SEBI fines NDTV Rs.5 crores after putting penalty of total Rs.43.97 crores on Prannoy Roy, wife and their shell firm for blatant Stock Exchange manipulations

SEBI levied a penalty of Rs.5 crores on NDTV for illegal private share trade with VCPL

After putting a total fine of Rs.43.97 crores on NDTV promoter Prannoy Roy and wife Radhika Roy, on Tuesday (Dec 29), the market regulator Securities and Exchange Board of India (SEBI) levied a penalty of Rs.5 crores on NDTV channel company for stock exchange manipulations and illegal private trade of shares to the Mukesh Ambani-linked firm, Vishwapradhan Commercial Private Ltd (VCPL). Prannoy Roy, wife and their shell firm RRPR Holdings (RRPR means Radhika Roy Prannoy Roy) traded their shares of public limited company NDTV fraudulently at just Rs.4 when the share price in Stock Exchange between Rs.127 to Rs.140 during 2009 to 2010.

In a 37-page order dated December 29, SEBI said that the entire fraud was conducted by Prannoy Roy in the garb of journalism and fooling other shareholders through their shell company RRPR Holdings loan of more than Rs.350 crores from ICICI Bank loan frauds and then dealing with another shell firm VCPL. The shell VCPL (Vishwapradhan Commercial Private Ltd) is owned by Reliance Group owner Mukesh Ambani’s trusted man Mahendra Nahata. This totally illegal deal was brought before the authorities by NDTV’s minority shareholder Sanjay Dutt.

The Central Bureau of Investigation (CBI) already found that Prannoy Roy has siphoned more than Rs.40 crores from the ICICI Bank loan for purchasing a posh bungalow in South Africa.

On November 28, 2020, SEBI fined Rs.16.97 crores on Prannoy Roy and wife for stock exchange manipulations and put a ban of two years for trading in Stock Exchanges. On December 24 (incidentally, Christmas evening, when Santa Claus lands with gifts), Prannoy James Roy and wife and RRPR were fined again by SEBI for another Rs.27 crores. Now when New Year approaches on Dec 29, 2020 evening Rs.5 crores penalty was slapped on NDTV by SEBI. Now the debt-ridden TV channel and its promoters must pay Rs.49.97 crores fine to SEBI[1].

The latest penalty of Rs.5 crores was put on NDTV company for its failure to disclose price-sensitive information about VCPL loan agreements. The loan agreements were containing clauses and conditions that substantially affected the functioning of the media company, SEBI said in its order. As per this dubious deal, the ownership pattern of NDTV was totally changed from 2009 which is a violation of TV channel’s license norms amounting to cancellation. PGurus published a series of reports on the covert acquisition by Mukesh Ambani linked firms in NDTV[2].

The regulator said its probe began after receipt of complaints in 2017 from Quantum Securities Pvt Ltd about an alleged violation of rules by non-disclosure of material information to the shareholders about loan agreements with Vishwapradhan Commercial Private Ltd (VCPL). As per SEBI, a loan amount of Rs.350 crores were borrowed by the promoters of NDTV under the VCPL loan agreement in 2009 to repay earlier loan availed from ICICI Bank and a second loan agreement with VCPL was signed for Rs.53.85 crores a year later. The Central Bureau of Investigation (CBI) already found that Prannoy Roy has siphoned more than Rs.40 crores from the ICICI Bank loan for purchasing a posh bungalow in South Africa.

“The VCPL loan agreements were inherently material and price-sensitive in nature and therefore they are required to be disclosed to the stock exchanges for dissemination to the public so that public shareholders and prospective shareholders could have taken an informed decision,” SEBI said in its 37-page order.

The regulator noted that NDTV was aware of such loan agreements with effect from August 5, 2015, which is the date of its board meeting, in which agenda of updating the board about regarding “change of control” issue flowing from VCPL agreements were put forth by promoters. However, the media firm did not make a disclosure about the loan agreements to the stock exchanges and violated the provision of listing agreement, Securities and Exchange Board of India said.

References:

[1] SEBI imposes Rs.27 crores fine on NDTV promoter Prannoy Roy, wife and their shell company for 2009 mega fraud of dubious sale of shares – Dec 25, 2020, PGurus.com

[2] Are Roys the benami owners of NDTV? Is Reliance Industries in control? – Mar 12, 2018, PGurus.com