The Foreign Investment Promotion Board (FIPB) has deferred a decision on Jaipur IPL Cricket Pvt Ltd's (JIPL) proposal to induct $5.82 million (Rs 26.7 crore) into the company. JIPL owns the Rajasthan Royals IPL franchise.
FIPB, the country's nodal body for approving foreign investment, had discussed the proposal on April 9 and has sent the application to the revenue department for comments on where the money is coming from.
FIPB had rejected the initial proposal in October last year after the revenue department questioned the consortium's source of funds. JIPL then made a “representation against rejection.”
The company has plans to induct the foreign equity by way of “issue of shares for consideration other than cash inflow”. It had approached the FIPB for permission of inflow of foreign equity to the Manoj Badale promoted Emerging Media IPL (EMIPL) in lieu of $5 million (Rs 23 crore) earnest money paid by it to the BCCI. The balance of $ 773,481 (Rs 3.56 crore) is to EM Sports Holding Ltd, Mauritius (EMHC), against franchisee fee paid by it to the BCCI on behalf of JIPL.
“The company has not yet provided the necessary information on source of funds,” a senior official, who did not wish to be identified, told the Hindustan Times. The Department of Economic Affairs (DEA) had earlier conveyed ‘no objection’ to the transaction, subject to satisfactory proof of foreign exchange.
The finance ministry felt that the company should justify direct payments being made before JIPL was even created. The company, a wholly owned subsidiary of EMHC, was incorporated in March 2008 and is responsible for managing and operating the Rajasthan Royals.
EMHC, in turn, is a venture between EMIPL, Tresco International Ltd (presumably representing the Nigeria-based Chellaram family), Blue Water Estate Ltd (representing Lachlan Murdoch and based in Hong Kong) and Kuki Investments Ltd (promoted by UK-based businessman Raj Kundra and incorporated in the Bahamas).
In 2008, Badale, along with a consortium of investors, including Murdoch and NRIs Aditya S Chellaram and Suresh Chellaram, acquired the Jaipur IPL team for $ 67 million (approx Rs 300 crore). Subsequently, in 2009, Kundra and his Bollywood actress wife Shilpa Shetty were inducted as co-owners.