Essar Group escapes 8216;scam8217; stigma

Corporate Affairs Ministry has said the Ruia-led group held only 2.15 stake in Loop Telecom.

In a move that could be a breather to the Essar Group,the Corporate Affairs Ministry has communicated to the Telecom Ministry that the Ruia-led group held only 2.15 per cent stake in Loop Telecom at the time of obtaining 2G licence.

In a letter,the Registrar of Companies Mumbai has pointed out that 8220;the Essar Group,directly or indirectly,held only 2.15 per cent of Loop Telecom Pvt Ltd,as on 3.9.07,i.e. the date on which the application was made to DoT for UAS licence8221;.

When contacted,a senior official in the ministry of corporate affairs MCA confirmed the communication and said,8221;We have only provided the DoT with what they had asked us. As on that particular date,Essar held that much 2.15 per cent stake in Loop,as per documents available with us,and we have forwarded the same to DoT.8221;

The RoC letter also said that 8220;documents of the company do not substantiate 8220;Associate8221; relationship between 8220;Essar Group and Khaitan Group8221; as alleged.

The CBI has been investigating as to whether Loop Telecom was an associate of Essar thus,acting as a front for the Essar Group,in obtaining the nation-wide UASL licence and 2G spectrum in 2007 that eventually flared up into the 2G scam involving a host of companies and caused the then telecom Minister A Raja to resign 8211; he was thereafter jailed and remains imprisoned till date.

When contacted Telecom Secretary R Chandrashekhar said that a communication has been received from the Ministry of Corporate Affairs and the same was under examination.

As per 8216;substantial equity8217; clause of the licence,a company can not hold more than 10 per cent in two operating licencees in same circle.

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The DoT had written to Ministry of Corporate Affairs in January this year asking them to convey their categorical views/comments whether the clause 8 of UASL guidelines regarding substantial equity have been violated in relation to Loop Telecom.

Earlier in 2009 also,the matter was referred to the MCA which had said that Essar held less than 10 per cent within permissible limits equity in Loop Telecom.

The RoC has also observed that Essar group have been a net borrower from Khaitan group during March 2006 and September 2007. The contention that Essar had given a huge loan of Rs 1,647 crore STPL now Loop Telecom to acquire indirect and beneficial stake in Loop Telecom 8220;appears to be not tenable8221;.

The MCA in its letter dated April 2011 has also clarified that investment in non-convertible debentures cannot be treated as on par with equity participation.