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Dairy firm Kwality Ltd under investigation for alleged $190 million fraud

·1-min read
A vendor selling ice cream by Kwality Wall's, a Hindustan Unilever Limited brand, waits for customers in front of the India Gate in New Delhi
A vendor selling ice cream by Kwality Wall's, a Hindustan Unilever Limited brand, waits for customers in front of the India Gate in New Delhi

NEW DELHI (Reuters) - India's federal police on Monday said they had registered a case against dairy company Kwality Ltd. and its directors for allegedly cheating a consortium of banks of around 14 billion rupees ($190 million).

Founded in 1992, the company describes itself as one of India's fastest growing private dairy firms, with six manufacturing units, and exports to more than 28 countries, according to its website.

Based on a complaint by state-run lender Bank of India, the Central Bureau of Investigation (CBI) said it has registered a case against Kwality for alleged "diversion of bank funds, sham transactions with related parties, fabricated documents".

"Investigation is continuing," CBI said in a press release, adding the agency had conducted searches at eight locations on Monday.

Kwality's managing director Sanjay Dhingra, who is named in the CBI case, was unavailable for comment.

The other banks named in the complaint include Canara Bank, Bank of Baroda, Andhra Bank, Corporation Bank, IDBI Bank, Central Bank of India, Dhanlaxmi Bank and Syndicate Bank.

Last week, Kwality posted a consolidated net loss after tax of 142.5 million rupees for the June quarter, compared to 646.2 million rupees a year ago.

In 2016, US-based investment firm KKR & Co. L.P. backed the company with 5.20 billion rupees for expansion and part repayment of debt.

Two years later, an Indian arm of KKR began bankruptcy proceedings against Kwality.

($1 = 73.5840 Indian rupees)

(Reporting by Devjyot Ghoshal)