Monday’s CBI raid on premises of Radhika Roy and Prannoy Roy, promoters of the NDTV group, has its roots in a series of loans the Roys took starting 2008 when they sought to buy back a large chunk of NDTV shares from the market.
After the Roys had bought 7.73 per cent of NDTV shares from General Atlantic in December 2007, it led to an open offer to other minority shareholders. To fund the purchase of shares that the minority shareholders wanted to sell, the Roys created a company, named RRPR Holdings Private Limited after Radhika and Prannoy Roy. RRPR borrowed Rs 501 crore from India Bulls. With the shares of RRPR Holdings and their individual shares, the three promoters controlled the majority of NDTV’s equity.
To cover part of the India Bulls loan, RRPR then borrowed Rs 375 crore from ICICI Bank. The private bank gave RRPR Rs 375 crore in October 2008, as per the deed of hypothecation. But by August 2009, RRPR had found another lender, a company named Vishvapradhan Commercial Private Limited, to repay the ICICI loan.
VCPL agreed to pay RRPR Rs 350 crore, shows a loan agreement dated July 21, 2009; this was to be used in full to repay ICICI’s loan. RRPR’s balance sheets filed with the Registrar of Companies show that on March 31, 2009, it had a loan of Rs 349,26,14,485 from ICICI and an interest of Rs 17,21,80,697 on this loan.
Between March 31 and August 7, 2009 — when it repaid ICICI after receiving the money from VCPL—an additional interest would have accumulated. As per an investigation report made by DG (Investigation), Income Tax, New Delhi, ARA Centre, Jhandewalan, the ICICI had given NDTV the loan at 19 per cent interest.
So an additional Rs 29,94,63,689 would have to be added as interest since March 31, according to calculations submitted by Sanjay Dutt, director of Quantum Securities, who filed the FIR leading to the CBI raid. The total amount payable to ICICI by August 2009, as estimated by Dutt, would therefore have been Rs 396,42,58,871 crore.
RRPR and ICICI settled at Rs 350 crore, which came from VCPL, when RRPR owed Rs 396 crore to ICICI. The complainant calculated this as a loss of Rs 46 crore to ICICI. But, even as of March 31, 2016, the RRPR balance sheet shows an outstanding of Rs 4,40,53,877 to ICICI. So, the complainant has calculated, the money RRPR actually owed ICICI included this Rs 4.40 crore, so that the loss suffered by ICICI was actually Rs 42,02,04,994.
Against the Rs 4.40 crore shown as outstanding to ICICI on the RRPR balance sheet, complainant Dutt has calculated the interest at approximately Rs 6 crore for 2009-16. Added to Rs 42.02 crore, the total loss of interest by ICICI would be Rs 48 crore. That is the amount for which the CBI conducted the raid on the Roys’ premises Monday.
Even as RRPR repaid first India Bulls and then ICICI, it continues to owe VCPL Rs 403.85 crore. After the initial Rs 350 crore it received from VCPL, it got an additional Rs 53.85 crore. As per the loan agreement signed between the two companies, the lender has the right to convert the loan into 99.99 per cent equity of RRPR at any point, giving it complete control over RRPR — which is still owned by the Roys though. RRPR owns 29.2 per cent of NDTV’s shares. Effectively, VCPL has rights over 29.2 per cent of NDTV shares.
When it gave the loan to RRPR, VCPR was owned by subsidiaries of Reliance Industries, and the money too had been piped from Reliance Industries to RRPR through VCPL. But in 2011-12, the Reliance company that had given VCPL Rs 403.85 crore — Shinano Retail, a step-down subsidiary of Reliance that also owned half of VCPL’s equity — claimed in its annual report that it had been repaid the entire amount.
Part of this money had come from Eminent Networks, a company linked to Mahendra Nahata who is a board member of Reliance Jio. Eminent’s balance sheet for that year shows that it had given VCPL Rs 50 crore, and got rights over the Rs 403.85 crore worth of debentures of RRPR, which could be converted into 99.99 per cent of its equity. During the same financial year, VCPL’s ownership also moved hands to companies that are linked to Nahata.
Who had repaid Shinano the remaining Rs 353.85 crore is not immediately clear. Filings with the Registrar of Companies do not shed any light on who plugged this massive gap. As of March 31, 2016, VCPL is still owed Rs 403.85 crore by RRPR and can convert it into equity to control over 29 per cent of NDTV’s shares.