Aurobindo, India Cements under CBI scanner for Jagan links

The probe into the wealth amassed by YS Jagan Mohan Reddy (pictured), the Kadapa MP and son of former Andhra Pradesh chief minister Y S Rajasekhara Reddy, by the Central Bureau of Investigation (CBI) is proving to be a cause of headache for several listed companies.

Aurobindo Pharma, India Cements, Dalmia Bharat, Navabharat Ventures, PVP Ventures and Ramky group are among those named in the FIR by the CBI in the list of accused.

According to the FIR filed by the CBI in a local court and the findings of the income-tax department, the corporate entities had invested crores in Jagan’s closely held businesses as part of a quid pro quo arrangement after getting land allotted for SEZs, mining contracts, irrigation contracts and other such forms of support from the government.

Among the Jagan entities this investment went into were his media outfits Jagathi Publications, which publishes the Sakshi Telugu daily, Sandur Power and Bharathi Cements, which was recently acquired by French company Vicat.

The CBI started probing the allegations about Jagan amassing wealth during his father YSR’s regime following an order by the Andhra Pradesh High Court.

The list of accused also includes N Prasad, founder and a key stakeholder in pharma major Matrix, though his relationship with Jagan is said to be independent of Matrix.

In fact, Prasad — popularly known as Matrix Prasad — is emerging as the biggest investor in Jagan’s companies with a total funding of over Rs300 crore. It is being suspected that the serial entrepreneur had invested huge sums only as a quid pro quo for allotment of over 15,000 acres for development of port infrastructure on the east coast of Andhra Pradesh.

Aurobindo group, according to the CBI and the income-tax assessment note, had invested about Rs10 crore in Jagan’s businesses. However, no investment was made directly by Aurobindo Pharma. Axis Clinicals, owned by Aurobindo’s promoter Ram Prasad Reddy, individuals including K Prasad Reddy, brother of Aurobindo’s MD K Nityanand Reddy and K Rajeshwari, Nityanand Reddy’s wife, had invested in Jagan’s businesses.

Though the CBI is still trying to determine the motivation for Aurobindo group’s investment, a note prepared by the income-tax department stated that the investments were made in lieu of the land allotted to Aurobindo to set up an SEZ at Mahaboobnagar in Andhra Pradesh.

Similarly, the Ramky group is said to have invested in Jagan’s businesses in lieu of the approval given to it for developing a pharma SEZ near Visakhapatnam. Interestingly, I-T officials too are questioning the credentials of two front companies used by Ramky for making the investment.

The investments made by India Cements, Dalmia Bharat, PVP Ventures and Navabharat are also being examined in the wake of allotment of limestone deposits, award of water supply facilities to their existing facilities through issuance of special government orders, allotment of land for development of real estate projects and SEZs. In the case of Navabharat, its group entity Brahmani Infratech has been named as an accused.

The CBI officials have already conducted search and seizure operations at the premises of all the entities named in the list and confiscated several key documents including bank account statements and computer hard discs.

CBI officials, assisted by bank officials and auditors, are currently going through the documents and are believed to be convinced about the theory of kickbacks getting converted into investments into the MP’s business based on prima facie evidence.

“The material that has been procured through searches is being examined. The officials are yet to decide on sending fresh notices to the parties. It would take some time,” said a source tracking the developments.