Saradha Group spun web of loan transfers: RoC report

A recent probe by the Registrar of Companies (RoC), West Bengal, has revealed a series of financial transactions between different Saradha Group companies during the fiscal year ended March 31, 2012, wherein the funds were not used for any "constructive purposes".

In a report filed with the ministry of corporate affairs on April 23, the RoC West Bengal has stated that the cross-loans were to create a maze of financial transactions to cover up the mess. The report has also said that the flagship Saradha Realty India has not filed a balance sheet for fiscal 2012, for which default action against it is in progress.

However, it is the balance sheet of another group company — Saradha Construction, the second-largest company in the group — that provides details about inter-group companies' financial transactions.

During 2011-12, Saradha Construction received long-term advances of Rs 40 crore from Saradha Realty. Subsequently, in a series of transactions, Saradha Construction lent Saradha Realty around Rs 30 crore, thus leaving it with a balance of Rs 10 crore.

However, this Rs 10 crore was never spent by Saradha Construction in creating any business asset but was instead lent to other group companies where there were no business activities.

The RoC report noted that despite the precarious financial health of Saradha Realty as evident from its eventual debacle, it diverted Rs 10 crore to its associate company Saradha Construction, indicating clear misutilisation of resources. FE

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