Obulapuram Mining Company

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 ^[1]. The company has been fighting charges of illegal mining in forest lands on the Karnataka-Andhra Pradesh border ^[2][3]. 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 ^[1]. OMCPL is also the promoter of a Bramhani Industries Limited, an iron and steel producer^[1]. JSW steel is said to be in talks for partial ownership of OMC^[4].
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 ^[5]

References

1. ^ ^{a b c} "Brahmani - About Us". Bramhani Industries Limited. http://www.bramhani.com/aboutus.aspx. 
2. ^ "Reddys have the last laugh, national mines regulator has both hands tied". Indian Express. http://www.expressindia.com/latest-news/Reddys-have-the-last-laugh-national-mines-regulator-has-both-hands-tied/592902/. Retrieved 2010-06-24. 
3. ^ "Illegal mining: Lokayukta slams Government". Chennai, India: The Hindu. 2009-07-14. http://www.hindu.com/2009/07/14/stories/2009071461270100.htm. Retrieved 2009-09-07. 
4. ^ "JSW, Reddys deal hinges on iron ore". The Economic Times. http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/metals--mining/JSW-Reddys-deal-hinges-on-iron-ore/articleshow/6076534.cms. Retrieved 2010-06-24. 
5. ^ "Janardhana Reddy sent to jail; Rs 3cr cash, 30 kg gold seized". Times of India. http://timesofindia.indiatimes.com/india/Janardhana-Reddy-sent-to-jail-Rs-3cr-cash-30-kg-gold-seized/articleshow/9872724.cms. 

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.Tehelka
• Lokayukta slams mining in Karnataka's forests
• New York Times Slideshow - India’s Mining Magnates