The Andhra Pradesh government has issued orders for attachment of properties of Hyderabad-based Nagarjuna Fertilisers group chairman and promoter of Nagarjuna Finance Limited K S Raju and others under the Andhra Pradesh Protection of Depositors of Financial Establishments Act (1999).
Raju, along with another director Pundi Krishna Swamy Mahadevan, was arrested on December 15 last year in connection with a case relating to default on payments to NFL depositors. The two secured a bail later.
Nimesh Kampani, a leading investment banker who was a non-executive director (independent director), also came under the scanner for NFL's failure to return the money to the depositors. Kampani ceased to be a director of NFL in April 1999.
The Nagarjuna group incorporated NFL as a non-banking financial institution and accepted fixed deposits with a minimum amount of Rs 5,000 for periods of 12, 24, 36 and 54 months by promising an interest rate of 14, 14.25, 15.5 and 18.5 per cent respectively. It collected deposits of Rs 98.3 crore (Rs 983 million) from 85,160 depositors for the year 1997-98.
Deposits of 16,122 depositors amounting to Rs 23.02 crore (Rs 230.2 million) matured on December 31, 1999. But the company defaulted on repayment of the matured deposits.
In fact, the state government had issued attachment orders of properties standing in the name of K S Raju and others in March (Go Ms No 158 dated March 16, 2009) but named the company as Nagarjuna Constructions and Engineering Company Limited instead of Nagarjuna Fertilisers and Chemicals Limited.
Rectifying this mistake, the government issued another order on Monday replacing Nagarjuna Constructions and Engineering Company wherever it occurred with Nagarjuna Fertilisers and Chemicals Limited.