Daijiworld Media Network - Brahmavar (JD)
Brahmavar, Aug 18: The investigation into the sale of old machinery from the Dakshina Kannada Cooperative Sugar Factory in Brahmavar has confirmed a financial loss of Rs 13.92 crore.
Accordingly, permission has been granted to prosecute the factory’s management board, announced Shivananda Patil, minister for textiles, sugar, cane development and agricultural marketing.
The inquiry revealed that the loss occurred due to negligence on the part of the management board, the tender-cum-auction technical committee members, and the then managing directors, Praveen B Nayak and G N Lakshminarayana. Based on these findings, permission has been granted for criminal prosecution against the two former managing directors, while a departmental inquiry has also been recommended against them by the Cooperation Department.

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Additionally, instructions have been issued to recover the loss from the concerned individuals, the minister added.
The government had earlier approved the sale of the factory buildings and machinery to Chennai-based New Royal Traders. However, complaints of irregularities in the tender process were raised by MLC Manjunath Bhandari and Udupi District Farmers’ Association General Secretary, prompting the government to initiate an investigation.
Retired district judge K Radhakrishna Holla, who was appointed as the inquiry officer, submitted his report confirming malpractice in the process.
The sugar factory, established in 1985, operated until 2002–03, but was forced to shut down crushing operations in 2003–04 due to a shortage of sugarcane and lack of working capital. With operations suspended for over 17 years, machinery and buildings had deteriorated, leading the board to seek permission to sell them through a tender-cum-auction.
However, the inquiry revealed that the tender was not conducted as per rules. Although the board had initially decided to sell machinery and scrap to the highest bidder on a per-kg basis with conditions of a Rs 50 lac security deposit and Rs 5 crore bank guarantee, the management accepted New Royal Traders’ request to purchase the material in bulk lots, which violated tender conditions.
According to records, the company claimed to have lifted 1,139.37 metric tonnes of scrap in 46 truckloads, but actual figures showed 2,245.65 metric tonnes were transported in 83 truckloads. While the buyer had already defaulted on payments amounting to Rs 12.63 crore, additional building materials worth Rs 1.28 crore were also removed from the premises, the report stated.
“It is clear from the investigation that irregularities took place in the sale of the factory machinery and building. Permission has been granted to prosecute the directors of the management board. Directions have also been given to initiate criminal cases against the technical advisory committee,” said minister Shivananda Patil.