Ashish Deora gets IDBI summons, Reliance Info takes back his shares

In a stunning disclosure, Reliance Infocomm today claimed that the Infocomm shares were taken back from Deora because he failed to fulfil its service obligation for which the shares were given. His skill apparently was to create right of way and obtain clearances for Infocomm to lay out its network.

Top-level sources at IDBI say that Ashish Deora himself called the bank saying that he wanted to come and explain the media reports to them. ‘‘He has been asked to bring his cheque book along,’’ says the source.

IOL Broadband had received venture capital funding to the tune of Rs 10 crore from IDBI’s venture capital division, which has since wound up. After all the recent media coverage about IOL Broadband, IDBI had dusted off its record relating to the company.

The source says that the money was advanced in 2000 after clearance by an expert committee. Its business includes Internet services, communications and networking, software and other value-added services. IOL Broadband claims to have delivered “premium broadband services to high-end and major corporates and other segments”.

The company is still making small repayments to IDBI in installments and has already paid back over Rs 5.5 crore. However, inclusive of outstanding interest rates, IOL Broadband probably owes IDBI Rs 8 crore.

IOL Broadband has been in the news due to its links with one of the three recipients of one crore shares from Reliance Infocomm at Rs one per share. The value of these shares is now estimated at around Rs 700 crore.

IDBI, said our source, owns 33 per cent of the equity of IOL Broadband, which is listed on the BSE. Its shares have been languishing at just over Rs one last October was trading at Rs 4.85 on Tuesday, albeit at insignificant volumes.

When Deora meets IDBI next week, the bank will probably want to know why IOL Broadband has been defaulting on payments. The company claims gross fixed assets of Rs 25 crore. Interestingly, for an internet company and a broadband service provider, there is very little information available about it on the BSE website or on its own website.

Incidentally, despite the recent controversy, IOL Broadband has been taking care to clean up its problems with listing. On January 25, the BSE had announced a list of 50 companies that it planned to suspend from February 9, for non-payment of annual listing fees for 2004-05.

On February 8, the bourse said that 25 of these had promptly paid up the listing fees and it was decided not to suspend them. Two securities of IOL Broadband (Scrip codes 512185 and 890081) are on the list. Media reports have linked IOL Broadband to Pramod Mahajan and his son Rahul Mahajan and son-in-law Anand Rao.