Not just SEBI, need Income Tax dept nod as well on warrants' conversion: NDTV founders

The ongoing tussle between business conglomerate Adani Group and media major NDTV is getting increasingly complex with the media company now informing that the conversion of warrants held by an Adani Group subsidiary (VCPL) into equity shares of a promoter group company of NDTV would require a nod from the Income Tax (IT) department.

In a stock exchange announcement, the media major stated that the NDTV founders - Prannoy Roy and wife Radhika Roy – have informed that their stake in the company held through promoter group vehicle RRPR Holding Private Limited is attached with the Income Tax (I-T) department and any conversion would require the nod of the tax authorities.

“RRPRH, which owns 29.18 per cent equity interests in NDTV, has intimated VCPL on August 31, 2022 that equity shares of NDTV held by RRPRH were provisionally attached by the Income Tax Authorities in the year 2017, with notification in 2018 that the attachment shall remain in place until completion of reassessment proceedings,” stated the exchange announcement.

“RRPRH has informed VCPL that operation of these order(s) of attachment will require approvals and/or clarifications from the Income Tax Authorities in relation to the public announcement of August 23, 2022 by VCPL; it has invited VCPL to join its application to the Income Tax Authorities,” it added.

More importantly, it states that the IT attachment order pertains to the “loan agreement with VCPL in 2009, and is premised on RRPRH (allegedly) transferring its controlling interest in NDTV to VCPL for Rs 403.85 crore, culminating in an estimate of Rs 175 crore ‘tax on capital gains arising on sale of controlling interest in NDTV to VCPL’ on RRPRH.”

Interestingly, the latest announcement comes close on the heels of the NDTV founders informing the exchanges that the conversion cannot go ahead without an approval from the Securities and Exchange Board of India (SEBI).

Meanwhile, the stock exchange statement by NDTV further added that the Roys might individually also require independent approval from the I-T authorities to effect any indirect transfer of shareholding in the company.

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