CBI Registers ₹75 Crore Trade Finance Fraud Case Against KS Oils

The Central Bureau of Investigation (CBI) has registered a case against a former Chairman and Managing Director (CMD) of the State Trading Corporation (STC) , six former senior officials, and KS Oils Ltd (KSOL) over alleged irregularities in the extension of ₹75 crore trade finance for mustard oil purchases between 2010 and 2014. The agency alleges that lapses in due diligence and misuse of financial arrangements caused significant losses to the public sector enterprise.

According to the First Information Report (FIR), the alleged fraud involved the sanction and execution of trade finance facilities provided by STC to KS Oils for procuring mustard oil. The CBI claims that STC issued Letters of Credit (LCs) beyond approved limits, failed to conduct proper verification of suppliers, and did not take timely recovery measures despite emerging concerns.

The investigation further alleges that two supplier firms Chambal Valley Agro Products Pvt. Ltd. and Gwalior Commodities Pvt. Ltd. were in reality shell entities controlled by KS Oils Chairman Ramesh Chand Garg and Director Davesh Agarwal . These companies were allegedly used to receive LC proceeds, which were later routed back to KS Oils through a network of transactions.

As per the FIR, STC had entered into an arrangement under which KS Oils identified suppliers, while STC provided trade finance through usance Letters of Credit. Star Agri Warehouse and Collateral Management Ltd. was appointed to oversee the receipt, storage, quality certification, and monitoring of mustard oil stocks pledged as collateral.

The CBI has also alleged that false storage and quality certifications were issued during the process, enabling the continuation of financing despite irregularities. The agency claims that these actions resulted in wrongful losses to STC and corresponding gains to the accused entities.

Former STC CMD N.K. Mathur has been accused of approving the trade finance proposal despite incomplete disclosure of STC’s existing exposure to KS Oils. The FIR also alleges that he allowed repeated extensions for stock liquidation and recovery instead of initiating timely corrective action.

Following a preliminary enquiry that lasted over a year, the CBI has named seven former STC officials, KS Oils, its top executives, and associated companies in the case. Further investigation is underway to determine the extent of financial losses and individual accountability.