Who controls NDTV? No, its not the Roys
Updated on 24 July 2017 at 10.20pm to include response from NDTV.
 
Market regulator Securities and Exchange Board of India (SEBI) has finally issued a show cause notice to initiate action for the failure of New Delhi Television Ltd (NDTV) to make a public announcement pursuant to the "change of control" following transfer of shares to Vishvapradhan Commercial Pvt Ltd. This comes at a time when NDTV, which is still run by Dr Prannoy and Radhika Roy, have issued a strong rebuttal to the Income Tax Appellate Tribunal (ITAT)'s judgment with regard to various tax related actions against it.
 
Incidentally, the Business Standard had earlier reported (http://www.business-standard.com/article/companies/sebi-begins-action-in-ndtv-ownership-case-116122600016_1.html), based on Court documents, a SEBI submission to the Delhi High Court on 15 December 2016 in a case relating to NDTV. While SEBI's affidavit showed that the regulator considered the sale of shares by Prannoy and Radhika Roy (15.94% and 16.32%, respectively) as well as those of RRPR Holdings amounted to a change in control in favour of Vishwapradhan Commercial, no further action seems to have been taken. 
 
In a letter from SEBI that has been reviewed by Moneylife, a SEBI manager says that the regulator has issued a show cause notice to Vishwapradhan on 20 December 2016.  The letter says, "…it may be noted that the proceedings against Vishvapradhan under Sections 11(1), 11(4) and 11B of the SEBI Act, and regulations 44 and 45 of the SAST Regulations read with corresponding provisions of Regulations 32 and 35 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations have been initiated for failure to make public announcement pursuant to change in control in NDTV as required under Regulation 12 read with Regulation 14 of SAST Regulations for which the Show Cause Notice was issued on 20 December 2016".
 
It seems rather strange that SEBI has taken no action on its show cause notice issued in December, since the BSE records as of June 2017 still show the substantial holding of NDTV as follows: Prannoy Roy 15.94%, Radhika Roy 16.32% and RRPR Holdings ltd 29.18%. And yet, the multiple changes in the NDTV holdings have been the subject of court cases and innumerable news reports and are once again in focus after the ruling by the ITAT.
 
 
 
In July 2009, Vishvapradhan gave an interest free loan of Rs350 crore to NDTV's Dr Roy, his wife Radhika Roy and their private holding company RRPR Holding, which was a bailout-cum-takeover in the guise of a loan. Under the agreement signed on 21 July 2009, the Roys were to issue a convertible warrant that equals to 99.9% of the "fully diluted equity share capital of the borrowers (the Roys and RRPR Holdings) at the time of conversion" immediately upon execution of the agreement.  
 
As per the agreement, the Roys and RRPR Holding were to use the loan amount to repay in full a loan availed from ICICI Bank in October 2008. Vishvapradhan also had the right to buy from the borrowers all equity shares at par hold by them in NDTV. However, Vishvapradhan and its affiliate agreed not to purchase any more shares of NDTV to increase their stake for more than 26% without consent from other parties.
 
"The amount of Rs350 crore recorded in the loan agreement is exactly 26% of the valuation of NDTV (at Rs1,346 crore)," says a notice from the Income Tax (I-T) Department issued on 29 January 2016. 
 
But the intrigue does not end with this. A court affidavit of the DG Investigation of the Income Tax (document reviewed by Moneylife) says in 2015 that VCPL "has no business activity and is not a genuine concern. 
 
The I-T notice says, "The loan is contingent upon completion of due diligence of investment of $85 million by NDTV Four Holdings Ltd, Mauritius in NDTV Studios Pvt Ltd and further upon the ability of RRPR to transfer to NDTV and utilise $85 million either by merger of NDTV Studios Pvt Ltd with NDTV or by any other method. ...it is evident that the agreement although titled as loan agreement is actually sale agreement for transfer of controlling rights over NDTV by RRPR to Vishvapradhan for a consideration of Rs403.85 crore."
 
As per a regulatory filing, as on June 2017, Dr Roy holds 15.94%, Ms Roy owns 16.32% and RRPR Holding holds 29.18% stake in NDTV making the promoter group as largest stakeholder with 61.45% stake in the company. This as well documents (seen by Moneylife) and issued by the market regulator and I-T Department and the loan agreement, shows that it is Vishvapradhan and not the Roys that controls NDTV.
 
According to the December 2016 report from the Business Standard  two companies Subhgami Trading and Viswamukh Trading, that hold 50% stake each in Vishwapradhan, shared the same address at Shreeram Mills office in Mumbai. “On 29 August 2009, Subhgami and Vishvamukh sold their shares to Shinano Retail and Teesta Retail, based in Dhobi Talao, Mumbai. After changing hands a couple of times, the ownership of Vishvapradhan is now with a Gurgaon-based company called Nextwave Televentures. Vishvapradhan and Nextwave shared a common mail ID,” the report says. 
 
Update:
Late in the evening we got an email from Dr Roy. We are reproducing below his vitriolic reply to Moneylife’s queries, including his sneering at our journalism.  Further below that, we are reproducing, verbatim, the relevant paragraph from SEBI’s letter dated 21 July 2017 to Sanjay Dutt.
 
Dear Yogesh and Sucheta et al 
 
It is shockingly poor journalism that you gave us 3 hours to respond. And then you went ahead and wrote an article full of lies and inaccuracies. Each of which could have been easily checked and the truth verified. I guess this is to be expected as you hit one low after another low in journalism. 
 
As the matter is subjudice, here is what our lawyers have to say on the matter:
 
*******
 
The entire matter is subjudiced before high court of Delhi in a writ filed by a disgruntled shareholder who is trying to extort money from NDTV . Since the issue is subjudiced we do not want to get into any details suffice it is to say that there has been no change in ownership as alleged and we are still the shareholders and have exercised all rights of a shareholder. 
 
Further no proceedings to our knowledge have been initiated by SEBI as yet . In fact in June 2017 the earstwhile disgruntled shareholder had approached vacation court seeking interim orders on the allegation that there has been a change in control of shares of RRPR in NDTV by transfer to vishwapradhan by Roys . SEBI replied in court by saying that as yet even show cause notice had not been issued to vishwapradhan and the matter was still under scrutiny . Based on that no interim protection was granted by court and the prayer was rejected. 
 
Therefore the allegation that any shares have been transferred to vishwapradhan or any other entity is false and as per SEBI till June 2017 no show cause had been issued to vishwapradhan or any other person till date.
These false allegations are being touted by Sanjay Dutt who wanted 28 crores from NDTV to withdraw all false allegations and when NDTV refused he has started maligning NDTV and it's founder-journalists despite an injunction from mumbai high court . In fact the hollowness of his allegations is apparent from the fact that he has bought several lakh shares in Ndtv just 3 weeks ago.
As mentioned as the matter is subjudiced we cannot give any further details.
 
*******
If you have any journalistic integrity left you will please make all the corrections and quote our lawyer's response in full.
 
Prannoy Roy
 
From SEBI's letter:
“With regard to change in control of NDTV, it may be noted that the proceedings against Vishvapradhan Commercial Pvt. Ltd. under section 11(1), 11(4) and 11(B) of SEBI Act 1992, and regulations 44 and 45 of SAST Regulations, 1997 read with corresponding provisions of regulation 32 and 35 of SEBI with (Substantial Acquisition of Shares and Takeover) Regulations, 2011 have been initiated for failure to make public announcement pursuant to change in control in NDTV Limited as required under regulation 12 read with regulation 14 of SAST Regulations, 1997 for which show cause notice was issued on December 20, 2016”.

The reader may judge whether we as journalists have done anything wrong in writing a report based on SEBI’s latest letter.  Incidentally, as our report shows, SEBI had already made this point in a court affidavit in December 2016, as reported by Sundaresha Subramaniam of Business Standard. But Dr Roy continues to insist that no show cause notice has been served on him or NDTV.
 
Moneylife has forwarded Dr Roy's letter to Sanjay Dutt, since there are several personal allegations against him. We will publish his rejoinder as and when we receive it.
 
Late in the night, Vikram Chandra who was an integral part of NDTV's international operations, which are the subject of invetigations by Income Tax and Enforcement Department, sent us this email forcefully distancing himself from NDTV.
 
Hi Yogesh,
 
Also, for the record and future reference, please do note that I stepped down as NDTV CEO more than 8 months ago and am not part of executive management. I wouldn't want a mail or message to me to treated as "delivered to NDTV" 
 
Many thanks
 
Vikram 
 
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    COMMENTS

    dhruv singh

    3 years ago

    There's always the fear of self righteousness possessing us, the fear of arrogating to ourselves a superiority that we do not possess.- gandhi

    Good job guys!

    Anand Kumar

    3 years ago

    Confusing.

    Gupta

    3 years ago

    "Shockingly poor journalism"..... look who's talking!!!
    Kudos to ML for another brave expose.... wish we had more MLs in India to expose many other Roys.....

    SHEKHAR PYLUR

    4 years ago

    Smart sophisticated cheats

    Mani Sriram

    4 years ago

    There is definitely something fishy in NDTV. Else they would not be so touch and defending themselves so aggressively in the public forum instead of seeking redressal in the courts.

    A BANERJEE

    4 years ago

    Again, a very timely piece by Moneylife. In addition, it is indeed ludicrous, as reported, that "NDTV, ....have issued a strong rebuttal to the Income Tax Appellate Tribunal (ITAT)'s judgment with regard to various tax related actions against it"! A truly law abiding citizen does not issue rebuttals (in the press/media) to the findings of fact recorded by the statutory authorities in statutory and appellable orders.

    REPLY

    Rajeshkrishna Bajpai

    In Reply to A BANERJEE 4 years ago

    " DR" PRANOY ROY

    Anand Vaidya

    4 years ago

    NDTV teaching MoneyLife about honesty and ethics in journalism? irony just died...

    Sunil Rebello

    4 years ago

    THIS IS HOW FAKE NEWS FLOURISHES

    the news channels are owned by fake entities.

    during the 2016 US of A elections, TRUMP the master of fake news was finalizing a deal to buy a news in the US

    We are listening!

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