ED arrests Kishan Modi in adulterated dairy export case; probe finds fake lab reports

The Directorate of Enforcement (ED) has arrested Kishan Modi, promoter of Madhya Pradesh-based food company Jayshri Gayatri Food Products Pvt. Ltd. (JGFPPL), in connection with a money laundering investigation linked to the alleged manufacture and export of adulterated dairy products.

According to the Enforcement Directorate, Kishan Modi was arrested on March 13, 2026, by the agency’s Bhopal Zonal Office under Section 19(1) of the Prevention of Money Laundering Act (PMLA), 2002. He was produced before the Special PMLA Court in Bhopal a day later on March 14. The court granted ED custody until March 18, allowing investigators time to question him and gather more evidence in the case.

The investigation revolves around allegations that dairy products sold under the brand name ‘Milk Magic’ were adulterated on a large scale. Officials suspect that forged laboratory reports were also used to obtain export approvals, enabling the products to be shipped to foreign markets.

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Case began with police and EOW complaints

The money laundering probe began after two FIRs were registered by authorities in Bhopal. The first case was filed at Habibganj Police Station on August 29, 2023. Another FIR was later registered by the Economic Offences Wing (EOW), Bhopal on July 22, 2024.

In these complaints, the directors and officials of Jayshri Gayatri Food Products Pvt. Ltd. were accused of multiple offences under the Indian Penal Code, including fraud and criminal conspiracy linked to the production and sale of adulterated dairy products.

Based on these allegations, the Enforcement Directorate launched a parallel investigation under the Prevention of Money Laundering Act to examine whether the suspected illegal activity generated proceeds of crime and whether those funds were routed through the banking system.

Dairy products allegedly adulterated with palm oil

During the course of the investigation, officials found indications that the company was allegedly producing dairy items by replacing milk fat with palm oil and other chemicals.

These products were reportedly sold in domestic markets and also exported overseas under the ‘Milk Magic’ brand.

Investigators believe the alleged adulteration may have been carried out to cut production costs while still presenting the products as genuine dairy items, allowing the company to earn higher profits.

Authorities say such practices not only breach food safety norms but also raise serious concerns about consumer health and trust in food products.

Fake laboratory reports suspected in export approvals

These documents were submitted to the Export Inspection Agency (EIA) in Indore, which checks whether food products meet quality standards before they are exported.

However, when the ED verified the reports with the laboratories named on them, several labs said they had never issued those documents.

This raised suspicion that fake reports were used to show the products met export standards, allowing the company to ship adulterated dairy items to overseas markets.

Rs 20.59 crore identified as suspected proceeds of crime

The ED said that using these forged reports, the company managed to export dairy products and received payments through its bank accounts.

Investigators identified export proceeds amounting to approximately Rs 20.59 crore that were deposited in accounts maintained with Axis Bank and HDFC Bank.

The agency has classified these funds as suspected “proceeds of crime” under the provisions of the Prevention of Money Laundering Act.

Authorities are now examining financial transactions linked to these accounts to trace the movement of funds and determine whether they were diverted or layered through other entities.

Further investigation underway

The ED said the investigation is ongoing and more individuals or entities could come under scrutiny as the probe progresses.

Officials are analysing financial records, export documents and communication trails to establish the full extent of the alleged adulteration and money laundering network.

Meanwhile, the agency is continuing its interrogation of Kishan Modi during the custody period granted by the court.

ED also conducts searches in separate Bengaluru real estate probe

In a separate development, the Enforcement Directorate conducted search operations on March 16 at residential and office premises linked to Mantri Developers Private Limited and its directors in Bengaluru.

The searches were initiated by the Delhi office of the ED under Section 17 of the Prevention of Money Laundering Act as part of another ongoing investigation.

Officials said the raids began around 8 am and are aimed at collecting documents and financial records relevant to the case.