The Jaganmohan share

CBI chargesheet details how those given govt favours invested in Jagan’s companies

Written by Sreenivas Janyala | Published: April 5, 2012 12:40 am

The CBI chargesheet in the illegal assets case against Y S Jaganmohan Reddy,Kadapa MP,details how companies and individuals benefited from the Andhra Pradesh government when his father,the late Y S Rajasekhara Reddy,was the chief minister. It says they were allotted land at low rates,awarded contracts and granted special permission for various ventures in exchange for investing in businesses owned by Jaganmohan. Here is what the 68-page chargesheet says about the accused.

2 companies,1 story

On July 17,2006,the directors of two companies wrote separately to the Andhra Pradesh Industrial Infrastructure Corporation,each seeking 75 acres at Jedcherla SEZ in Mahbubnagar and offering Rs 7 lakh per acre. Both requests were granted although,as the CBI points out,the price fixation committee had fixed the rate for that year at Rs 15 lakh per acre and later revised it to Rs 20.235 lakh per acre. Shortly after the allotment,the chargesheet says,both invested in Jaganmohan’s Jagati Publications and Janani Infrastructure.

The Hetero Group of Companies,popularly known as Hetero Drugs,invested Rs 4.50 crore in Jagati Publications by buying shares of Rs 10 at a premium of Rs 350 per share; and Rs 13.25 crore in Janani Infrastructure by buying shares at a premium of Rs 102. Founded in 1993 by B Pradhasarathi Reddy,Hetero is a research-based global group focusing on development,manufacturing and marketing of pharmaceuticals. It comprises Hetero Drugs Ltd,Hetero Labs Ltd,and Hetero Healthcare Ltd.

The other company,Aurobindo Pharma,invested Rs 10 crore in Jagati Publications and Janani Infrastructure. Founded in 1986 by P V Ramaprasad Reddy and K Nityananda Reddy,the Aurobindo Group of Companies started its first unit in Puducherry and has its corporate headquarters in Hyderabad.

Hetero director M Srinivasa Reddy and Aurobindo Pharma director K Nithyananda Reddy have been named as accused in the chargesheet.

B P Acharya

An IAS officer of the 1983 batch,he was the vice-chairman and MD of APIIC from 2005 to 2010. He is already in jail. The CBI arrested him on January 30,when he was posted as home secretary,in the Emaar Properties case which allegedly led to losses to APIIC and the government of AP because of flouting of rules and undue favour shown to Emaar.

In the Jaganmohan case,the CBI says he showed undue haste in deciding the allotments to Hetero and Aurobindo Pharma. It says these allotments at Rs 7 lakh,when the actual rate was Rs 20 lakh,each caused a loss of Rs 8.6 crore to APIIC. “In respect of these two companies,the allotments and rates were decided by B P Acharya,the then vice-chairman and MD of APIIC,at the instance of then chief minister late Dr Y S Rajasekhara Reddy,in violation of the laid down procedures,” the chargesheet says. “In respect of other allotments made in the Jedcherla SEZ,the allotments were mostly decided by the plot allotment committee as per the rates fixed by the price fixation committee.” Quoting from notes on files by APIIC officials,the CBI states that when officers brought the price difference to Acharya’s notice,he told them that the “rate and extent of land was decided in the presence of the chief minister and there is no need to open the issue”.

Subsequently,Acharya allowed the transfer of 33 acres allotted by APIIC to Aurobindo Pharma in Medak district to another company,Trident Life Sciences,without verifying if it was a wholly owned subsidiary of Aurobindo Pharma. APIIC rules involve a transfer fee of 10 per cent of the value of the land. The Aurobindo Pharma director wrote to Acharya for a waiver; Acharya reduced the transfer fee to 2 per cent. The CBI says Trident was then not a wholly owned subsidiary of Aurobindo Pharma and should have paid 10 per cent.

Y S Jaganmohan Reddy

The CBI says Jaganmohan was the director and chairman of Jagati Publications Pvt Ltd from June 21,2007,to February 1,2011,and held a majority stake there as well as in subsidiary company Janani Infrastructure,through his holding companies. Jaganmohan “got shares for himself allotted at par initially in Jagati and Janani Infrastructure and later mobilised funds through the companies and individuals benefited in the form of quid pro quo of allotment of lands in industrial parks and other allied ventures developed by APIIC in SEZs,circumventing the laid down guidelines by using the influence of his father… when he was the CM.”

The CBI states Jaganmohan concealed facts about the profitability of Jagati Publications,which is not yet showing profits,and solicited investments at high premiums from Aurobindo Pharma,Trident,and Hetero Group through members of their respective directors’ families. According to the CBI,the three companies invested Rs 30 crore. It says Jagati Publications,over the last few years,continued to receive investments from many companies at Rs 350 per share,taking the total investment to Rs 1,246 crore,though the venture accumulated losses of Rs 349 crore.

V Vijay Sai Reddy

A close friend Jaganmohan,a chartered account. According to the CBI,he conspired with Jaganmohan to fix the high premium for Jagati shares,and falsified information to Deloitte Touce Tohmatsu India Pvt Ltd and Jagadisan and Co to get Jagati evaluated. Vijay Sai Redy “unilaterally fixed the premium of Jagati Publications at Rs 350 per share for the sole purpose of soliciting huge investments. He prevailed upon Deloitte to antedate the valuation report to suit the stealthy requirements of the company. He played a vital role… in soliciting investments in the form of bribes as quid pro quo and thereby facilitated Jaganmohan Reddy to reap undue benefit in the form of investments in his company,” the chargesheet says.

The Accused

Y S Jaganmohan Reddy

V Vijay Sai Reddy,chartered accountant and vice-chairman of Jagati Publications,owned by Jaganmohan Reddy,and which publishes Sakshi

Aurobindo Group of Companies and APL Health Care

Hetero Group of Companies

Trident Life Sciences

M Srinivasa Reddy,director,etero Drugs Ltd

K Nityananda Reddy,managing director of Aurobindo Pharma Ltd

P Sarath Chandra Reddy,former managing director of Trident Life Sciences Ltd

B P Acharya,former chairman and MD of Andhra Pradesh Industrial Infrastructure Corporation

Y Vijaya Lakshmi Prasad,former general manager of APIIC

P S Chandramauli,company secretary of Aurobindo Pharma

Jagati Publications

In the courts

July 26,2011: CBI files report in AP High Court following preliminary probe into Jaganmohan’s wealth. The probe had been ordered following a petition by Textile Minister Dr P Shankar Rao,and another petition by Telugu Desam Party leaders.

August 10,2011: High Court orders full-scale CBI probe. CBI forms a multi-disciplinary team.

August 17,2011: CBI files FIR against Jaganmohan. Court directs CBI to register a case against all those who invested in companies promoted by Jaganmohan to ascertain whether those investments were made in order to receive favours from the Andhra Pradesh government.

March 31,2012: CBI files chargesheet in special court

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