The Enforcement Directorate has served a show cause notice on private
broadcaster NDTV Limited, involving a sum of Rs.2,030 crore, for
allegedly flouting foreign exchange regulations in availing of overseas
and foreign direct investment facilities.
In a statement to the Bombay Stock Exchange, NDTV said the company,
along with Prannoy Roy, executive co-chairperson; Radhika Roy, executive
co-chairperson; K.V.L. Narayan Rao, executive vice-chairperson; and
NDTV Studios Ltd. (erstwhile subsidiary of the company since merged with
it) had on Thursday Nov 19,2015 received the notice.
“The company has been advised that the allegations of the contraventions
of provisions of the Foreign Exchange Management Act in the show cause
notice are not legally tenable and the company will reply to the same
within due course of time,” said the statement.
Alleging that the company received a total of over Rs.1,113 crore in
violation of Foreign Exchange Management Act rules, the directorate has
issued the notice on the basis of investigations into the financial
transactions made by 21 companies.
Four of the companies were incorporated in the Netherlands, six in
Mauritius and one each in the United Kingdom and Sweden. NDTV Limited
was directly linked to 18 of the firms, while one was a joint venture
and two were associates.
Funds through shares
According to the ED, the Foreign Investment Promotion Board (FIPB) had
permitted the parent company, through its U.K. subsidiary NDTV Networks
Plc (NNPLC), to raise funds from abroad by way of equity shares and
through listing on the London Stock Exchange. The funds were to be
channelised to the group companies in India.
Between March 2007 and October 2010, NDTV allegedly raised $170 million
through NNPLC and brought in $163.78 million to the Indian group firms.
Based on Reserve Bank of India observations, the ED alleges that the
money was raised through bonds, loans and fixed-income securities, in
violation of FIPB conditions and Foreign Exchange Management Act rules.
Under the automatic route of the foreign direct investment, the Indian companies also allegedly received over $83 million from Mauritian subsidiaries NDTV World Mauritius Media and NDTV Worldwide, which, according to the RBI, violated foreign exchange rules
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