Udupi, August 18, 2025 – The Karnataka government has granted permission for criminal prosecution against the management board, tender-cum-auction technical committee members, and former managing directors Praveen B. Nayak and G.N. Lakshminarayana of the South Kanara Cooperative Sugar Factory in Brahmavar, Udupi district, following a ₹13.92 crore loss in the sale of old machinery. Minister for Textiles, Sugarcane Development, Sugar, and Agricultural Marketing, Shivanand Patil, announced the decision, citing an investigation report that held the board and former directors responsible for the financial loss due to negligence and irregularities in the tender process.

The factory, operational from 1985 until 2002-03, ceased sugarcane crushing due to a shortage of cane and working capital. After 17 years of disuse, the machinery and buildings deteriorated, prompting the board to seek government approval for their sale through a tender-cum-auction process. The board sold the assets to New Royal Traders, Chennai, but allegations of irregularities led to complaints from Legislative Council member Manjunath Bhandari and the Udupi District Raitha Sangha, triggering an investigation by retired district judge K. Radhakrishna Holla.

The investigation revealed violations in the tender process, including the board’s decision to sell scrap on a lot basis instead of per kilogram, as initially stipulated, following a request from New Royal Traders. This breached tender rules, which required a ₹50 lakh security deposit and a ₹5 crore bank guarantee. Records showed discrepancies in the quantity of scrap transported, with New Royal Traders claiming 1,139.37 metric tonnes in 46 truckloads, while 2,245.65 metric tonnes were moved in 83 loads. An outstanding ₹12.63 crore remains unpaid, and building materials worth ₹1.28 crore were also removed. The government has directed the recovery of the loss from those responsible and recommended a departmental inquiry against Nayak and Lakshminarayana.