MK Agarwal, former promoter chairman of logistics company Gati, is being probed by market regulator SEBI for alleged related party transactions and siphoning off funds. This comes after his wife Neera and sons Dhruv and Manish told SEBI that he had diverted company funds to private ventures.

In August, SEBI had called for documents on the financial transactions involving Gati and Agarwal-linked entities and is looking into them, regulatory sources told BusinessLine .

According to the complaint, a $21-million loan was taken by GI Logistics PTE Singapore from DBS Bank for which Gati and Gati Ship paid $7,200 per day as instalment for eight years.

Meera Madhusudan Singh, Gati’s Brand Custodian, was the sole proprietor of the Singapore company, Agarwal’s sons and wife have told SEBI. The instalments involved a mark-up as GI Logistics paid an EMI of $4,958 per day.

This was to purchase a charter ship, which Gati had to later buy for an additional $5 million from the Singapore company. Thus, Gati was burdened with a total transaction cost of $26 million for an eight-year-old ship, which was nothing but a scheme to siphon out money from the Indian company.

SEBI is in possession of the agreement between Gati and GI Logistics, the loan agreement and ownership details of the Singapore company.

The complainants have further told SEBI that Singh was the beneficiary of Maxibit Enterprises, a British Virgin Island company, where money was being moved and details were out in Panama leaks.

Unrecoverable loans

SEBI is also in possession of documents wherein auditors have highlighted huge loans and advances from Gati and its subsidiary Gati Kintetsu Express to promoter-owned entities, which were termed as not recoverable.

The auditors have shown concern that all the loans and advances to promoter entities of Agarwal could write off 2.4 per cent of Gati's net worth for the financial year 2020. Further, a Gurgaon apartment in the name of Singh was leased to Gati for ₹3 lakh per month.

Gati’s investments into Amrit Jal Ventures (AJVL), promoted by Agarwal, are also under the scanner. Gati invested in AJVL, which is into hydro power projects and has a subsidiary, Gati Infrastructure, of which Singh is a founder director and a shareholder through River Valley Hydro Pte. Singapore, the complainants have said.

Under Agarwal, Gati approved investment of ₹34.5 crore into unsecured debentures and ₹18.7 crore into shares of AJVL. Also, an investment of ₹18.5 crore was done into Indonesian firm PT IndoGati Resources, which is a 100 per cent subsidiary of GI Logistics Singapore.