The Central Bureau of Investigation (CBI) has registered a case against Ahmedabad-based Electrotherm India, and some unknown persons for allegedly causing a loss of ₹436 crore to Central Bank of India.
The agency conducted searches at nine places in Ahmedabad, Gandhinagar, Vadodara and Kutch (Gujarat).
Following the news, the company’s share fell 3.5 per cent and closed at ₹20.50 on BSE on Tuesday. The company is engaged in the business of engineering, projects, steel and pipes, among others.
According to a CBI statement, a case has been registered on the basis of a complaint received from Central Bank of India alleging that the firm and its directors and other unknown bank officials entered into a criminal conspiracy and cheated the bank.
It is further alleged that the company requested for credit to enable it to supply steel and iron to a firm in Tanzania.
One of Electrotherm’s directors was also the director of the Tanzanian company.
Electrotherm did not submit any proof of delivery of the material and defaulted on the loans taken.
Also, standby letters of credit opened by the bank to facilitate trade in machinery and coal have devolved.
The bank had to make payment when the company failed to pay the counterparty.
The company had allegedly made false representations to induce the bank to extend credit facilities to them, the agency said.
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