CAG flays IRDEA for loan to Purti; co denies charges

Government auditor CAG has flayed IREDA for "violation of financial guidelines" in connection with Rs 48.65-crore loan to Purti Sakhar Karkhana for which company's promoters and directors including Nitin Gadkari had given "personal guarantee", a charge the Nagpur-based company denied.
The Purti Sakhar Karkhana Limited (PSKL) was sanctioned a term loan of Rs 48.65 crore by Indian Renewable Energy Development Agency Limited (IREDA) in March 2002 for setting up a 22 MW bagasse based co-generation power project at Nagpur in Maharashtra.
The CAG report said "promoters and/or directors of the borrower company had given their personal guarantee for the loan".

As per the report, the promoters and directors of the company were Nitin Jayaram Gadkari, Jayakumar Rameshji Verma, Anandrao Motiram Raut, Astik Janglu Sahare and Vishnu Govind Chorghade.
Gadkari, now Union Minister for Road, Transport, Highways and Shipping, had run into a controversy a few years ago over his links with Purti Group. At that time, Gadkari had said he was no more associated with Purti.
The Comptroller and Auditor General of India (CAG) said IREDA disbursed first installment in March 2003 of Rs 10.25 crore and second installment in July 2003 of Rs 4.25 crore as an interim loan totaling to Rs 14.50 crore on request of the borrower which was more than 25 per cent of the loan sanctioned, "in violation of financial guidelines".

Reacting to the charges, Purti group firm Purti Power & Sugar said in statement: "CAG report clearly mentions that in April 2014, the IREDA management told the CAG that PSKL settled the entire loan outstanding as per OTS norms."

"While settling the repayment of the loan as per the OTS norms with IREDA, PSKL (Purti Sakhar Karkhana Limited) furnished all necessary documents and replied to all their queries to their satisfaction," it added.
"PSKL has always been a law abiding entity and has nothing to hide and will fully cooperate with the IREDA management in any manner whatsoever which they may deem necessary to satisfy the CAG," it added.

The CAG noted that after the first installment in March 2003 the borrower's financial position appeared to be unstable as one of the creditors Canbank Factors Limited of the borrower requested IREDA directly to clear the liability of the company to the extent of Rs 1.50 crore.