Has Elder Pharmaceuticals defrauded investors?

The nearly Rs 400 crore (Rs 4 billion) Elder Pharmaceuticals has come under the corporate affairs ministry's scanner for alleged irregularities in its balance sheet that has resulted in the siphoning of several crores of investors' money, a charge denied by the firm.

Official sources said the ministry's serious fraud investigations office has initiated a probe into the alleged irregularities.

"There was an income tax raid at the firm premises sometime back... later, the company did pay up the required tax. But it came to light that certain bogus bills were debited in the account, which inflated expenses. The company had taken advantage of this while filing its income tax," a senior official, who didn't wish to be identified, said.

He said bogus bills to the tune of Rs 15 crore (Rs 150 million) were allegedly debited through cheques.

"The probe indicated that the listed company had debited the amount through cheques on bogus bills leading to the siphoning of money," the official said.

He said the anomalies found in the financial statements of the company were also tantamount to a violation of the Companies Act and, therefore, the matter is being looked into by the corporate affairs ministry as well.

When contacted, a company spokesperson said, "We are cooperating with the concerned department and are also in the process of furnishing all the documents required. We are in discussions with the department and the firm has not done anything which violates any law."

As per Section 628 of the Act, if any person is found guilty of recording any false transactions in the financial statements, he is punishable with an imprisonment of up to two years and is also liable to a fine.