A library of old Telugu movies. That was one of the key assets, which fetched premium valuation in 2007 when Reliance Industries picked stake through group entities in Ushodaya Enterprises, the holding company of ETV group.
For, the archive contained rights of old Telugu films starring late thespian NT Rama Rao besides octogenarian A Nageswara Rao and was valued at Rs 1,200 crore. This estimate formed a key part of arriving at the enterprise value of Ushodaya Enterprises at Rs 6,500 crore, according to a writ petition filed in the Andhra Pradesh High Court in October last year.
The petition filed by legislator Y S Vijaya, widow of former chief minister YS Rajasekhara Reddy, seeks CBI investigation into irregularities during Telugu Desam Party leader N Chandrababu Naidu’s tenure as chief minister of the state between 1995 and 2004. A public interest litigation directed at the state, it also lists top investigative agencies such as Central Bureau of Investigation, Enforcement Directorate and Securities and Exchange Board of India as respondents. Recently, Reliance impleaded itself into the case, though the petition did not name it as a respondent. The company, in its submission to the court, has denied any wrongdoing in the K-G basin exploration project, according to media reports.
The petition, a copy which was reviewed by Business Standard, said the “curious part” of the valuation exercise was that a library containing film rights of the Telugu movies in which thespians like Rama Rao and Nageswara Rao, among others, acted, was “shown as an asset of Ushodaya Movies”, a proprietary concern in the Hindu Undivided Family (HUF) of Ramoji Rao at Rs 1,200 crore.
The petition further states that the asset was sold to Ushodaya Enterprises, and “was taken into consideration for arriving at the enterprise value of Ushodaya Enterprises at Rs 6,500 crore.”
On Tuesday, Reliance Industries, following a deal it struck with Network 18, said “RIL through investments of about Rs 2,600 crore, by its group companies, currently holds interest in various ETV channels being operated and managed by Eenadu group.”
According to Vijaya’s petition, six “shell companies” were allegedly floated between December 2007 and January 2008 in 37 days. Reliance invested Rs 2,604 crore through these companies into Nimesh Kampani-controlled Equator Trading India Limited and Vinay Chajlani’s Anu Trading.
Vijaya’s petition said the complex web of transaction was unearthed by it through filings of these companies at the Registrar of Companies. It has produced the supporting documents in the annexures to the petition. Detailed email questionnaires Business Standard sent to Reliance, TV18 and Nimesh Kampani remained unanswered. Chajlani could not be reached for comment.
“Of the Rs 2,604 crore,” the petition said, “Rs 1,454 crore was routed through Equator Trading, while Rs 1,150 crore was through Anu Trading.”
Elsewhere the petition states that despite Ramoji’s Ushodaya Enterprises “having incurred a loss of Rs 59.19 crore, these companies purchased its (Ushodaya) Rs 100 shares at an astronomical premium of Rs 5,28,630 crore.” Vijaya’s petition, among other things, seeks investigation into incentives given to Reliance by the AP government.
According to the petition, the Krishna-Godavari basin is home to one of the most lucrative gas deposits in the world, as was discovered in 2002, and estimated to be almost 40 times that of the Bombay High basin. While the basin is located in Andhra Pradesh, the government chose to “turn an obliging blind eye” to its rights to the discovery on its soil, while allowing Naidu’s “close associate” Ramoji Rao to be the vehicle of the quid pro quo, it said.
There was also a note to Naidu by the senior officers of the government cautioning him that the state should also bid for the gas by forming a company like what Gujarat had done. But, Naidu “wholly ignored” this piece of advice, Vijaya added.
