News: Ansal Properties' related-party land deals remain unexplained-06-05-2022
According to financial statements of the Chiranjiv Charitable Trust, which runs educational institutions under the Ansal University brand (these have now been renamed Sushant University), the trusts made an advance payment of ₹120 crore to Ansal Properties in FY19 to buy land for a campus in Lucknow.
Relatedparty land deals between listed Ansal Properties & Infrastructu re and charitable trusts controlled by the Ansal family that took place four years ago remain unexplained in the listed firm's books, a review of the financial statements of the entities reveals.
According to financial statements of the Chiranjiv Charitable Trust, which runs educational institutions under the Ansal University brand (these have now been renamed Sushant University), the trusts made an advance payment of ₹120 crore to Ansal Properties in FY19 to buy land for a campus in Lucknow. This advance was paid based on an agreement that Ansal Properties would subsequently sell the land to Chiranjiv, as per the trust's statements.
However, it is not clear if possession of the land has been taken by the trusts. Further, the financial statements of Ansal Properties for FY21 continue to show that a sum of ₹129 crore is 'advance payable' to Chiranjiv Charitable Trust.
The trust's financial statements show that another advance payment of ₹57 crore was made by Chiranjiv Charitable Trust to Ansal Properties in FY19. No explanation was given for that payment.
The Ansal API Group has a debt burden of ₹1,400 crore and financial institutions have approached courts to recover dues in the past.
Ansal Properties did not respond to ET's emailed queries on the transactions.
Auditors usually advise companies against undertaking such transactions, said an auditor at a Big Four firm on condition of anonymity. "When you have a situation where a charitable trust is buying land from a company promoted by the same family, one has to ask if there was proper valuation of the land, and if it was absolutely necessary for the land to be purchased from a related party."
An Ansal official, who spoke on the condition of anonymity, said the listed company is owed a sum of ₹130 crore by the charitable trusts because the latter had used the Ansal brand to run educational institutions for almost 20 years. This official claimed an arbitrator had ruled in favour of Ansal Properties regarding its claim against the charitable trusts, and now the trusts would have to deposit the amount as compensation for use of the Ansal brand. The official claimed the arbitrator's award could potentially set off the 2019 land transaction, and so the listed company would not owe anything to the trust.
The arbitrator's ruling is dated November 19, 2020, according to this official. The official was unable to confirm if possession of the land had been given to the trusts.
However, such set-offs are generally seen as a violation of accounting norms and could be subjected to scrutiny by regulatory agencies, analysts said.
The Ansal Group is facing a series of allegations regarding its functioning.
The UP Real Estate Regulatory Authority has claimed that the company has diverted a sum of ₹600 crore from one its projects. The company's vice-chairman and director Pranav Ansal was arrested in September 2019 by the Lucknow Police for allegedly cheating flat-buyers and was subsequently released upon settlement of dues. Also, Dalmia Group Holdings has won an arbitration award worth ₹160 crore against Ansal API Group over a land dispute, ET reported on November 23, 2018.
