ED searches Gujarat firm for alleged FEMA violations

The ED today conducted multiple searches against a Gujarat-based pharma company for alleged "suspicious" transactions in violation of foreign exchange laws.
The agency searched at least 11 premises of the group, identified as Vadodara-based Sandesara Group of Companies, in Vadodara, Ahmedabad, Mumbai and Delhi under the Foreign Exchange Management Act (FEMA).
The central probe agency, in a statement, said that the companies owned by the group were "indulging in transactions which are complex and suspicious in nature and are being routed through intermediary entities situated in and outside India".
"Chetan Jayantilal Sandesara and Nitin Jayantilal Sandesara, owners of Sandesara Group of Companies, are suspected to be controlling more than 151 entities including seven subsidiaries outside India, of which three each are in Mauritius and the British Virgin Islands and one is in Nigeria," it said.

The Enforcement Directorate (ED), after the searches, said it seized "100 rubber stamps of different companies with same address and fixed deposit receipts of Rs 1.8 crore".
It added that "incriminating documents have been recovered and seized" as part of the operation that began early this morning.

"According to available information, it is suspected that Chetan and Nitin Sandesara are suppressing income, inflating expenses of their companies in India and routing such unaccounted amounts through various bogus or paper entities," the agency alleged.
A company of the group, Sterling Biotech, was also searched by the agency sleuths during the operation.

"It is suspected that Sterling Biotech Limited in connivance with Dubai-based NRI Arun Pancharia and his entities perpetrated fraudulent scheme whereby Pancharia subscribed the global depositary receipt (GDR) to the tune of USD 15.39 million (of Sterling Biotech) with the subscription money availed as loan from the bank for which issuer company (SBL) itself gave the security to bank.
"It is also suspected that Sterling Biotech Limited had been exporting co-enzyme Qten to UAE and France at highly over invoiced price," the ED said.
The agency said, "Information has also been received in respect of 13 individuals/entities of Sandesara Group of Companies, including Sterling Biotech and Blue Mark Mercantile Private Limited, for high value suspicious transactions."

Efforts to seek comments from Sterling Biotech did not fructify.