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Amrapali Redux: SRS Group promoters likely to have siphoned off over Rs 1,000 crore

The promoters of the SRS Group seem to have used similar methods as used by Amrpali promoters to siphon off funds from group companies.

twitter-logo Dipak Mondal   New Delhi     Last Updated: January 17, 2019  | 22:24 IST
Amrapali Redux: SRS Group promoters likely to have siphoned off over Rs 1,000 crore

Even as the muck in the realty firm Amrapali Group is out in open, promoters of another group, which has dabbled in real estate among other things is also suspected to have diverted money from the business.

The promoters of the SRS Group, a corporate entity that virtually has tried its hands in all kind of businesses--real estate, jewellery, retail, cinema exhibition, financial services and hospitality--seem to have used similar methods as used by Amrpali promoters to siphon off funds from group companies.

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Three of the group's more than 300 subsidiaries are at different stages of insolvency proceedings. These are SRS Ltd, SRS Modern Sales and SRS Meditech. While SRS Modern sales has been liquidated, the insolvency proceedings of SRL Meditech and SRS Ltd are underway.

The committee of creditors (CoC) of SRS Ltd -- a diversified company with business interests in gold and jewellery (retailing, wholesaling, manufacturing), cinema exhibition, retail, hotel, etc -- had ordered a forensic audit of the transactions of the company by Grant Thornton.

The forensic audit report was put up for discussion in third meeting (a copy of the minutes of the meeting is with Business Today) of the CoC on 27 December 2018. The report submitted by Grant Thornton indicates several fraudulent practices and manipulations of books by the promoters to divert funds from the company.

The transaction audit reveals many irregularities in its jewellery business, which had shown receivables worth around Rs 1,300 crore in its books from 214 clients. Around 98 per cent of that amount, or Rs 1,267 crore, is owed by only 20 entities.

The report suggests that 16 of these entities are linked to SRS. The forensic audit found that directors of these companies have been associated with SRS group companies as directors or employees. In some cases the addresses of these companies were not traceable, while in some cases there were no one in the addresses of the companies.

Out of the Rs 13,000 crore debt mentioned above, the company first wrote-off the debt worth Rs 825 crore in December 2017 and again wrote back the debt in March 2018. The company did not provide any document to support the write-off and the subsequent write-back.

SRS Limited, which is facing insolvency proceedings, owes around Rs 1,100 crore to financial creditors. The founder and CMD of the group, Anil Jindal, is in jail on charges of cheating and fraud.

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