Did NDTV Violate FDI Laws to Set up Its Entertainment Ventures?

NDTV’s Director KVL Narayan Rao describes various subsidiary entities of NDTV in foreign countries.

In a contentious revelation, PGurus, a collective of journalists, economists and other experts, has claimed that Prannoy Roy's New Delhi Television (NDTV) had floated shell companies – or non-trading companies used for financial manoeuvring – in Netherlands, and routed money by violating India's Foreign Direct Investment (FDI) norms.

However, in a 33-page handwritten statement to income tax officers, NDTV's Director and Executive Vice Chairperson KVL Narayan Rao merely described various subsidiary entities of NDTV in foreign countries.

The I-T department said in the report:

He (Rao) admitted that the foreign subsidiaries were incorporated to circumvent the restriction imposed by Indian regulations.

In response to PGurus’ claims, NDTV said:

The latest article published by known NDTV baiter, Mr Post-Truth-Gurumurthy, on his website pgurus.com is not only a classic case of misreporting and concoction of untruths but yet another attempt to scuttle and suppress free and fair press in India.

The channel added that all Rao has admitted to in his statement is that all transactions and dealing made by NDTV are “100 percent legal and 100 percent authorised and transparent.”

The channel goes on to question how a confidential notice issued by the I-T department to NDTV and a statement recorded by tax officials have been made available to a third party like PGurus.

Here are excerpts from Rao's statement to I-T officials, as reproduced by PGurus:

Funds From Offshore Accounts?

According to the I-T department's report, in the financial year 2007-08, when P Chidambaram was India’s Finance Minister, NNPLC raised $100 million by floating “step up coupon bonds” that were due in 2012. A coupon bond is an investment bond on which interest is paid with coupons. The coupon rate increases in regular intervals in step up bonds.

The initial investors in these bonds were eight foreign institutional investors (FIIs). The I-T department claims three of the eight FIIs were from the Cayman Islands and one from the British Virgin Islands.

To this, Rao’s reply is that all these companies met with NDTV in Hong Kong, London and New York – and not the Cayman Islands or the British Virgin Islands.

All of them met us in their offices in these cities.

When asked whether he was aware that the investments came from the Cayman Islands and the British Virgin Islands, Rao answered, "Not at all."

In NDTV's 2006-07 annual report, the channel declared that NNPLC "would house the businesses of entertainment, lifestyle, convergence and labs". The annual accounts of the subsidiary companies were not mentioned in the report.

NDTV-PGurus’ Ongoing Tussle

The tussle between NDTV and PGurus has been an ongoing one. PGurus has earlier made the same allegations against the news channel. Responding to them, NDTV clarified on 26 December:

NDTV has gone to court to prove it wrong. The case is being heard in the Income Tax Appellate Tribunal and stay has been granted. NDTV is confident of winning – because, once again, there are documents to prove all laws were complied with and all dues paid.

The channel said PGurus and its "cohorts are devoted to trading lies about NDTV”.

The I-T department's findings are from June 2016. Read the full copy of the report here:

NDTV TaxDocuments NarayanRao Statement by PGurus on Scribd

Source: PGurus and NDTV.com.

(This story has been updated with NDTV’s response.)