Asia / Oceania
Cement firms come under scanner in high profile corruption case
May, 31 2012
(India) -- Chennai-based India Cements Limited and Hyderabad-based Penna Cement Industries have come under the scanner after the CBI investigations revealed that the two Private Limited (PCIL) Cement companies made investments into the firms of the Kadapa MP YS Jagan Mohan Reddy, who is currently remanded to judicial custody on charges of corruption.
"The investigation revealed that as a quid pro quo M/s India Cements Limited had invested an amount of Rs 40 crore in Jagathi Publications and an amount of Rs 100.32 crore in other group of companies of YS Jagan Mohan Reddy, the accused No 1,&" the CBI stated in the report.
The other cement companies mentioned in the FIR filed in August last year include Dalmia Cements and Bharathi Cements.
Andhra Pradesh is the topmost state in India in terms of the installed capacity, which is at 48 million tonne per annum (mtpa).
The CBI has alleged that the investments in the firms owned by the politician were made by the cement companies in exchange for favors received from the state government headed by the then chief minister and Jagan's father YS Rajasekhara Reddy.
Among the favors granted to the cement firms by the then state government, the CBI cited a few instances such as the permission granted to India Cements to draw 1 million gallons of water per day, including 300,000 gallons of water already permitted from Krishna River. The company was also granted extension of lease of land for a further period of 25 years from July 2003 to June 2028. The company was given a 2.6 acre land to construct an infiltration well with a pump house for pumping out water to the cement plant for a period of 20 years that expired in 2003.
However, India cements has refuted the charges.
"There was absolutely no quid pro quo at all. Water allocation towards expansion of our plants was perfectly in line with the AP Industrial Policy to promote industrial development in the state," said Raghupathy, executive president of India cements.
India Cements has an installed capacity of 7 mtpa in the state and 12.95 mtpa in South India.
Penna Cements, the AP-based cement company which has an installed capacity of 6.5 mtpa next to India Cements in the state invested Rs 23 crore in Carmel Asia Holdings Private Limited and Rs 45 crore in Jagathi Publications Private Limited, both companies owned by Jagan. The Penna group had received an allotment of government land, fresh limestone mining leases and transfer of the existing mining leases to the extent of close to 3,000 acre through various government orders among other benefits, according to the CBI.
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