BCCI chief Srinivasan's firm snared in Jagan Reddy case

BCCI Chairman N Srinivasan , who has been summoned for questioning by the CBI, is not personally named in the FIR against Jagan Mohan Reddy but his company India Cements figures as the 22nd accused out of 74 listed by the Central Bureau of Investigation (CBI).

The CBI's allegation? India Cements paid bribes of Rs 60 crore in the garb of investments to YS Jaganmohan Reddy and his father, former Andhra CM YS Rajsekhra Reddy, in return for official favours.

 BCCI chief Srinivasans firm snared in Jagan Reddy case

N Srinivasan has been summoned for questioning. Reuters

The case, as made out by the Jagan Reddy FIR, is simple: Like many other industrialists, Srinivasan-led India Cements subscribed to shares of Jaganmohan Reddy’s companies at a very high premium and in return he was allotted land and water from the Krishna river for his cement plants.

According to the FIR, India Cements made following investments in Jagan Reddy’s Companies:

- Rs 5 crore in Carmel Asia Holding Pvt Ltd, one of the 36 companies created by Jagan Mohan Reddy. He paid Rs 252 per share, while the promoters and group companies had paid only Rs 10 per share.

- Rs 15 crore in Raghuram Cements Ltd (now called Bharathi Cements) purchasing 12,50,000 shares at a premium of Rs 110 in 2007.

- Rs 40 crore in Jagathi Publications, which owns Sakshi TV and newspapers.

And in return, according to the FIR, Jagan Reddy’s father YSR Reddy rewarded Srinivasan’s India Cements with the renewal of a land lease in Kadapa district on 11 July 2008. Srinivasan’s cement company was permitted to draw upto 10 lakh gallons of water from Krishna river by a government order on 22 July 2008 and 13 million cubic feet of water from Kagna river through a government order on 12 September 2009.

"It is alleged that the promoters and group companies of Jagan Mohan Reddy had subscribed to the capital at par whereas all other shareholders had subscribed to the shares at a premium of Rs 252 per share in Carmel Asia Holdings as an alleged quid pro quo for the benefits which they got from the Andhra government,’’ the FIR says.

Interestingly, Carmel Asia Holding Pvt Ltd, which itself is a subsidiary of another Jagan Reddy’s company Sandur Power Company, has invested its entire capital gathered from so-called shareholders in Jagathi Publications Pvt Ltd (69.12 percent) and Indira Television Ltd (51.22 percent).

According to the CBI, as per the provisions of FEMA read with guidelines of the government of India on foreign investments. Sandur Power Co. Ltd is not eligible, firstly, to float the subsidiary, that is, Carmel Asia Holdings and, secondly, to allow it to invest in Jagathi publications. The FIR alleges that this is a clear violation of all the regulatory norms under relevant regulatory enactments.

Leading cement companies like Dalmia Cements and India Cements, whose shares were valued are around Rs 40 and Rs 110 respectively after decades of their existence and reputation in the sector, were made to purchase the shares of the novice Bharathi Cements at a premium of Rs 1,440 at the time of its inception, the agency has.

This was allegedly an instance of paying  of bribe in the guise of purchase of shares for benefits given to them by the state government during this period, the CBI has said.

Dalmia Cements invested Rs 50 crore by purchasing shares at a premium of Rs 110 in 2007 and at a premium of Rs 1,440 in 2008. In return, it got a mining lease, the CBI said.

It is also alleged that Jagathi Publications as on 31 March 2010 had a paid-up capital and share premium of Rs 844.129 crore and India Cements holds Rs 40 crore worth shares in the company, subscribed at a uniform premium of Rs 350 per share even before the Jagathi Publications commenced its commercial operations.

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Updated Date: Jun 08, 2012 17:03:15 IST