New Delhi: Following Venkatesh Infra Projects Private Limited (VIPPL), Avon Steel Industries Private Limited has now emerged as the latest focal point in the alleged scam involving steel sales conducted by Steel Authority of India Limited (SAIL). In response to the Lokpal’s admonition, the Central Bureau of Investigation (CBI) filed an FIR, claiming that with the connivance of SAIL officials, raw materials were sold to Avon at cheaper rates, resulting in a loss for the company estimated between Rs 263 crore to Rs 370 crore.

The Wire Hindi previously reported on the ongoing investigation by the CBI into allegations of significant losses incurred by SAIL in collusion with Venkatesh Infra against Apco Infratech Private Limited, a firm that donated Rs 30 crores to the BJP in electronic bonds.

In the preliminary investigation in this matter, the Lokpal stated in an order, “It seems that the officials of SAIL did not exercise due diligence, resulting in VIPPL receiving materials at a price lower than that offered to other clients.”

The Lokpal has raised significant concerns regarding the internal procedures of SAIL, stating, “It is not only a question of financial loss, but it is also crucial to determine whether the system was intentionally manipulated to inflict damage and benefit the company. Experienced players of the steel market, in collusion with SAIL officials, may alter the system.”

In the case of Avon, the CBI has filed a first information report (FIR) against SAIL officials and other individuals on July 25, 2025. Under Section 4(A) of the Lokpal (Complaints) Rules, 2020, the identity of the accused government official remains undisclosed. 

The FIR includes charges under Section 120B of the Indian Penal Code and Sections 7, 8, and 9 of the Prevention of Corruption Act, 1988 (as amended in 2018).

It is alleged that government officials have inflicted losses on SAIL and provided undue advantages to private entities through collusion with private firms. The chief vigilance officer of SAIL has determined in the initial investigation that SAIL has incurred a loss ranging from approximately Rs 263 crore to Rs 370 crore due to the products sold to Avon at reduced prices.

These allegations were also confirmed by the Lokpal. In its ruling dated January 10, 2024, the Lokpal stated that SAIL could have realised greater profits, but instead, it faced losses by selling high-quality products to Avon at a lesser price.

The Lokpal said that in both instances involving VIPPL and Avon, the ministry of steel itself has sought a comprehensive investigation, suggesting that the issue is more complex.

FIR filed after reprimand issued by the Lokpal

On January 10, 2024, the Lokpal had ordered CBI to investigate VIPPL and Avon cases. Subsequently, on November 12, 2024, the Lokpal mandated that all complaints pertaining to SAIL be acknowledged, emphasising that the possibility of a major conspiracy cannot be overlooked.

However, the report submitted by CBI to the Lokpal on May 9, 2025, failed to include the investigation findings related to Avon.

In response, on July 2, Lokpal reprimanded the CBI questioning the absence of a separate investigation report against this company.

Finally, the Lokpal instructed the CBI director to appear in person on July 15, leading to the filing of an FIR against Avon on July 25.

Allegations against Avon

According to the complaint filed with the Lokpal, between October 2020 and May 2022, two senior SAIL officials, Mahesh Chandra Agarwal (who was then the executive director – Sales & ITD) and Soma Mandal (who served as the chairperson of SAIL), allegedly abused their positions by selling 2,65,820 tonnes of Semis-Bloom to Ludhiana-based Avon Company at an excessively low price.

Semis refers to a semi-finished steel product from which the final product is manufactured. 

According to the investigation report prepared by the chief vigilance officer (CVO) of SAIL, which has been submitted by the chief vigilance commission (CVC) to the Lokpal, SAIL incurred a financial loss of Rs 263 to Rs 370 crore due to the sale of 2,65,820 tonnes of Semis to Avon at a reduced price during the period from October 2020 to May 2022.

It is important to note that only SAIL is capable of supplying this raw material in such quantities within India. However, despite this advantage, SAIL failed to leverage its significant market presence and sold the material to Avon at a reduced price.

Similar to VIPPL, the complainant in this matter is Rajiv Bhatia, who previously held the positions of general manager (marketing) and product manager at the SAIL-CMO headquarters located in Kolkata, but retired prematurely on February 11 this year.

SAIL has stated that Bhatia did not fulfill the criteria of “honesty and accountability”, despite the fact that Bhatia had revealed extensive irregularities occurring within SAIL.

CVC report and Lokpal's comments after preliminary probe

The CVC submitted its report to the Lokpal on August 24, 2023.

Key comments from the CVC and the ministry included that SAIL should have generated greater profits from Avon, as high-quality products were offered at reduced prices. This represents a policy error. However, the potential involvement of certain officials in criminal activities cannot be dismissed.

The ministry explicitly stated that an external expert agency, such as the CBI, should conduct an investigation to ensure that the individuals responsible for the misconduct are identified.

Based on the findings of this investigation, the Lokpal issued an order on September 12, 2023, requiring the then executive director (sales and international trade division), Mahesh Chand Agarwal, and the then SAIL chairperson, Soma Mandal, to appear before the Lokpal on October 17, 2023.

The attorney for Mahesh Chandra Agarwal asserted that the transaction involving the sale of Blooms to Avon by SAIL adhered to established procedures. There was no indication of criminal intent or any unlawful actions whatsoever.

Soma Mandal's attorney stated that she was not involved in the determination of prices or in direct transactions with Avon. At that time, she held the position of chairperson and was not engaged in the daily operational decisions.

The Lokpal said in its order dated January 10, 2024, that “due diligence was not followed... The possibility of criminal activity by certain officials cannot be ruled out.”

Furthermore, the Lokpal noted that SAIL could have achieved greater profits. However, it incurred losses by selling high-quality products to Avon at reduced prices.

The Lokpal has remarked, “The possibility of collusion between the concerned officials and the alleged beneficiary company has also not been ruled out.”

Meanwhile, the Union steel ministry asked an external agency to conduct a comprehensive investigation into the matter to examine the role of various parties.

When the steel ministry sought a response from SAIL, the company provided the names of 17 officials through whom the sale documents to Avon had been processed. Following the Lokpal's order on January 10, 2024, the ministry suspended 13 of these 17 officials, while the four who were not suspended had already retired prior to this decision.

Mahesh Chandra Agarwal's name was included among those who retired. Additionally, after stepping down as chairman of SAIL on April 30, 2023, Soma Mandal was appointed as a member of the Public Enterprise Selection Board (PESB).

CBI investigation and court stay

On January 10, 2024, the Lokpal mandated the CBI to conduct an investigation.

Soma Mandal filed a petition with the Delhi high court challenging the CBI's investigation order. On July 26, 2024, the court issued a stay on the investigation against her. Nevertheless, the high court permitted the CBI to proceed with investigations in all other cases as directed by the Lokpal's order from January 10, 2024.

The next hearing in the Delhi high court is set for September 25, 2025.

Meanwhile, Soma Mandal has been appointing CMDs and directors for public sector undertakings (PSUs) during her tenure. It remains uncertain whether she will retain her position following the initiation of the CBI investigation against Avon, or if the government will implement any stringent measures against her.

The ongoing controversies surrounding SAIL prompt the question whether there exists a systemic issue within the largest public sector steel company. The cases of VIPPL and Avon both illustrate a trend where a private entity received substantial advantages, resulting in the loss of public funds.

The Wire Hindi reached out to MC Agarwal, but he declined to comment. Questions have been directed to Soma Mandal. She has not provided a response at the time this report was published.

This article was first published in The Wire Hindi.

The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.