The Hush Post: In connection with raising of funds abroad to the tune of $18 million (around Rs 100 crore) by floating foreign shares or GDRs (Global Depository Receipts) allegedly without the mandatory permission of the Reserve Bank of India (RBI), the Enforcement Directorate (ED) has issued summons to Rana Inder Partap Singh, son of Punjab Power Minister Rana Gurjit Singh.

He is to appear before the Enforcement Directorate on January 17. He raised shares for one of the family-owned companies, Rana Sugars Ltd .  founded in 1992 in collaboration with Punjab Agro Corporation, with its head office in Chandigarh.

The Central investigation agency suspects the funds may have been raised in violation of the Foreign Exchange Management Act, 1999 (FEMA). The ED also believes that the company extended its own guarantees for loans taken by foreign investors/entities from banks abroad for subscribing to its shares (GDRs) floated outside India.

Indian companies issuing GDRs have to comply with certain conditions under FEMA, and filing of information with the RBI is one of the mandatory requirements.

The RBI has told the ED that it has no information regarding Rana Sugars issuing GDRs. The company had also not filed any information regarding the end utilisation of the money in India.

The ED alleges that the money raised by Rana Sugars was kept in a Portugal bank based in Madira Island for a while before transferring it back to India. The ED initiated its investigation into the matter after it was flagged by SEBI.

Rana Sugars MD Inder Partap while talking to a national daily said “confusion” had been created by people managing his company accounts, who had inadvertently mixed up the money received from their 2008-09 sugar exports and the proceeds of the GDR floated, in the account books.

“We have not violated any law. We have been furnishing all requisite information to the RBI as well as the ED. The ED has now asked me to provide additional information in person,” he said, adding it is a five-year old issue.

Responding to the ED’s queries, Rana Sugars submitted copies of audited balance-sheets from 2005-06 to 2007-08, along with details of GDRs issued by the company.

In a letter to the ED, Inder Partap Singh contended that no permission was required as the GDRs were issued under the ‘automatic route’ in accordance with the “Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993” and the guidelines issued by the Department of Economic Affairs dated January 19, 2000.

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