Maxis owns effective 99% of Aircel through Suneeta Reddy

The Central Bureau of Investigation (CBI) has stumbled upon a new possible irregularity in the shareholding structure of Aircel, an all-India mobile services operator owned by Malaysian entrepreneur T Ananda Krishnan’s Maxis Group.

While the CBI is checking to see if Maxis was shown any special favours by the then Communications Minister Dayanidhi Maran, it now appears as if Maxis is an indirect owner of the nearly 99 percent of Aircel. Telecom regulations do not allow foreign parties to own more than 74 percent in Indian mobile phone companies.

While investigating C Sivasankaran’s allegation that Maran pressured him to sell his stake in Aircel to Maxis, the CBI stumbled upon the real shareholding pattern of Aircel. While 65 percent of the equity is held by Maxis directly, the balance 35 percent is held by Deccan Digital, in which Maxis (through subsidiaries) has 26 percent and Sindya Securities & Investment Pvt Ltd 74 percent.

Sindya belongs to P Dwarakanath Reddy and Suneeta Reddy , who is Joint Managing Director of the Apollo Hospitals Group.

With this equity structure, Maxis gets an effective 74 percent holding in Aircel (65 percent directly, and an effective 9 percent through Deccan).

But here’s the dicey part. While Sindhya paid Rs 34.17 crore for its 74 percent equity stake in Deccan, Maxis paid Rs 11.82 crore for the equity and also invested Rs 1,664 in the preference capital of Deccan. In short, the total investment of the Maxis Group in Aircel is a whopping Rs 7,880.8 crore against just Rs 34.17 crore by Sindya.

According to CBI sources, this investment break-up suggests that Sindya is just a front for Maxis and hence needs to be investigated further by the enforcement directorate for possible Foreign Exchange Management Act violations.

CBI had questioned Suneeta Reddy early this week to find links between T Ananda Krishnan, the Reddy family and Dayanidhi Maran. Firstpost has requested Suneeta Reddy for her version of events by email, but did not receive any reply at the time of writing.

Interestingly, Ananda Krishnan, a Malaysian businessman of Sri Lankan Tamil origin, did not hide his 99 percent ownership from the Malasiyan stock exchange, Bursa Malaysia, in a March 2006 filing. Krishnan said: “With equity interest of 74 percent in Aircel and 100 percent subscription of cumulative redeemable non-convertible preference shares in Deccan Digital, this effectively gives the group 99.3 percent economic returns from the investment in Aircel.''

CBI is in the process of acquiring all the concerned documents from Malaysia.

The Telecommunication Ministry under Dayanidhi Maran allotted 2G spectrum to Aircel in 14 circles without verifying the ‘holding structure’ of Aircel. In 2004, Aircel existed only in two circles - Chennai Metro circle and Tamil Nadu circle. C Sivasankaran, then the owner of Aircel, had applied for Unified Access Service Licence (UASL) 13 times, but Maran raised objections and issued show cause notices on various pretexts.

Maran began allotting telecom circle licences only after T Ananda Krishnan of the Maxis Group became the majority owner of Aircel. On 16 May 2006, Dayanidhi Maran’s ministry ‘delinked’ all the show-cause notices served on Aircel in the past and initiated a process to allot spectrum to Aircel under Ananda Krishnan. Withing nine days (between 20 and 29 November), Aircel became the eighth largest telecom company in the country, as Maran cleared all the pending requests for UASLs to Aircel.

Firstpost had earlier reported that Krishnan had reciprocated favours received from Dayanidhi Maran by investing Rs 725 crore in the Maran family’s companies - Sun TV Group. Krishnan’s Group company South Asia Entertainment Holding Ltd. (SAEHL) invested Rs 625 crore in Sun Direct for a 20 percent state in the company. And Maran family had invested Rs 12.6 crore to own the remaining stake (80 percent). Besides, Maxis had invested Rs 100 crore in Sun FM Radio Network and acquired a minority stake of 20 percent.