The CBI today early morning raided the Roys, Prannoy Roy and his wife Radhika Roy of the NDTV. As construed, many thought the raids are related to ongoing investigation by ED & IT officials for FEMA and money laundering violations, but this one turned out to be a new one at least in the public domain.
Many of the left leaning media fraternity immediately jumped to their rescue and started their favorite rhetoric – words like “vendetta”, “freedom of press”, “emergency like situation”, “witch-hunt”, “concerted harassment”, “old endless false accusations”, etc. But none have tried to bring in facts to the people.
Why try to project or propagate them as “people’s crusader being victimized by all powerful, mighty, cruel, dictator government?”
Is Prannoy Roy above law, is he not answerable to a due process of investigation when the country’s prime investigation agency has a prima facie evidence. Well we will not play to the galleries, instead will play it simple and put some real and hard hitting facts about this case.
The case was first published by “The Sunday Guardian” on 5th Dec 2010.
NDTV Limited and associate companies in which Prannoy Roy and Radhika Roy have a majority stake have indulged in financial misdemeanors and malpractices in connivance with ICICI Bank, and raised funds by wrong declaration of the value of shares in NDTV.
These shares were held by a company called RRPR Holding Private Limited. The deal took place between July and October 2008 during a “buyback” of shares from the stock market announced by NDTV Limited at the price of Rs 439 per share.
Share prices were in a period of boom at the time, and the company expected prices to rise even further, this is why it wanted to buy the shares back. Since the company did not have sufficient liquid funds to finance this purchase of shares, it took a loan from India Bulls Financial Services of Rs 363 crores, pledging 90,70,297 NDTV shares as collateral. This was in July 2008.
In August 2008, the stock market collapsed on the back of the subprime crisis in USA; the index crashed from about 22,000 to below 10,000. The price of NDTV shares also went down from a high of Rs 394 to around Rs 100. Now the collateral of the India Bulls loan, therefore, depreciated, compelling India Bulls to recall the loan. NDTV did not have the money to do so.
Next they approached ICICI Bank to lend them money. ICICI gave a loan of Rs 375 crores in October 2008 against the collateral of 47,41,721 shares held by RRPR, at an average price of Rs 439, representing a gross value of Rs 208 cr.
Now this was the first financial fraud made, since the worth of the collateral was far less than the amount given, which means ICICI bank gave a loan Rs 375 crores against a undertaking of Rs 208 crores worth of shares and secondly the price of the shares given as collateral was not Rs 439 but was actually Rs 99 in the market, as of 23 October 2008. Therefore the gross value of the collateral was only Rs 46.94 crores, or one-eighth of the Rs 375 crores loan granted.
ICICI, is a publicly traded company in which the government and its institutions have a substantial stake. It is also important to note that RRPR Holdings owned by Prannoy Roy and Radhika Roy did not own a single NDTV share before July 2008, authorized and subscribed with a capital of a mere Rs 1 lakh.
Shockingly, just days after the disbursal of the money, one of the directors of RRPR Holding [there were only two directors, the husband-wife team of Roys], was granted an interest-free loan of Rs 73.91 crores from the funds that had suddenly come into this inert company through the ICICI loan. The ICICI loan was an open violation of the SARFAESI Act of 2002.
The Ministry of Corporate Affairs, who received the necessary intimations of all transactions, gave implicit acquiescence of the transaction by choosing to remain silent. RBI, which had also received this information, also kept quiet. And we all know who was in power in the year 2008.
In simple terms the above case is no different than the infamous Vijay Mallya’s case where the bank officials in connivance with these high profile industrialists or businessmen frauded and cheated for granting these un-qualifying loans.