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L&T may face SFIO probe as MP says group defaulting on bank loans

The Serious Fraud Investigations Office (SFIO) has asked its parent, the Ministry of Corporate Affairs, if it can probe engineering giant Larsen & Toubro and its subsidiaries, over allegations of misappropriation of funds and bank loans.

The SFIO’s move follows allegations by Kahkashan Perween, a Rajya Sabha MP from Bihar, that L&T and its subsidiaries may have loans aggregating to ₹8,000 crore from various public sector banks and they “face the serious threat of becoming NPAs.”

Perween had written to the SFIO seeking a forensic audit of L&T’s books and alleged that two L&T subsidiaries — L&T Halol and L&T Chennai Tada Ltd — had defaulted on payments to banks including Allahabad Bank, UCO Bank, Oriental Bank of Commerce, Syndicate, Vijaya Bank & IDBI.

The letter by the MP alleges that the parent company let L&T Halol enter SDR (strategic debt restructuring) in 2015, and since then it’s been missing payments. L&T Chennai became an NPA in 2016. The allegations also suggest a possible nexus with banks to not enforce guarantees by L&T subsidiaries, resulting in the non-recovery of ₹1,300 crore in dues. It is also alleged that L&T and some of its associate companies and subsidiaries have been termed as habitual defaulters by the National Highways Authority of India (NHAI). Recently, the NHAI had cancelled road projects of 20 contractors, including L&T, for not being able to fulfill obligations as per deadline.