Obulapuram Mining Company
Encyclopedia
Obulapuram Mining Company also known as OMC or OMCPL is an iron ore mining
company located in Karnataka
and Andhra Pradesh
in India
. The company is owned by the brothers, G. Karunakara Reddy
, G. Janardhana Reddy
and G. Somashekara Reddy
, who were ministers in the Government of Karnataka
. The company has been fighting charges of illegal mining in forest lands on the Karnataka-Andhra Pradesh border . OMCPL holds iron ore mining leases in 134 hectares in Anantapur
District of Andhra Pradesh
and iron ore reserves in these leases are estimated to be around 100 million tonnes . OMCPL is also the promoter of a Bramhani Industries Limited, an iron and steel producer. JSW steel is said to be in talks for partial ownership of OMC.
Income tax sleuths unearthed under-invoicing and tax evasion of around Rs 86 crore by the Obulapuram Mining Company (OMC), run by Karnataka's Reddy brothers and also their trusted confidante and state health minister B Sriramulu.
The scam, that can embarrass Karnataka's BJP government further, is said to have alarmed the top guns in the state. The CBI is investigating illegal mining transactions in Andhra Pradesh. Ministers G Janardhana Reddy, G Karunakar Reddy and Sriramulu have mining business in AP.. The company had evaded Rs 86,42,88,802 during 2007-08.
Official sources said after getting clues to tax evasion by OMC B N Mohan, Sibichen Mathew and G M Belagali of Bangalore (Commissionerate) Central circle were assigned to work on the case. They found that the OMC had entered into a MoU with a one-dollar company of Singapore to camouflage the company's income suppression.This report was recorded in the book Let us Share by the Finance Ministry.
Officials found that the one-dollar company, GLA Trading International (GLATI), was established on November 30, 2007, with Janardhana Reddy as one of its directors. GLA, presumed to be named after Janardhana Reddy's wife Gali Laxmi Aruna, has offices in Singapore, Dubai and the British Virgin Islands, which is a `tax haven'.
"OMC's transactions through the MoU with GLATI are convoluted and devised to evade tax payment in India," assessing officers said in the report.
A comparative study of shipping bills for export with other companies, which are exporting the same grade material, confirmed the malpractice by OMC. According to the report, OMC signed the MoU with GLATI to sell iron ore only to evade tax payment in India.
For the similar grade of iron ore or ferrous content (FE), OMC had under-invoiced. The per tonne rate of iron ore exported to GLATI ranged between $76.14 and $98.24 as compared to per tonne rate of $144 to $165.22 of other export sales of ore.
When officials sought explanation from OMC, the Reddys claimed it suppressed sales for developing stronger relationship worldwide with global buyers through GLATI for financial stability against price fluctuations.
This explanation was considered inept by the investigating agency. According to investigators, it's difficult to believe a business house like the Reddys would enter into such an MoU with an offshore company to secure financial stability against price fluctuations from a one dollar company of Singapore and that too without any knowledge of its business, its board of directors and its standing in the line of business. The OMC has taken the issue to an appellate authority.
Gali Janardhana Reddy and managing director of Obulapuram Mining Company Srinivasa Reddy have been sent to jail after CBI has arrested them on 5th September 2011
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
company located in Karnataka
Karnataka
Karnataka , the land of the Kannadigas, is a state in South West India. It was created on 1 November 1956, with the passing of the States Reorganisation Act and this day is annually celebrated as Karnataka Rajyotsava...
and Andhra Pradesh
Andhra Pradesh
Andhra Pradesh , is one of the 28 states of India, situated on the southeastern coast of India. It is India's fourth largest state by area and fifth largest by population. Its capital and largest city by population is Hyderabad.The total GDP of Andhra Pradesh is $100 billion and is ranked third...
in India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
. The company is owned by the brothers, G. Karunakara Reddy
G. Karunakara Reddy
G. Karunakara Reddy is a member of the 14th Lok Sabha of India. He represents the Bellary constituency of Karnataka and is a member of the Bharatiya Janata Party political party....
, G. Janardhana Reddy
G. Janardhana Reddy
Gali Janardhana Reddy is a Indian politician with the Bharatiya Janata Party and one of the richest politicians of Karnataka. He has been implicated in the massive illegal mining scandal in Bellary and the related Belekeri port scam...
and G. Somashekara Reddy
G. Somashekara Reddy
G. Somashekara Reddy is a member of the Vidhan Sabha of Karnataka representing the Bellary assembly constituency of Karnataka and is a member of the Bharatiya Janata Party political party. He is also the chairman of Karnataka Milk Federation...
, who were ministers in the Government of Karnataka
Government of Karnataka
The Government of Karnataka is a democratically elected body with the Governor as the constitutional head. The Governor who is appointed for a period of five years appoints the Chief Minister and his council of ministers...
. The company has been fighting charges of illegal mining in forest lands on the Karnataka-Andhra Pradesh border . OMCPL holds iron ore mining leases in 134 hectares in Anantapur
Anantapur district
Anantapur District , ) is one of the 23 districts in Andhra Pradesh, India. The district headquarters is Anantapur City. It is currently a part of the Red Corridor.- Geography :...
District of Andhra Pradesh
Andhra Pradesh
Andhra Pradesh , is one of the 28 states of India, situated on the southeastern coast of India. It is India's fourth largest state by area and fifth largest by population. Its capital and largest city by population is Hyderabad.The total GDP of Andhra Pradesh is $100 billion and is ranked third...
and iron ore reserves in these leases are estimated to be around 100 million tonnes . OMCPL is also the promoter of a Bramhani Industries Limited, an iron and steel producer. JSW steel is said to be in talks for partial ownership of OMC.
Income tax sleuths unearthed under-invoicing and tax evasion of around Rs 86 crore by the Obulapuram Mining Company (OMC), run by Karnataka's Reddy brothers and also their trusted confidante and state health minister B Sriramulu.
The scam, that can embarrass Karnataka's BJP government further, is said to have alarmed the top guns in the state. The CBI is investigating illegal mining transactions in Andhra Pradesh. Ministers G Janardhana Reddy, G Karunakar Reddy and Sriramulu have mining business in AP.. The company had evaded Rs 86,42,88,802 during 2007-08.
Official sources said after getting clues to tax evasion by OMC B N Mohan, Sibichen Mathew and G M Belagali of Bangalore (Commissionerate) Central circle were assigned to work on the case. They found that the OMC had entered into a MoU with a one-dollar company of Singapore to camouflage the company's income suppression.This report was recorded in the book Let us Share by the Finance Ministry.
Officials found that the one-dollar company, GLA Trading International (GLATI), was established on November 30, 2007, with Janardhana Reddy as one of its directors. GLA, presumed to be named after Janardhana Reddy's wife Gali Laxmi Aruna, has offices in Singapore, Dubai and the British Virgin Islands, which is a `tax haven'.
"OMC's transactions through the MoU with GLATI are convoluted and devised to evade tax payment in India," assessing officers said in the report.
A comparative study of shipping bills for export with other companies, which are exporting the same grade material, confirmed the malpractice by OMC. According to the report, OMC signed the MoU with GLATI to sell iron ore only to evade tax payment in India.
For the similar grade of iron ore or ferrous content (FE), OMC had under-invoiced. The per tonne rate of iron ore exported to GLATI ranged between $76.14 and $98.24 as compared to per tonne rate of $144 to $165.22 of other export sales of ore.
When officials sought explanation from OMC, the Reddys claimed it suppressed sales for developing stronger relationship worldwide with global buyers through GLATI for financial stability against price fluctuations.
This explanation was considered inept by the investigating agency. According to investigators, it's difficult to believe a business house like the Reddys would enter into such an MoU with an offshore company to secure financial stability against price fluctuations from a one dollar company of Singapore and that too without any knowledge of its business, its board of directors and its standing in the line of business. The OMC has taken the issue to an appellate authority.
Gali Janardhana Reddy and managing director of Obulapuram Mining Company Srinivasa Reddy have been sent to jail after CBI has arrested them on 5th September 2011
External links
- Mining Mafia - A threat to democracy. Andhra Mirror
- The Hell Diggers - The scale of corruption in mining is a national calamity. No one epitomises this better than the Bellary brothers. Kidnappings, political clout, muscle power.TehelkaTehelkaTehelka is an Indian weekly political magazine under the editorship of Tarun Tejpal known for its undercover exposé style of journalism. Its cover price is Rs 20 per issue. The publication began in 2000 as a news website, Tehelka.com...
- Lokayukta slams mining in Karnataka's forests
- New York Times Slideshow - India’s Mining Magnates