SAIL SCAM: APCO’s letter and Venkatesh’s SCAM
APCO’s letter cost SAIL loss of over Rs 80 Crore. Will CMD SAIL ban business dealings with APCO?
Against the complaint of the Whistle Blower Rajeev Bhatia in the matter of supplies to Venkatesh Infra Projects P Ltd in the name of Project, in the first week of Mar 2023 LOKPAL of India entrusted CVC to conduct the preliminary inquiry on the matter. As CVOs are an extended arm of CVC, the responsibility of the inquiry was given to CVO SAIL by the CVC.
For facilitating the signing of Project MOU, a letter cum experience certificate dated Sep 12, 2020 issued by APCO Infratech P Ltd to Venkatesh Infra Projects P Ltd was submitted to SAIL by them. It was certified by APCO Infratech P Ltd that Venkatesh Infra Projects P Ltd is associated with them in 11 on-going projects including expressway projects with satisfactory performance. During the preliminary inquiry, on Mar 16, 2023, SAIL vigilance took up the matter with APCO Infratech P Ltd to confirm the authenticity of the above letter Vide e-mail dated Mar 21, 2023 APCO Infratech P Ltd confirmed the authenticity of the letter.
Considering that Venkatesh Infra Projects P Ltd was constituted on Oct 12, 2020 and APCO Infratech P Ltd (a contractor for NHAI) issued their letter on Sep 12,2020, SAIL Vigilance vide e-mail dated Mar 23, 2023 again took up the matter with them and sought copies of Work Orders issued to Venkatesh Infra Projects P Ltd and basis of issuance of the letter dated Sep 12,2020. After much pursuance, APCO Infratech P Ltd vide their e-mail dated Apr 22, 2023 stated that promoter of Venkatesh Infra Projects P Ltd i.e. Mrs. Ekta Agarwal has a long-term association with them and earlier they were providing services in the name of Venkatesh Steel. Further, as the name of Venkatesh Infra Projects P Ltd was approved by MCA on Sep 07, 2020 and on request of the party, APCO Infratech P Ltd transferred all the orders to the new company.
APCO Infratech P Ltd further stated that they are unable to produce old work orders issued to Venkatesh Steel as most of the projects are now closed projects and it is very difficult to get the work orders from their old records.
In addition, APCO Infratech P Ltd stated that they have not issued the experience certificate in the name of SAIL and further details in this regard may be obtained from Venkatesh Infra Projects P Ltd. It seems that APCO Infratech P Ltd thought that they were getting into a deep quagmire, they tried to divert the issue away from them.
On Apr 17, 2023, SAIL Vigilance also took up the matter with Vigilance of NHAI (National Highways Authority of India) for providing information with respect to sub-contracting of Jobs by APCO Infratech P Ltd to Venkatesh Infra Projects P Ltd. In reply it was informed that Venkatesh Infra Projects P Ltd was not a sub-contractor of APCO Infratech P Ltd for National Highways Authority of India (NHAI) related projects
With respect to above, Bureaugram’s investigation throws the following points and question:
1. The letter cum experience certificate was issued by APCO Infratech P Ltd to Venkatesh Infra Projects P Ltd on Sep 12, 2020 merely certified that Venkatesh Infra Projects P Ltd is associated with them in 11 on-going projects including expressway projects with satisfactory performance. The letter was silent about the kind of association. How and why, it was construed by the SAIL officials that Venkatesh Infra Projects P Ltd was a sub-contractor for APCO Infratech P Ltd. The association could have been of many kinds with one of them as supplier of TMT Bars particularly when the SAIL officials were fully aware of the business of the Ekta Agarwal family through their earlier associations through their two firms viz. BLA Udyog P Ltd and Jai Balaji Enterprises. They both also are Trading firms but SAIL officials sold steel to them as Project.
https://www.bureaugram.com/news/agarwals-agarwals-and-sail-officials-a-noticeable-nexus
2. A total of 13 officers of SAIL CMO signed on the proposal. How come none questioned the APCO’s letter.
Though the proposal for Project MOU was initiated on Oct 27, 2020 but the MOU was effective from Oct 20, 2020
3. Name approval and incorporation of a company are two different things. Even if the name for the company is approved, and the other formalities of incorporation are not completed as per MCA guidelines within 20 days, the name gets free for others. The only purpose of pre-approval for a company’s name before the initiation of process for registration is to avoid duplication in names.
4. Venkatesh Infra Projects P Ltd was incorporated on Oct 12, 2020 and SAIL signed Project MOU with the firm from Oct 20, 2020, when the firm did not even have the GST registration. The firm got its first GST registration on Oct 27, 2020 in the state of Delhi.
5. On the very next day i.e. on Oct 28, 2020, a proposal for selling price was initiated by the Dehradun Consignment Agency (Under Ghaziabad Branch of SAIL-CMO). It may be noted that till this date GSTIN was only for state of Delhi.
6. On the very next day i.e. Oct 29, 2020, order was placed by Venkatesh Infra Projects P Ltd on the Ghaziabad branch of SAIL CMO.
7. On the same day, the order was released by the Ghaziabad Branch on the Durgapur Steel Plant of SAIL for TMT Bars on Direct Dispatch by Rail with destination as Panki (Kanpur) Siding.
8. On Nov 01, 2020, dispatches against the above order began.
Readers must be intrigued by the speed of the whole process. Additionally, they must be intrigued for another reason. When the firm did not have the GST registration for the state of Uttar Pradesh, how did the above happen? The TMT Bars were Billed to: Venkatesh Infra Projects P Ltd with the Delhi GSTIN and Shipped to: Venkatesh Infra Projects P Ltd with GSTIN - 09AADCA5639H1ZK which belongs to APCO Infratech P Ltd. It has been gathered that about 15,000 T of steel has been sold by SAIL officials in this manner.
Venkatesh Steel vs Venkatesh Infra Projects P Ltd
Unlike Venkatesh Infra Projects P Ltd, which is a Private Limited Firm with Ekta Agarwal and Karishma Agarwal as its Directors, Venkatesh Steel is a Proprietorship Firm with Ekta Agarwal as its Proprietor.
Suspension/cancellation dates suggest that Venkatesh Steel was an active firm when APCO Infratech P Ltd transferred all orders from Venkatesh Steel to Venkatesh Infra Projects P Ltd. Therefore, the question arises what was the need to do so?
Instead of incorporating a new company Venkatesh Infra Projects P Ltd, why Ekta Agarwal had not approached to enter into Project MOU in Venkatesh Steel?
When both Venkatesh Steel and Venkatesh Infra Projects P Ltd are trading firms and also registered with GST authorities with Nature of Core Business Activity as Trader - Wholesaler/Distributor, why a new firm Venkatesh Infra Projects P Ltd was incorporated?
Further, as the name of Venkatesh Infra Projects P Ltd was approved by MCA on Sep 07, 2020 and on request of the party, APCO Infratech P Ltd transferred all orders to the new company.
Answer of all the above questions lies in the name of the firms. From the name itself Venkatesh Steel smells like a Steel Trading Firm. Moreover, as it was an old firm, its trading activities were known. To remove these issues, the name of the new firm was christened including words like “Infra” and “Projects” to give a feel of a construction company. It would not be out of place to assume here that the same was suggested by SAIL officials to Ekta Agarwal.
In addition, Venkatesh Steel was a Proprietorship firm and for doing a large annual business of 1,50,000 T of steel valuing about 900 Crores, it was probably thought that a Private Limited Company would be a better option. It may be noted that in projects steel constitutes about 30% of value. With steel valuing 900 Crores, the gross value of projects being done by the firm would be to the tune of Rs 3,000 Crores. The bubble burst after a year otherwise the aim was to continue with this illegal Project business for years to come in connivance with the SAIL officials.
Venkatesh Steel was a trading firm. Hence, orders, if any, placed by APCO Infratech P Ltd on the firm would have been for supply of steel/TMT Bars and not for the project work. Therefore, order transferred, if any, from Venkatesh Steel to Venkatesh Infra Projects P Ltd would also have been for supply of steel primarily TMT Bars.
With GSTIN only for three states, Venkatesh Infra Projects P Ltd has been able to sell steel purchased from SAIL in 11 states. The modus-operandi was that steel was billed to them in the three states where they are registered with GST and shipped to other firms mentioning their respective GSTINs.
(The above article has been written based on Bureaugram’s extensive research and inputs from various sources including sources from SAIL)
