Sunil Kakkad of Sai InfoSystems Arraigned by CBI

CBI has recently arrested Sunil Kakkad, director of Ahmedabad and Mumbai-based IT solution provider Sai InfoSystem, for defrauding banks of  Rs 126 crore. In 2015, CBI had registered a case against Kakkad for a loan scam involving several banks, such as SBI, Canara Bank, and Vijaya Bank.

SIS made headlines in 2013 after Kakkad fled the country without paying his 1400 employees their salaries totaling Rs 40 crore. Later, he was arrested from Liberia in 2014, by the local police. Last year, he was granted bail by the Gujarat High Court.

CBI is investigating Kakkad for seven cases involving Sai InfoSystem, Click Telecom, Atrium InfoComm, and several banks such as SBI, Canara, and Vijaya Bank.

The recent arrest has been done post the investigation of loan scamming perpetrated by Click Telecom, a subsidiary company owned by Kakkad. The telecom company had been taken by Kakkad and allegedly sanctioned several credit facilities such as cash credit, term loan and non-fund-based limits amounting to approximately Rs 126 crore.

The company had won the bid for the launching of BSNL Voice and Video Over Broadband project in the southern and eastern zones of the country, and then inflated the project costs to obtain huge funds from the banks. It was also reported that no machinery was actually supplied, and letters of credit (LCs) were opened favoring Kakkad's associate companies.

With the recent case, Kakkad is currently accused of duping banks of Rs 918 crore, and he will soon be produced in the designated court.

Like a Bollywood movie, Kakkad’s story began in Gujarat’s Tharad town more than two decades ago. He started SIS in 1992 with college friend  with a sum of Rs.5 lakh from his father.

The turning point for the fledgling company came in 1999, when BSNLplaced a Rs.1 crore order with it. Over the next decade, BSNL would become central to the company’s rise.

SIS started by providing computer systems to, and maintaining them for, BSNL. When IT firms that had been given a contract by the telco to build a billing system abandoned the project, SIS took over and completed it.

By the end of 2012, SIS was responsible for the roll-out of over Rs.200 crore of BSNL projects. These included voice over Internet protocol (VoIP) or Internet telephony services in two zones, four Internet data centres across India and local area networking of 280 universities for the government’s ambitious National Mission on Education through ICT.

SIS’s revenue came mainly from these and other government contracts and was reputedly further enhanced by Kakkad’s connection with Sam Pitroda described as a “family friend”.

Pitroda inaugurated BSNL and SIS Internet telephony services. He placed the first VoIP call through the system in 2012. Also, SIS subsidiary SIS Global’s office is located in the vicinity of Pitroda’s Oak Brook office in Illinois in the US.

SIS’s fall from grace was as sudden as it was steep. It was in 2013 when Sunil Kakkad fled the country. In 2011-12, according to the company’s audited financial statement, SIS made a net profit of Rs.113.81 crore on revenue of Rs.1,618.97 crore. In 2012-13, it made a profit of Rs.144.27 crore on revenue of Rs.2,061.97 crore. The audited financial statement for 2012-13 was never filed with the Registrar of Companies (RoC). No financial numbers were available for 2013-14.

By the time Kakkad fled, SIS had already stopped paying its employees, although it had around Rs.2,400 crore of orders on its books (or, at least, on paper). And Kakkad’s family had moved to Chicago. 1,400 employees of the company were left in the lurch. Also left high and dry were banks that had loaned a little over Rs.1,000 crore to SIS. Subsequently in June 2014, Kakkad was arrested in Monrovia, the capital of Liberia, by Interpol.