margin money for letters of credit and Rs 29.26 crore to Birla Energy Infra, Birla Cotsyn and Birla Ahuja.
Police continues establish the money trail and has called Yash Birla 2-3 times so far for investigation. He may be called even future as and when required, the official said.
Much before EOW filed an FIR against Birla Power, many small investors especially senior citizens were relentlessly pursuing with the Company Law Board to protect their life savings which they had invested lured by the higher returns and 'Birla' reputation.
"CLB continues to receive fresh complaints on Birla Power and Zenith Birla fixed deposits. In past one month CLB has issued orders to both the companies to pay the dues of investors with interest within 30 days or face action from Registrar of Companies (RoC)," P Sawant, Bench Officer at CLB said. RoC could not be immediately contacted to know the further course of action against these companies.
Birla Power had launched the deposit scheme in 2010-11, and according to its 2012-13 annual report fixed deposits worth Rs 11.92 crore and outstanding interest of Rs 1.26 crore were to be repaid. In case of Zenith Birla deposits worth Rs 5.39 crore is due to 1,287 investors, its annual report said.
So far, EOW has frozen 66 bank accounts of the Yash Birla group's allied companies. Sinha said that police had identified several of Yash Birla Group properties which are enough to recover investor dues. All efforts to get in touch with Yash Birla failed. Yash Birla's business empire has around 20 companies, the major ones being Birla Cotsyn, Zenith Birla and Birla Pacific Medspa.