Sail suspends 2 directors, 26 other officials over alleged corruption

State-owned Steel Authority of India Limited (Sail) has suspended two directors, and 26 senior officials, including executive directors, over alleged corruption, according to a regulatory filing with the stock exchanges.

The two suspended directors are VS Chakravarthy, director (commercial) and AK Tulsiani, director (finance). The filing said the two have been placed under suspension with immediate effect.

“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 19 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 VS Chakravarthy, director (commercial) and AK Tulsiani, director (finance) on suspension with immediate effect,” SAIL stated in the regulatory filing. The PSU steel giant has also named some executive director-level officials who have been suspended as per the steel ministry’s order.

“Complying with the ministry of steel, Government of India, letter dated 19 January 2024, the company has placed some below board-level officials of the company, which include SK Sharma, ED (F&A), CMC; Vinod Gupta, ED (commercial); Atul Mathur, ED (sales and ITD) and  RM Suresh, ED (marketing services), on suspension with immediate effect,” it further informed.

The ministry’s move follows Lokapal’s orders relating to two cases pertaining to Sail’s dealings with Venkatesh Infra Projects 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.” 

Lokpal ordered CBI investigation into the two cases of alleged corruption and found prima facie evidence of corruption. 

“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 the case of Venkatesh Infra Projects (P) Ltd, it has been alleged that Sail, on 20 October 2020, entered into a memorandum of understanding (MoU) with Venkatesh Infra Projects (P) Ltd - a company that was incorporated eight days ago on 12 October 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 Venkatesh was also offered steel at abysmally low prices, giving the company undue benefits running into crores of rupees. This was with the connivance of an executive director-level official, says the filing.

“… 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 Venkatesh vis-à-vis other similar customers that resulted in loss of opportunity for maximising profit to Sail,” Lokpal said in its order.

In the case pertaining to Avon Steel in Ludhiana, it was alleged that the same ED-level official and a former chairperson of Sail misused 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 used the semis bought from SAIL to manufacture narrow-width HR coils. SAIL also manufactures HR coils and sells them in the market. However, Avon manages to sell HR coils at rates that are cheaper by Rs1,000-1,500 per tonne as their coils have lesser width. Avon is a competitor of Sail in the market. The complainant has alleged that semis were sold to Avon Steel at cheaper rate to allow them to make windfall profits at the expense of SAIL. The complainant also shared data to show the 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 NSR of semis and HR coils sold by Sail was Rs20,962/MT in June 2021. This, according to the complainant, has been due to the undue favours to Avon Steel and has caused a loss of more than Rs231 crore to Sail.