Janardhan Reddy's Bellary mining empire stretched to Sumatra

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In the course of a decade in the mining business, jailed mine baron G. Janardhan Reddy ensured that his business empire spread far and wide and even penetrated faraway Sumatra in Indonesia.

What else could explain the fact that GJR (Gali Janardhan Reddy) group of companies owns half of the lease share in a 438 hectare iron ore mine at Nelbaro —Sumatra in Indonesia? This mine belongs to Earth Stone Holding Limited and GJR group has a 50 per cent share worth Rs.150 crore in it. The total value of the mine is estimated at Rs 5 lakh crore.

Sources associated with the CBI probe into the illegal mining scam, revealed that Janardhan Reddy entered the mining trade by purchasing a 25 hectare mine in Obulapuram village in Rayadurga taluk in Ananthapur district in 2001 after a stint in the chit fund business. He even considered making a film with a star cast led by super stars Rajnikanth or Chiranjeevi and make a profit so that he could repay the money people had invested in his chit fund.

However, the China boom and the huge demand for iron ore, spelt a change in his fortunes with Obulapuram Mining Company(OMC) owned by him, making huge profits after 2004. His streak of luck continued when in 2007, he ventured into steel manufacture by launching Brahmini Steels with the blessings of then AP Chief Minister Dr Y.S. Rajashekhar Reddy and got land at subsidised rates.

The AP government allotted 10,760 acres to Brahmani in Kadapa district for which Brahmani paid approximately Rs 20 crore. In August 2009, the same land was pledged with a bank to get financial assistance to the tune of Rs 350 crore, sources said.

Brahmini was given three iron ore mines at Obulapuram in Anantapur district and government land for setting up a steel mill at Kadapa on the assurance that they would set up an industry. Instead, OMC mined ore and exported it, which according to Indian Bureau of Mines (IBM), runs into nearly 2 crore metric tonnes of ore from 2004-2009.

Some foreign companies were also given shares in Brahmini Steel with the GJR group benefiting as Brahmini was allotted shares of the same companies. Some of the companies which form part of the GJR Group are GJR International Holdings Limited, GJR Holdings (Mauritius) Limited, GLA Trading International.

The central Income Tax department’s assessment report for the year 2007-08 shows that OMC suppressed sales by under invoicing exports to non-resident associate enterprises. The alleged tax evasion came to light after I-T sleuths raided the company on Oct. 26, 2007.

The report shows that Janardhan Reddy was a director of GLA Trading International of Singapore, a one-dollar company. The only share of GLA Trading was transferred to GJR Holdings International in Isle of Man in 2007.

According to sources, the assessment officer concluded that the memorandum of understanding (MoU) between the seller and buyer was a sham to hide the taxpayer’s attempt to suppress details of his real income. Price irregularities have also come to light with the company supplying iron ore at January 2007 prices, later in the year in December 2007, sources said.

According to the report prepared by senior forest official U.V. Singh on OMC, which was annexed to Lokayukta Santosh Hegde’s report on illegal mining, OMC evaded Rs 215,12,50,387 in I-T and duties by under invoicing ore prices in 2007-09.

The sources said he had purchased a island in Europe and would have fled there if he was aware of the CBI raid on his residence on Monday when he was arrested.