Tax dept questions Matix's Nishant Kanodia in connection with NuPower probe

Central Bureau of Investigation (CBI) is likely to file a case in the coming weeks regarding the financial transactions related to NuPower Renewables

The income tax (I-T) department has questioned Matix Group Chairman Nishant Kanodia in connection with its probe into NuPower Renewables, a company promoted by Deepak Kochhar, the husband of ICICI Bank Chief Executive Officer Chanda Kochhar, sources said.

According to highly placed officials, the Central Bureau of Investigation (CBI) is likely to file a case (a first information report) in the coming weeks regarding the financial transactions related to NuPower Renewables. There is no clarity on which individuals or entities could be named in the FIR. “While the I-T department has been probing the Rs 3.25-billion investment made by Firstland Holdings in NuPower that was routed through Mauritius, our investigation is now centered around what is the source of the funds and why did Firstland Holdings exit NuPower and whether there is any relation to Essar Group of companies,” said a tax department official.

Kanodia is the son-in-law of Essar Group patriarch Ravi Ruia and he owns the Mauritius-based Firstland Holdings that invested Rs 3.25 billion in NuPower between 2010 and 2012. Earlier this month, the department conducted searches on Kanodia and related persons.

The questioning of Kanodia and searches followed tax probe into multiple transactions, involving companies such as NuPower, Videocon Industries and other parties in India and abroad. 

The CBI had earlier filed a preliminary inquiry against Kanodia for the alleged nexus between Deepak Kochhar and Videocon group Chairman Venugopal Dhoot. “The question is why did Firstland invest that money in NuPower, which got it 49 per cent stake in the firm only to offload that stake to DH Renewables within a year?” the official said.

In an emailed response to queries from Business Standard, a representative of the Matix Group said the inquiry by the I-T department was a routine one and the company had cooperated. “We reiterate and say that Matix has always followed highest levels of corporate governance practices and has at all times made complete disclosures of all its business transactions,” the representative said.

When pressed on whether Kanodia had revealed the source of the Rs 3.25 billion that Firstland had invested in NuPower, the representative said relevant information had been provided to the authorities. 

According to the representative, Firstland had to divest its equity in NuPower due to cost overruns in Matix’s Fertiliser business.

The transaction came under the I-T radar since Firstland sold the cumulative convertible preference shares (CCPS) to another Mauritius-based entity DH Renewables, a subsidiary of Accion Diversified Strategies Fund of Cayman Island in 2011 and 2012.

Under the original resolution, Kanodias’ investment would have resulted in 49 per cent stake in NuPower, which it relinquished in favour of DH Renewables Holding, the firm that bought the CCPS from Firstland. Kanodias received neither dividend nor capital gains on its investment. The original resolution on the CCPS did not provide any details on dividend payments.

As Business Standard reported earlier, tax authorities had sent letters to Mauritius and Cayman Island authorities seeking more information on the funds since the antecedents of DH Renewables and Accion Diversified Strategies Fund were not known.

Essar has denied that it has anything to do with Firstland’s investments in NuPower and said that it had not invested in NuPower. After making the investment between 2010 and 2012, Firstland sold its stake in NuPower in 2013 to DH Renewables, another Mauritius-based firm.