A software firm, whose flagship product was a school and college management application, hired as an IT consultant for a mineral sands company; monthly remuneration of Rs 8 lakh for consultancy work that, investigators say, left no trace; and, fresh loans disbursed despite defaults on earlier borrowings.
These are the key allegations to emerge from a Ministry of Corporate Affairs investigation into the financial dealings between Exalogic Solutions Pvt Ltd, , daughter of former Kerala Chief Minister , and Cochin Minerals and Rutile Ltd (CMRL). CMRL is a publicly listed company in which state-PSU KSIDC (Kerala State Industrial Development Corporation) holds a 13% stake.
The allegations, detailed in a Serious Fraud Investigation Office (SFIO) report filed before a court in Ernakulam last year as part of prosecution proceedings under the Companies Act, are central to the Enforcement Directorate’s money laundering probe against Veena and CMRL.
On Friday, ED Director Rahul Naveen was in Kerala to take stock of the probe. Days earlier, the ED had searched premises linked to Vijayan and Veena in Kerala as part of the probe.
Veena has denied all allegations through a counter affidavit in court, claiming her transactions with CMRL were lawful and transparent. Following the ED searches, CPM general secretary M A Baby had said, “The CPI(M) denounces the ED raid on Comrade Pinarayi Vijayan’s residence. This is a targeted attack on a top Opposition leader by the BJP government. Such actions will not intimidate Pinarayi Vijayan or the CPI(M).”
According to the SFIO report, Exalogic Solutions was incorporated in 2014-15 with a paid-up capital of Rs 1 lakh, with Veena as its director. Its principal software product, Inmeg, was a school and college management solution, it said. Despite the company’s modest scale and a negative net worth of Rs 66 lakh in 2021-22, the report said, a substantial portion of its revenues came from contracts awarded by CMRL, particularly during 2017-18 and 2018-19.
According to the SFIO, Veena allegedly played a “pivotal role” in facilitating payments amounting to Rs 2.78 crore from CMRL under the guise of IT consultancy services. “Veena was appointed by CMRL as an IT and marketing consultant, receiving a monthly retainer of Rs 5 lakh in addition to Exalogic’s monthly payments of Rs 3 lakh. This dual arrangement positioned her as a significant financial beneficiary, heavily reliant on CMRL,” the report states.
However, the report says, investigators found no evidence that either Veena or Exalogic carried out any consultancy work for the company. “Investigations uncovered that Exalogic provided no actual services to CMRL, as confirmed by statements from Exalogic employees, CMRL’s IT head, and Veena T herself. This absence of any development or consultancy work confirms that payments to Exalogic and Veena T were fraudulent, with no deliverables or work outputs provided.”
The report contrasts Exalogic’s engagement with that of another technology firm hired subsequently by CMRL. “In contrast, ATNA Technologies, later hired for a similar IT study, delivered structured outcomes at a significantly lower cost, underscoring the lack of justification for the payments made to Exalogic and Veena,” it states.
‘Rs 50-lakh loan trail’
The SFIO further alleges collusion between Veena and then CMRL Managing Director Sasidharan Kartha. According to the report, a non-banking finance company promoted by Kartha and his wife Jaya Kartha, Empower India Capital Investments Pvt Ltd (EICPL), extended a Rs 25-lakh loan to Exalogic in August 2015, carrying an interest rate of 12% and requiring repayment through 24 monthly instalments beginning August 1, 2016. Despite Exalogic making no repayment until August 28, 2016, EICPL sanctioned and disbursed another Rs 25-lakh loan the following day. Exalogic repaid Rs 4 lakh only after receiving the second loan, the report states.
According to the SFIO, funds paid by CMRL to Exalogic were allegedly used to subsequently service these liabilities. “Bank records indicate that funds paid by CMRL to Exalogic were mostly redirected to cover Exalogic’s debts with Empower India Capital Investments Pvt Ltd (EICPL). This diversion effectively transferred a Rs 50 lakh liability from the private EICPL to the publicly held CMRL, causing financial harm to CMRL,” the report says.
CMRL is a listed manufacturing company specialising in the production of synthetic rutile and related chemical products. The Kartha family is its largest shareholder at 35.57%, followed by KSIDC at 13%.
Investigators said email exchanges examined during the probe allegedly centred mainly on invoicing and release of payments rather than delivery of services. “The investigation also uncovered collusion between Veena and Sasidharan Kartha… Emails predominantly focused on invoice generation and payment processing rather than actual service provision, suggesting a deliberate misuse of consultancy agreements for financial gain,” the report states.
The allegations concerning Exalogic emerged during a wider SFIO investigation into CMRL’s finances, which uncovered what investigators described as a long-running scheme of siphoning company funds. According to the report, CMRL recorded Rs 139 crore in “fictitious cash expenses” under sludge handling and transportation, and another Rs 43 crore through alleged over-invoicing involving unidentified vendors — an alleged cash misappropriation totalling Rs 182 crore over 15 years.
The SFIO submitted in court that the probe relied in part on loose sheets recovered by the Income Tax Department during a search of CMRL in 2019, which investigators said recorded actual cash disbursements. “The loose sheets reveal that, in addition to payments categorized under various heads, there are also cash payments recorded in the name of the Managing Director (MD) and his relatives. Therefore, there appears to be no connection between the cash payments made and the operations of CMRL,” the report says.
