New Delhi: Long before the Central Bureau of Investigation (CBI) swooped on to his premises and those of his relative Rakesh Biyani—once giants of the Indian retail marketspace—a forensic audit of the accounts of Kishore Biyani’s Future Retail Limited (FRL) had flagged a series of questionable transactions with nine group entities, amounting to Rs 1263.68 crore.
These transactions were carried out despite the weak financials of the recipient companies, including during the 2019-20 period, when Future Retail, which ran the famous retail chain Big Bazaar, was itself going through a financial crisis, the forensic audit revealed.
The forensic report submitted in September 2023 has formed the basis for the actions initiated by the CBI, which earlier this week booked Kishore and Rakesh Biyani, as well as Future Retail. The FIR dated 4 November was filed on the basis of a complaint from the State Bank of India (SBI), which alleged pending dues of Rs 904 crore and that Future Retail’s loan account was declared a non-performing asset (NPA) with effect from April 2021. Additionally, the bank informed the CBI about Future Retail’s exposure of more than Rs 19,000 crore to other lenders, whose claims are admitted before the National Company Law Tribunal.
Marred by heavy losses, especially after the Covid-19 pandemic, Biyani’s Future Group forged a deal to sell its retail, wholesale, logistics and warehousing assets to Reliance Industries in August 2020 for Rs 24,713 crore—a deal that was cleared by the market regulator SEBI and the Competition Commission of India. However, the deal fell through after Future’s previous partner, Amazon, challenged it, citing violations of its 2019 contract, and the matter was mired in legal disputes over the next couple of years before Future Retail and other group companies were admitted to insolvency proceedings in July 2022.
In its complaint to the CBI, the SBI explained that the loan accounts of FRL were audited after they were classified as NPAs, and a show-cause notice was issued in December 2025 to the Biyanis, seeking an explanation for why the Future Retail account should not be classified as fraudulent. The bank submitted that the company had not responded to the notice, whereas the Biyanis had sent a joint reply, after which the bank classified the account as fraudulent in March this year.
“It is alleged that the directors of M/s FRL indulged themselves in routing substantial funds to related parties and connected entities whose financial capacity and business operations were not commensurate with the transactions undertaken,” the CBI documented in the FIR. “The audit further highlighted manipulation of accounting records, falsification of books of accounts, layering of financial transactions through connected entities, etc., and concealed the true financial position of the company to cheat the Bank,” it added.
The agency raided the premises of Kishore and Rakesh Biyani, as well as those of individuals linked to Future Retail, Friday.
ThePrint reached Kishore Biyani over email, seeking his comment on the findings of the forensic audit and allegations in the CBI’s FIR. The report will be updated if and when that response is received.
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Trail of ‘questionable’ transactions
The audit task was handed to BDO India LLP, which conducted a comprehensive review of the books of account of Future Retail and its group companies for the period between April 2017 and April 2022. During the relevant period, the auditor found payments totalling Rs 16,537.72 crore to 192 entities. The auditor narrowed the search to 44 entities that allegedly received funds totalling Rs 9,394.59 crore, and found discrepancies in nine of them.
Seven of these nine entities were group companies and had received funds totalling Rs 1,263.68 crore, the forensic audit said.
In the forensic review, the auditor allegedly found that FRL had extended loans amounting to Rs 606 crore to a group company, Syntex Trading and Agency, during FY 2019-20. A review of Syntex’s book of accounts showed it had no outstanding loans from any group company but had given a loan of Rs 8.37 crore as of 31 March 2019.
However, the loan granted by Syntex jumped to Rs 850 crore by 31 March 2021—allegedly indicating the use of funds transferred by Future Retail for further transfer as loans to group entities.
The forensic audit also revealed FRL extended loans and advances of Rs 42.74 crore to one Acute Retail Infra, another group company, during the 2019-20 financial year despite struggling with liquidity constraints during the same time period, and did not bring back the funds despite the worsening financial conditions over the next financial years.
The forensic audit report also raised suspicions about transactions with Nishtha Mall Management Company, including an extended transfer of Rs 79.97 crore in 2019-20, despite the company reporting a meagre revenue of Rs 8.38 crore for the same period.
Overall, the forensic audit flagged nine companies and funds amounting to Rs 1,263 crore that were diverted from Future Retail to its group companies, despite poor financials, and possibly used for payment of loan funds and diversion to unknown purposes.
In addition to these nine companies that received loans from Future Retail during the review period, the forensic audit also revealed an outflow of Rs 5,878 crore to related and connected entities which are either loss-making or undergoing insolvency.
The forensic audit report has also alleged manipulation of records, questioning a surge in cash deposits—more than twice —from Rs 1,938 crore in 2018-19 to Rs 4,406 crore in the financial year, despite the number of stores falling from 1511 to 1350 in the same period. The forensic audit report also questioned the surge in payments to suppliers—from Rs 530 crore in 2016-17 to Rs 3,089 crore in 2020-21, despite a considerable decrease in purchases—from Rs 13,212 crore to Rs 3,765 crore in the same time period.
“The forensic audit reveals a consistent pattern of routing substantial funds to related parties and connected entities whose financial capacity and business operations were not commensurate with the transactions undertaken. The audit further highlights apparent manipulation of accounting records, falsification of books of accounts, layering of financial transactions through connected entities, abnormal increases in advances and security deposits without commercial justification, investments in financially distressed entities, and questionable franchise arrangements lacking transparency and supporting documentation,” the forensic report said.
“The promoters/directors of M/s Future Retail Ltd., in conspiracy with connected entities and other unknown persons, appear to have dishonestly misappropriated bank funds, falsified books of accounts, concealed the true financial position of the company and thereby cheated the consortium member banks,” it submitted to the bank.
The above facts disclose the commission of cognisable offences involving criminal conspiracy, cheating, criminal breach of trust, falsification of accounts and diversion/siphoning of bank funds involving M/s Future Retail Limited and the recipient entities. The entire chain of transactions, the commercial rationale, the nature, purpose and end-use of funds and the role of the connected parties merit a thorough investigation by the CBI into the role of the promoters, directors, key managerial personnel, related entities and all other persons involved in the fraudulent transactions,” it further recommended.
(Edited by Nardeep Singh Dahiya)
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