A feeder road giving access to India’s first superhighway, The expressway between Mumbai and Pune. (Photographer:Santosh Verma/Bloomberg News)

IRB Infrastructure Slips On CBI Chargesheet

IRB Infrastructure Developers Ltd. shares fell nearly 5 percent today after the Central Bureau of Investigation filed a chargesheet against the company, Chairman and Managing Director Virendra Mhaiskar and others over alleged illegal purchase of government land.

Aryan Infrastructure Investments Pvt Ltd., a unit of IRB Infrastructure, has been accused of illegally acquiring government land in and near Pimploli village in the Pune district, the company said in an exchange filing yesterday. A chargesheet has been filed in a Pune court, the filing added.

The chargesheet names IRB Infrastructure, its subsidiary AIIPL, its director Mhaiskar, for having issued a power of attorney in favour of the then project head, and Deepak Gadgil, who was the project head at the time.

The company and its officials have been fully cooperating with authorities and will seek appropriate remedies under the law, IRB said.

It appears that the chargesheet focuses on an alleged conspiracy to attempt to cheat for acquiring certain land parcels belonging to the government/MSRDC. We deny all allegations made against Mr Mhaiskar, Mr Gadgil and AIIPL and the company in this matter will seek appropriate remedies under the law.
IRB Infrastructure Statement

In a separate clarification issued the same day, IRB said, “AIIPL began acquiring land parcels from 2007 onwards and acquired approximately 1,200 acres of land parcels. In early 2009, AIIPL observed that around 5 percent of the total land parcels owned by it were, in fact, owned by the Maharashtra State Road Development Corporation.”

AIIPL on its own accord proceeded to cancel agreements to sell, for these land parcels. The amount attributable to these 5 percent of land parcels, pertaining to which the chargesheet has been filed, is Rs 6 crore only.
IRB Infrastructure Statement

Brokerages Sound Caution

Brokerages HSBC Global Research, Macquarie and Emkay Global expect the stock to remain under pressure based on this development.

“It is very difficult to predict how the case will progress from here and how it can potentially impact operations of the company,” HSBC said in its report. “Until further clarity emerges on this front, we believe IRB’s shares will be under pressure and will not be driven by business fundamentals.” The brokerage downgraded its rating on the stock to ‘Hold’ from ‘Buy’ and cut the price target to Rs 200 from Rs 331 earlier.

"The stock could be under pressure on the back of this development. The outcome or time-line is difficult to forecast,” Macquarie said in its note.

IRB in its exchange notification, said the development “should not have any material impact on its business”.

The stock has lost 11.5 percent between Nov. 29- Dec. 5 on the BSE.

Case Background

Here is the timeline of the case, as detailed in the draft prospectus filed ahead of IRB InvIT’s initial public offering.

2009: RTI Activist filed a complaint and a case was registered against Mr. Mhaiskar, Mr. Gadgil and certain others, alleging an illegal purchase of governmental land on the basis of fake and forged documents.

Jan. 13, 2010: RTI Activist was murdered by unknown persons and the investigation of such murder case was transferred from local police to the CBI.

Dec. 2011: Local police filed a closure report in relation to the illegal land purchase case, and such closure report was accepted by the Judicial Magistrate, First Class Vadgaon Maval, District Pune.

Aug. 8, 2014: Bombay High Court ordered matter relating to the illegal land purchase be reinvestigated by the CBI in light of the murder investigation.

Aug. 11, 2014: CBI filed the Closure Report in relation to the murder investigation before the Judicial Magistrate, First Class Vadgaon Maval, District Pune. While the acceptance of the Closure Report was pending, the case was transferred to the Sessions Court, Pune.

Jan. 5, 2015: CBI visited the Sponsor's offices in connection with the illegal land purchase reinvestigation ordered by the Bombay High Court.

April 2016: CBI requested certain additional documents in relation to the murder investigation, which were provided.