Learn why CBI raided NDTV’s Prannoy, Radhika Roy

The raid by the CBI on different premises of Radhika Roy and Prannoy Roy, the promoters of NDTV Group on Monday morning, has its roots in a series of loans the Roys took starting in 2008 because they wanted to buy back a large chunk of NDTV’s shares from the market.

After the Roys bought a 7.73% shares of NDTV from General Atlantic in December 2007, an open offer to other minority shareholders automatically kicked in. To fund buying the shares minority shareholders wanted to sell the Roys created a company named RRPR Holdings Private Limited — named after Radhika and Prannoy Roy.

RRPR borrowed Rs 501 crore from Indiabulls. Along with RRPR Holdings and their individual shares, the three promoters controlled majority of NDTV’s equity.

To cover part of Indiabulls’ loan, RRPR 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, a loan agreement dated July 21, 2009 shows, which was to be used in full to repay ICICI. RRPR’s balance sheets filed with the Registrar of Companies reveal 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.

But between March 31 and August 7 that year — 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, ICICI had given NDTV the loan at an interest rate of 19%.

So an additional Rs 29,94,63,689 would would have to be added as interest since March 31. Thus, the total amount payable to ICICI Bank by August 2009, as calculated by the complainant Sanjay Dutt, would have been Rs 396,42,58,871 crore.

RRPR and ICICI Bank settled for Rs 350 crore though, which came from VCPL, when RRPR owed Rs 396 crore to ICICI; a discount of Rs 46 crore. But, even as of March 31, 2016, RRPR shows an outstanding loan of Rs 4,40,53,877 to ICICI Bank.

That means of Rs 396 crore it owed ICICI in August 2009, it continues to have Rs 4.40 crore on its books. So effectively, the money it actually owed ICICI included this amount, thus the the discount it got was Rs 42,02,04,994.

Now, even as it shows ICICI’s Rs 4.40 crore on its books, RRPR hasn’t added any interest to it. Interest on that amount since 2009 is calculated by Dutt to approximately Rs 6 crore. Added to Rs 42.02 crore, the total amount RRPR owed ICICI as of March 31, 2016, would be Rs 48 crore. That is the amount for which CBI conducted the raid on the premises of Radhika Roy and Prannoy Roy on Monday morning.

Even as RRPR repaid India Bulls, it continued 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 both the companies, the lender has the right to convert the loan into 99.99% equity of RRPR at any given point, giving it complete control over RRPR, which is still owned by Radhika and Prannoy Roy though. RRPR owns 29.2% of NDTV’s shares.

Effectively, VCPL has rights over 29.2% of NDTV shares, the single largest stock of NDTV shares owned by anyone.

VCPL when it gave the loan to RRPR was owned by Reliance Industries subsidiaries, and the money too had been piped from Reliance Industries to RRPR through VCPL. But in 2011- 2012 financial year, the Reliance company that had given VCPL Rs 403.85 crore, Shinano Retail, a step down subsidiary of Reliance, which also owned half of VCPL’s equity, claimed that it had been repaid the entire amount.

But VCPL had not received the money from RRPR. Instead, Eminent Networks, a company related to Mahendra Nahata, who is a board member of Reliance Jio, 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% of its equity. During the same financial year, VCPL’s ownership also moved hands to companies that are related to Nahata.

Who had repaid Shinano the remaining Rs 353.85 crore is unclear, even the filings with the Registrar of Companies do not shed any light on who plugged this massive gap. As of March 31, 2016, VCPL still owed RRPR Rs 403.85 crore and can convert it into equity to control over 29% of NDTV’s shares.

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