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

Private sale of stock exchange-listed company was considered big cheating of other shareholders

The Securities and Exchange Board of India (SEBI) on Thursday imposed a hefty fine of Rs.27 crores on NDTV promoters, Prannoy Roy and his wife Radhika Roy, as well as their shell company RRPR Holding (Radhika Roy Prannoy Roy Holdings) for the illegal sale of stock exchange-listed company NDTV’s shares to Mukesh Ambani-linked firms in a secretive way in 2009. This is a big blow for Prannoy Roy and Radhika Roy, coming in the heels of another ruling by SEBI in which they were fined Rs.16.97 crores for stock exchange manipulations and insider trading and banned for two years[1].

The Rs.27 crores fine was levied on Prannoy Roy and his wife and their controlled shell firm RRPR Holdings for making made a dubious deal by selling their NDTV shares to a Mukesh Ambani-linked firm VCPL (Vishvapradhan Commercial Private Ltd) in 2008 by making a bumper profit of more than Rs.400 crores. This private sale of a stock exchange-listed company was considered big cheating of other shareholders by the promoters Prannoy Roy and wife. PGurus had published a series of articles on this particular deal and detailed in our Managing Editor’s book – ‘NDTV Frauds’. The details of this big fraud during the UPA regime by Prannoy Roy can be read here[2].

Reliance Jio’s first license was issued to Nahata’s little known firm and within hours Mukesh Ambani took over the little firm which bagged initially a license for Reliance Jio in mid-2010.

According to SEBI’s latest order, certain loan agreements had clauses that have an adversarial effect on the NDTV shareholders. The regulator said its probe began after receipt of complaints, in 2017 from Quantum Securities Pvt Ltd – a shareholder of NDTV– about an alleged violation of rules by non-disclosure of material information to the shareholders about loan agreements with VCPL. This deal originated from the ICICI Bank fraud in 2008 by Prannoy Roy and wife which both of them are facing CBI and ED probe. CBI has already found from the ICICI Bank loan, Roy and Roy siphoned out around Rs.40 crores to build a palatial house in South Africa. SEBI had detailed the frauds by Prannoy Roy in the garb of journalism in its 52-page Order. The detailed order is published below this article.

As per SEBI, one loan agreement was with ICICI Bank, and two were with Vishvapradhan Commercial Private Ltd (VCPL). The order says an agreement was signed in 2009 with VCPL for a loan of Rs.350 crores to repay the ICICI Bank loan and a second loan agreement with VCPL was signed for Rs 53.85 crores, a year later. Further, one of the terms of loan agreements allowed VCPL to indirectly acquire 30 per cent shareholding of NDTV through the conversion of warrants into equity shares of RRPR Holding. VCPL is controlled by Mukesh Ambani’s trusted man Mahendra Nahata, who owns HFCL Group. Reliance Jio’s first license was issued to Nahata’s little known firm and within hours Mukesh Ambani took over the little firm which bagged initially a license for Reliance Jio in mid-2010.

The loan agreements were structured in such a manner that clauses on various matters pertaining to NDTV, which were material and price-sensitive information, were concealed from the minority shareholders. The Roys have contended that NDTV was not a party hence there was no requirement for them to make disclosure of the agreement to the stock exchanges.

“I admit this position that NDTV was not a party to these loan agreements, however, contents and clauses of loan agreement clearly demonstrate that the scheme was devised by the noticees in such a way that though NDTV would not be a party to the said loan agreements, yet the loan agreements would contain certain crucial, onerous and hostile stipulations pertaining to NDTV,” SEBI Adjudicating Officer Amit Pradhan said.

Such stipulations included NDTV’s capital restructuring, which was agreed to be undertaken by Prannoy Roy and Radhika Roy, only with the prior consent of ICICI Bank/ VCPL, he added. Through such acts, the two promoters and RRPR Holding have violated provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, according to SEBI.

Accordingly, a fine of Rs.25 crores has been imposed on the Roys and RRPR Holding, which needs to be paid jointly and severally. Besides, a penalty of Rs.1 crores each has been levied on Prannoy Roy and Radhika Roy.

SEBI’s 52-page Order imposing the fine on Prannoy & wife and their shell firm is published below:

SEBI Order on NDTV Dtd Dec 24, 2020 by PGurus on Scribd

References:

[1] NDTV’s Prannoy Roy and wife Radhika caught for insider trading by SEBI. Rs.16.97 crores fine imposed and banned for two years from stock exchanges – Nov 28, 2020, PGurus.com

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