New Delhi: Steel Authority of India Limited (SAIL) has suspended two Directors and 26 below board-level officials, including Executive Directors (ED), for alleged corruption, regulatory filing made to the stock exchanges on Saturday show. SAIL has placed Director (Commercial) VS Chakravarthy and Director (Finance) AK Tulsiani under suspension with immediate effect, the PSU told the bourses.
“In terms of Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is hereby informed that Ministry of Steel, Government of India vide its letters dated 19th January, 2024 in exercise of the powers conferred by sub-rule (1) of Rule 20 of the Conduct, Discipline and Appeal Rules, 1977 of Steel Authority of India Limited, has placed Shri V.S. Chakravarthy, Director (Commercial) and Shri A.K. Tulsiani, Director (Finance) on suspension with immediate effect,” said SAIL in the regulatory filing. The Maharatna PSU has also named some Executive Director-level officials who have been suspended in line with the order issued by the Ministry of Steel.
“It is further informed, that complying with the Ministry of Steel, Government of India, letter dated 19th January, 2024 the Company has placed some Below Board Level Officials of the Company, which include Shri S.K. Sharma, ED (F&A), CMC; Shri Vinod Gupta, ED (Commercial); Shri Atul Mathur, ED (Sales & ITD) and Shri R.M. Suresh, ED (Marketing Services), on suspension with immediate effect,” said SAIL.
According to a copy of the order issued by the Lokpal, accessed by PSU Watch, there are two cases pertaining to SAIL’s dealings with M/s Venkatesh in 2020 and Avon Steel Industries between 2020 and 2022 that are under scanner. Taking note of the prima facie material on record, the Lokpal has said in its order, “… we are of the considered view that an investigation is necessary in order to unearth the truth and the roles played by the concerned officers/officials at SAIL in the entire process.” The Lokpal has directed the Central Bureau of Investigation (CBI) to investigate the two cases in accordance with Section 20(3) (a) of the Lokpal and Lokayuktas Act, 2023.
“The investigation shall be completed as expeditiously as possible and preferably within a period of six months from the date of receipt of this order,” the order said.
In one of the cases, it has been alleged that SAIL on October 20, 2020 entered into a Memorandum of Understanding (MoU) with M/s Venkatesh Infra Projects (P) Ltd case, a company which was incorporated eight days ago on October 12, 2020, for the sale of 1,40,000 MT of TMT bars. The complainant has raised questions over how a company incorporated only days before the signing of the MoU in 2020 was able to secure such large projects where it was able to consume such large volumes of steel. The complainant has also alleged that special favour was shown to M/s Venkatesh by offering the company abysmally low prices that were not being offered to even well-established customers of SAIL, which allegedly conferred benefits running into crores of rupees onto the company. An Executive Director-level officer has been accused of undue favouritism and manipulation for facilitating the deal.
Referring to this case, the Lokpal said in its order, “… we are of the view that there is prima facie material on record to indicate that in Complaint number 73/2023, there was lack of due diligence on the part of the concerned officers of SAIL in providing material at lower costs to M/s Venkatesh vis-à-vis other similar customers that resulted in loss of opportunity for maximising profit to SAIL.”
In another case, allegations have been levelled against the same ED-level officer and a former Chairperson of SAIL for allegedly misusing their official position, resulting in loss to SAIL. The complainant has alleged that SAIL sold semis, a steel product, to Ludhiana-based Avon Steel Industries Private Ltd at prices that gave huge profits to the company and caused loss to SAIL.
Avon Steel buys semis from SAIL and uses them to manufacture narrow-width HR Coils. SAIL also manufactures HR Coils and sells them in the market. However, Avon’s HR Coils are cheaper by Rs 1,000-1,500/MT as their coils have lesser width. Therefore, Avon is a competitor of SAIL in the market. The complainant has alleged that Semis were being sold to Avon Steel to allow them to make windfall profits at the expense of SAIL. The complainant has shared data which shows that there is an exponential increase in the difference between the Net Sales Realisation (NSR) of Semis sold to Avon Steel and the NSR of HR coils sold by SAIL’s Ludhiana branch. The different between the NSR of Semis and HR Coils sold by SAIL was Rs 20,962/MT in June 2021. The complainant has alleged that the advancing of undue favours to Avon Steel has caused a loss of more than Rs 231 crore to SAIL.