INDIA’s Enforcement Directorate on Monday (9) said it has issued a fresh order to seize assets worth more than Rs 240 million of a hatchery company as part of an investigation relating to alleged violation of the foreign exchange law.
Six immovable properties belonging to Venkateshwara Hatcheries Pvt Ltd in Maharashtra and Karnataka states were seized under the provisions of the Foreign Exchange Management Act (FEMA), the federal agency said in a statement.
The total value of these assets is Rs 246 million.
The investigation relates to “illegal remittances made by the company since 2010, till date, to its wholly owned subsidiary named Venky’s London Limited, Cardiff, UK.”
The agency had last month seized assets worth Rs 650 million in the case.
It said Venkateshwara Hatcheries Pvt. Ltd (VHPL) incorporated Venky’s London Limited, Cardiff, UK (VLL) as its wholly owned subsidiary in 2010 in Cardiff.
“VHPL declared the business of VLL to RBI (Reserve Bank of India) as engaged in recreation activity in the form of running a football club named Blackburn Rovers Football Club PLC (BRFC).
“After the incorporation of VLL, VHPL remitted huge funds in the guise of equity infusion,” the ED alleged.
In addition to the initial investment, the company infusing money in the form of equity contribution for day-to-day maintenance of the loss making club without earning any profit from the said investments, according to the Indian agency.
VHPL made remittances worth £219,083,419 to VLL since its incorporation till date, the ED stated. Of the said investment, it added that Venkateshwara Hatcheries Pvt. Ltd diverted investment worth £3,378,378 to acquire 53,00,000 shares of entity named M/s Hitlab Inc. Canada.
The agency said the Canadian entity is partially owned by an American Singer Akon who reportedly performed at the private birthday party of one of the promoters of VHPL, B Balaji Rao, in Pune.
An investigation found that VHPL had made an investment of £3,378,378 in an unrelated loss-making entity. It was made with a non-bonafide intention since it went against their own declared purpose of investment, the ED said.
It claimed “multiple” FEMA contraventions were seen in these transactions.
“Apart from mis-declarations in the remittances, VHPL wrongly claimed these remittances as equity infusion in its wholly owned subsidiary, but in reality, the intention was to siphon off huge amount to an unrelated loss making entity,” it said.
The said investments were not declared to India’s RBI and hence, the equivalent value of properties held in India have been seized under the provisions of Section 37A of FEMA, the agency said.