Dalmia Bharat has issued a clarification regarding media reports on a Serious Fraud Investigation Office (SFIO) report concerning the alleged fraudulent transfer of mutual fund units by Allied Financial Services Private Limited. The company has categorically denied the allegations and provided a detailed account of the situation.
Dalmia Cement (Bharat) Limited (DCBL), a subsidiary of Dalmia Bharat, had opened a demat account with Allied, which later misappropriated securities from the account. DCBL reported the incident to various authorities, including the Securities and Exchange Board of India (SEBI), the National Stock Exchange (NSE), the National Securities Depository Limited (NSDL), and the Economic Offences Wing (EOW).
The EOW registered a First Information Report (FIR) in 2019, leading to an investigation by the Delhi Police. A chargesheet was filed, indicating that Allied, in collaboration with IL&FS Securities Services Limited (ISSL), criminally misappropriated DCBL’s mutual fund units. SEBI’s investigation confirmed that Allied had fraudulently used Dalmia Group’s securities for its trading activities, resulting in the seizure of Allied’s assets and penalties imposed on both Allied and ISSL.
Furthermore, SFIO Mumbai investigated ILFS and its subsidiary ISSL, filing complaints in a Special Court in Mumbai. The investigation revealed that ISSL provided irregular benefits to Allied, facilitating the misuse of DCBL’s securities. ISSL was found to have failed in enforcing the CM-TM agreement with Allied, allowing fraudulent movement of collaterals.
The Supreme Court intervened, releasing the mutual funds to DCBL in August 2019, a fact duly noted in DCBL’s financial statements. Additionally, a private complaint by Mr. Ramesh Shiledhar, associated with the Bawri Group, led the Ministry of Corporate Affairs to order an SFIO investigation in 2019. The Bawri Group, a shareholder in a Dalmia Bharat subsidiary, is involved in a commercial dispute with DCBL. However, DCBL and its associates have not received any SFIO report.
Dalmia Bharat asserts that the media reports are speculative and motivated, noting that no clarification was sought from the company before publication. The company emphasises its commitment to legal compliance and high standards of corporate governance and transparency.
Disclaimer: This article is based on a regulatory filing submitted to the National Stock Exchange of India (NSE).