The Andhra Pradesh government has ordered the attachment of properties of KS Raju, group chairman of Hyderabad-based Nagarjuna Fertilisers and promoter of Nagarjuna Finance Ltd (NFL), 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 had secured a bail.
Nimesh Kampani, a leading investment banker and the then non-executive director (independent director), also came under the scanner for NFL’s failure to return money to depositors. Kampani ceased to be a director of NFL in April 1999.
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 from 85,160 depositors in 1997-98. Deposits of 16,122 depositors, amounting to Rs 23.02 crore, matured on December 31, 1999. The company defaulted on repayment of the matured deposits.
