Zero to Rs 755 crore in a Year !

Telecom Minister family firm sets record turnover - Spectrum allottees investing?

The Pioneer had on Thursday reported that Union Telecom Minister A Raja’s wife MA Parameswari, a director in Green House Promoters Private Limited, used the Minister’s official residential address as her business address. This daily also noted that Raja had failed to file a ‘non-conflict of interest’ affidavit or inform Prime Minister Manmohan Singh of the business interests of his wife and other relatives. Parameswari was the company’s director till February 2008.

But this was not the only time the Minister had slipped on a mandatory requirement; he had apparently ‘forgotten’ to submit the required details when Parameswari first became a director in another company, Equaas Estates Private Limited, a real estate firm like Green House, which was established in September 2004.And as in the Green House case, the managing director of this company too was Raja’s confidant, Sadhick Batcha, from the Minister’s Perambalur constituency. Raja’s nephew RP Paramesh Kumar became the joint managing director. And, like the earlier firm, this company was also based in Chennai.

According to documents available with The Pioneer, it is this company which recorded a huge ‘domestic’ turnover of Rs 755 crore in the very first year of its operations.There is no mention in the documents filed with the Registrar of Companies about the source of this turnover. Form 23AC — to be filled by private limited companies for filing balance sheets/profit and loss statements with the Registrar of Companies — does not give any information on the following heads mentioned in the form: Sale of the goods manufactured; sale of the goods traded and sale or supply of the services. The form does not even indicate elsewhere how the turnover was achieved.

But talking about Green House, highly-placed sources in the Telecom Ministry told The Pioneer that Swan Telecom Private Limited, which has been in the news for being allotted in a controversial manner the 2G Spectrum licence, was likely to invest in Green House Promoters Private Limited — managed, as known, by relatives and close associates of the Telecom Minister. According to these sources, Swan planned to invest in 49 per cent equity in Green House at a dictated price of Rs 1,000 crore. To facilitate this financial deal, Greenhouse and Swan officials were reportedly working together with a Chennai-based audit firm.

When The Pioneer spoke to Sadhick Batcha over telephone, he confirmed that Green House was in an expansion mode. He also said the company was considering investment offers made by some firms. But when specifically asked whether Swan was one of these firms, he refused to confirm. The managing director said, “We are expanding but I cannot reveal the name of companies that are investing in Green House.” He directed this paper to contact one Kevin, ‘business adviser’ of Green House.Kevin, on his part, was equally cautious. “Green House is in talks for expansion. But I cannot confirm the names that are going to invest.”

Despite repeated attempts by The Pioneer, Swan Telecom managing director Shahid Balwa was not available for comment.“He will get back to you after some time. Currently, he is in a meeting,” said a person, who picked up his cellular phone. Balwa, however, did not return the call.It may be recalled that Swan Telecom bagged the licence for Rs 1,537 crore for operating in 13 circles in October. Within weeks, it sold 45 per cent of its shares to Etisalat, the UAE telecom giant, for $900 million (approximately Rs 4,500 crore). Swan Telecom’s roots can be traced back to July 2006, when it was established in the name of Swan Capital Private Limited.

The Mumbai-based firm, then part of a leading corporate house, was involved in non-banking financial services. The company applied for a GSM circle licence in January 2007. A month later, in February 2007, it changed its name to Swan Telecom Private Limited. In October 2007, the corporate house, that was already a strong name in the CDMA sector, quit the firm after the Centre announced a new telecom policy that allowed one company to operate both GSM and CDMA services. Two entrepreneurs - from the real estate sector — acquired Swan Telecom Private Limited. Balwa and Vinod Kumar Goenka became the new owners of the company. Balwa became the company’s managing director. Politically well connected, the young Balwa had been operating his real estate business from Mumbai.Unitech, another real estate company, also entered into a bumper deal without investing anything in telecom infrastructure. The company got a licence to operate in 22 circles for Rs 1,651 crore.

Within weeks of acquiring the circles, it sold 60 per cent shares for Rs 6,120 crore to a Norwegian company, Telenor, which is a major telecom player in Pakistan and Bangladesh. Unitech’s story, therefore, is not unlike Swan’s, which too disposed of part of its shares to a prominent foreign telecom firm after getting the 2G licence, in the process netting a huge profit.Interestingly, like Unitech and Swan, a number of real estate firms suddenly developed keen interest in the telecom sector over the last two years, virtually coinciding with Raja’s tenure at Sanchar Bhavan. This had upset the existing telecom operators, some of whom even complained to the Prime Minister over the reported ‘irregularities’ that followed.

The Minister, on his part, had justified the move, saying that he had attempted to break a powerful telecom operators’ cartel that had been working against public interest.Raja, Green House deny chargesUnion Telecom Minister A Raja has strongly denied any wrongdoing in the 2G spectrum allocation issue. Reacting to Thursday’s report of The Pioneer, Raja said he had nothing to do with the affairs of Green House Promoters Private Limited, the firm mentioned in the report, although his family members were part of its business. Green House too has denied in writing any irregularity.

The Minister said, “My wife, as an advocate, worked with them as the director (legal). She neither has any investment, nor attended any meetings.” He ruled out his involvement with the company, though he admitted to his close relatives being part of the firm. Sadhick Batcha, the MD of Green House, also said Raja’s wife was not a director of the board. “With regard to her involvement, I would like to clarify that she was appointed the director (legal) to advise on legal issues. She neither has any shares nor any involvement in the day-to-day management of the company,” he stated.

http://jgopikrishnan.blogspot.com/2009/03/spectrum-scandal-and-telecom-ministers.html


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