SREI Group reports Rs. 3,025 crore fraud based on transaction auditor audit

SREI Equipment Finance announced on Monday that its administrator had received a report from the transaction auditor regarding certain fraudulent transactions.

SREI Equipment Finance announced on Monday that its administrator had received a report from the transaction auditor. Lest, which was regarding certain fraudulent transactions in 2019-20 and 2020-21, with a monetary impact of over 3,025 crore on the SREI group.

The Reserve Bank took over the boards of Srei Infrastructure Finance Limited (SIFL). Also, its wholly-owned subsidiary SREI Equipment Finance Limited in early October of last year (SEFL).


It then formed a three-person Advisory Committee to assist the administrators of the two troubled firms. Rajneesh Sharma, ex-chief general manager of Bank of Baroda, was appointed as administrator to investigate the SREI group companies’ operations.

The SREI group companies. Which are in the process of resolving corporate insolvency, were put under duress during the Coronavirus-induced lockdown. Furthermore, as nonpayment from customers resulted in asset-liability mismatches.

Investigation into company’s affairs

According to a regulatory filing, BDO India LLP (BDO or transaction auditor) is conducting an investigation into the company’s affairs (SREI Equipment Finance). Thus, this is in relation to transactions qualified under sections 43 to 51, and sections 65 and 66 of the Insolvency and Bankruptcy Code, 2016. The filing by SIFL is on behalf of its unlisted subsidiary SEFL.

“Accordingly, the administrator of the company received an initial report from the professional agency appointed. As the transaction auditor, indicating that there are certain transactions. Which are fraudulent in nature, as per Section 66 of the Code.

“Basis the investigation and observations of the transaction auditor. The administrator has filed an application in respect of disbursements made to certain entities,” the filing said.

On June 10, 2022, the application was filed with the NCLT under Sections 60(5) and 66 of the Code. Since, the report, according to SREI SEFL, relates to certain fraud transactions conducted by the company during 2019-20 and 2020-21. And the monetary impact of these transactions on the listed entity SREI (SIFL) is 2,512.06 crore, which is the amount outstanding in the company’s books as of October 8, 2021.

Furthermore, 513.67 crore is the amount considered due and outstanding towards the company’s notional loss. As a result of fraudulently charging a lower rate of interest to certain entities referred to. As the Power Trust group of entities, according to the filing.

Power Trust, Kanoria Foundation and its trustees, India Power Corporation Limited, India Power Corporation (Bodhgaya) Ltd. Tuticorin Electricity Supply, Bhaskar Silicon, Green Utility, Environ Energy Corp. India, Meenakshi Energy Limited, Devi Trading and Holding. And certain other entities. As reported by the transaction auditor were among the 14 respondents named in the administrator’s application.