ED Raids BC Jindal Group: Investigating Rs 505 Crore FEMA Violations and Overseas Fund Diversion

The Enforcement Directorate has conducted search operations under the Foreign Exchange Management Act at 13 locations associated with the BC Jindal Group and its affiliates. These searches were executed on September 18 and 19 across various premises in Delhi-NCR and Hyderabad.

According to the ED, the operations were launched due to suspected violations of FEMA regulations by several group entities, specifically Jindal India Thermal Power Ltd (JITPL), Jindal India Powertech Ltd (JIPL), and Jindal Poly Films Ltd (JPFL). The investigation focuses on alleged irregularities involving overseas investments, round-tripping of funds, and misappropriation of public investors' capital.

Investigators claim that companies owned by Shyam Sundar Jindal, his spouse Shubhdra Jindal, and their son Bhavesh Jindal transferred Rs 505.14 crore to their Dubai-based company, Topaz Enterprise DMCC. This substantial remittance was reportedly utilized to acquire another foreign entity, Garnet Enterprise DMCC, under the pretext of Overseas Direct Investment.

The investigation has uncovered that between fiscal years 2013-14 and 2016-17, JPFL invested Rs 703.79 crore into JIPL, which subsequently channeled these funds into JITPL's coal power project in Odisha. However, rather than recovering this investment, JPFL wrote off the entire amount in FY 2018-19 and divested it at a significant loss to promoters and affiliated companies—an action the ED suspects was a calculated diversion of investor funds.

In May 2024, JIPL received Rs 853.72 crore from JITPL through the redemption of preferential shares. Instead of repaying JPFL, approximately Rs 505.14 crore was allegedly diverted to Topaz Enterprise DMCC, controlled by Shyam Sundar Jindal, for the acquisition of Garnet Enterprise DMCC.

Seized documents indicate that valuation reports may have been manipulated to justify inflated overseas remittances. The ED suspects the group transferred funds internationally through fabricated transactions and distributed them across multiple entities in various countries including the Netherlands, USA, Belgium, Italy, Luxembourg, Singapore, China, UAE, and Germany—all beneficially owned by the Jindal family.

It is noteworthy that Shyam Sundar Jindal was in Hong Kong during the search operations and has not yet participated in the investigation.

The ED has confirmed the seizure of incriminating documents pertaining to overseas acquisitions and financial control, and the investigation remains ongoing.