According to investigations, Gadkari’s Purti Power and Sugar received funding from virtually defunct companies which do not have their own source of income. Even sources from the I-T department have labelled 18 investor companies of Purti as fake

Moneylife Digital Team

Nitin Gadkari, president of the Bharatiya Janata Party (BJP), appears to have used layers of virtually defunct companies, which invested money in his Purti Power and Sugar (Purti). As of 30 July 2010, there were 20 entities registered as stakeholders in Purti, out of which 18 are acquired companies.

According to documents with Moneylife, Purti got its shares subscribed by second layer of companies. These second layer companies (virtually defunct companies) received funds (that were invested in Purti) from a third layer of companies.

The third layer of companies that provide funding to second layer of companies for investing in Purti are again virtually defunct companies and per se do not have their own source of income or revenues. Both the second and third layer companies did not report substantial revenues from their main business activities for which they were incorporated.

In fact, looking at the whole set of transactions, one can say that all these investment companies of Purti were acquired with the sole object to channelize the capital to the Gadkari company. Interestingly, capital structure of all these companies increased mostly in February 2010 and subsequent allotment was made in March 2010.

All the 18 second and third layer (acquired) companies have four persons, Kawdu Pandurang Zade, Manohar Madhavrao Panse, Nishat Vijay Agnihotri and Sagar Shripad Kotwaliwale as common directors. All of them were appointed as directors in and around first six months of 2009. Appointment of directors in all these companies were made with retrospective effect, reveals the report.

To read other latest articles on Nitin Gadkari, please click here.

On 30 March 2010, Global Safety Vision Pvt Ltd, owned by Dattatrey Pandurang Mhaiskar (the promoter of Ideal Road Builders—IRB group) provided a loan of Rs164 crore to Purti by creating a charge on all assets and liabilities on the Gadkari company. That means all the assets of Purti are mortgaged or hypothecated to Global Safety Vision. The Mhaiskar-promoted company is mentioned as promoter group entity of IRB Infrastructure, a listed entity on the Indian bourses.

The Directorate General of Income Tax (Investigations) officials, who conducted enquiry in the open premises of companies which invested in Purti, have shared all information retrieved from these investor companies with their Pune counterparts.

The Income Tax department’s Mumbai office also shared recorded statements of 13 people who were mentioned as ‘directors’ in the initial company that was floated.

According to I-T department sources, these companies in Mumbai, which were started with paid-up capital of about Rs2,000 to Rs3,000 are fake and inquiries revealed that they did not even find their books of accounts.

Earlier, the I-T department had said that people who were mentioned as ‘directors’ are men of no means and most of them are security guards, labourers and astrologers.

I-T sleuths at various locations had also found that offices were being made to look like genuine companies registered with the Registrar of Companies (RoC).