The Securities and Exchange Board (SEBI) has told Vishvapradhan Commercial Private Limited (VCPL) to make an open offer to New Delhi Television (NDTV) within 45 days for indirectly acquiring up to 52 percent stake. SEBI is an independent regulator of the capital market in India. VCPL owns a majority stake in NDTV after it gave a loan of Rs.350 crores to NDTV in July 2009 for a period of 10 years. The term of the loan will end in July next year. NDTV’s promoter group made an open offer in 2008, for which they borrowed Rs 540 crore from Indiabulls Financial Services to finance this open offer. The promoters then took another loan of Rs 375 crore from ICICI Bank to repay Indiabulls and the ICICI Bank loan was repaid in 2009 with a Rs 350 crore loan from VCPL.
The ownership of VCPL was in the hands of Reliance Investment Limited (RIL) when it was incorporated in 2008. The RIL led by Mukesh Ambani later sold VCPL to Nahara Group. Very little is known about Nahara group except that Reliance had bought Infotel Broadband from them in 2010 to enter the telecom business. RIL runs its telecom business under the name of Reliance Jio Infocomm Limited, which controls almost 17 percent of Indian telecom market. SEBI in its order of open offer observed “source for the loan was the borrowing from Reliance Strategic Investment Limited, a wholly owned subsidiary of Reliance Industries Limited.” The SEBI order also said that “the company had revenues of only Rs 60,000 in FY2017 and more than Rs 400 crore in long-term loans and advances. VCPL neither have the history of advancing such loans nor do they appear to have had the financial wherewithal to advance loans on such liberal terms.” This suggests that VCPL was incorporated to provide ‘soft’ loans to NDTV for their survival.
SEBI said that VCPL has violated the laws of indirect control through a loan agreement, therefore “The noticee shall, along with the offer price, pay interest at the rate of 10 percent per annum from the date when they incurred the liability to make the public announcement till the date of payment of consideration.” The stocks of NDTV surged by 20 percent after the SEBI order to VCPL to make an open offer to NDTV. The promoter group of NDTV is RRPR holding private limited, named after its founders Radhika Roy and Pronnoy Roy. Radhika Roy is the sister of Brinda Karat who is Politburo member of CPM and was Rajya Sabha member for 2005-2011. Brinda Karat’s husband Prakash Karat was general secretary, the highest decision making member of CPM for 2005-2015. On the other hand, Pronnoy Roy’ cousin Arundhati Roy is a political activist alleged to be involved in anti-national activities.
The SEBI in its order said that the agreement between VCPL and NDTV provided for RRPR issuing a warrant to VCPL, convertible into equity shares aggregating to 99.99 percent of RRPR at the time of conversion at any time during the tenure of the loan or thereafter. This clause itself would translate into 26 percent stake in NDTV, in addition, it gave VCPL right to purchase from promoters all equity shares of RRPR at par value. In its 28 page open offer said the transaction between VCPL and NDTV “is not to secure the loan but to acquire control over all the affairs of the target company leaving only the right to control the editorial policies of NDTV to the promoters and borrowers, right from the day of execution of the loan agreement.” The transactions suggest that NDTV is involved in fraudulent activities since decades and they were not penalized by previous governments, perhaps due to their editorial stances.