The enforcement directorate (ED) Thursday said it has seized a multi-screen theatre in Thanjavur district of Tamil Nadu as part of its probe into an alleged foreign exchange law violation by a Chennai-based film production and distribution company.
The property belongs to GV Films Ltd. and the federal agency charged it with violating certain provisions of the foreign exchange management act (FEMA) by “siphoning off foreign exchange in the guise of issuance of 6.4 million global depository receipts (GDR) to the tune of ₹345.6 crore.”
“G V Films Limited with an intention to misuse the proceeds of GDR opened a bank account in Banco Efisa S.A. (Bank), Lisbon (Portugal), for the purpose of handling the GDR proceeds,” the enforcement directorate said in a statement.
It said the company “conspired” with Whiteview trading corporation, a British Virgin Islands (BVI) company, for the purpose.
“In line with the conspiracy, Whiteview entered into a credit agreement with the Banco Bank and availed a loan of USD 40 million for the purpose of subscribing the GDRs of G V Films Ltd. and the latter company subsequently entered into an account charge agreement with the bank, and pledged entire GDR proceeds as collateral against the loan availed by Whiteview,” it said.
By availing the loan, the ED alleged, Whiteview Trading Corporation subscribed to the entire 6.4 million GDRs of G V Films, which pledged entire proceedings of USD 40 million against the loan availed by Whiteview Trading Corporation.
{{/usCountry}}By availing the loan, the ED alleged, Whiteview Trading Corporation subscribed to the entire 6.4 million GDRs of G V Films, which pledged entire proceedings of USD 40 million against the loan availed by Whiteview Trading Corporation.
{{/usCountry}}By doing so, the ED said, the Chennai company “siphoned off” USD 40 million, equivalent ₹172.8 crore, which was supposed to be repatriated to India.
The statement said G V Films Limited, as part of its plan to “siphon off” foreign exchange, issued 16,00,00,000 underlying equity shares having value of ₹172.8 crore representing the said 6.4 million number of GDRs and the same were sold in the Indian market through subscriber entities.
The agency said the company, in its annual reports, has valued the attached multi-screen theatre complex at ₹8.94 crore but its market value “appears to be much higher which is being ascertained from the competent authority.”