In another move to delay the transfer of 29.8 per cent of shares to Adani’s ownership, NDTV promoters disclosed that the transfer will require the approval of the Income Tax authorities. The promoters, Radhika and Prannoy Roy, notified the exchanges that the equity shares held by their holding company RRPR were provisionally attached by the tax authorities as part of reassessment proceedings. Therefore, RRPR has informed Adani-owned Vishvapradhan Commercial Limited (VCPL) that VCPL’s move to exercise rights to convert warrants into equity shares of RRPR will require approval and clarification by the Income Tax Authorities. 

Citing a July 20, 2022 order by the Securities Appellate Tribunal (SAT) stating the following, “The intent and language of the loan agreement and call option agreements read with the SAT Regulations makes it clear that there is no direct or indirect control of NDTV by VCPL. The transaction structure does not lead to a conclusion that VCPL has acquired direct or indirect control over NDTV.” The letter by NDTV noted that the Income Tax Authorities will be required to clarify whether, in light of the SAT order, the provisional attachment will continue to operate on RRPR’s equity shares held in NDTV.

Moreover, as per the promoters, Radhika and Prannoy Roy may individually require independent approval, under section 281 of the Income Tax Act, from the Income Tax Authorities to deal with any assets, including indirect shareholding in NDTV, arising from sub judice (impugned) orders. RRPR has intimated this to VCPL as well.

Adani Group’s counter

Countering the promoter’s claims, Adani notes, “It is clear that the RRPR Letter lacks bona fides and has no merit or basis either in law or in fact and is misconceived. The IT Orders only apply to the shares of NDTV held by RRPR and in no manner restrict RRPR from completing the formalities in relation to the allotment of equity shares to VCPL on exercise of the warrants.”

VCPL denies that the steps required to be taken by RRPR in terms of the warrant conversion notice require any prior approval from the Assessing Officer, under Section 281 of the Income-tax Act, 1961, as alleged or at all.

“The IT Orders have not been issued against Prannoy Roy and Radhika Roy individually and do not relate to their equity ownership in RRPR. In this background, the suggestion that Prannoy Roy and Radhika Roy will need prior approval of the Assessing Officer under Section 281 of the Income Tax Act, 1961 is wholly misconceived and has no basis,” said Adani in their reply.

VCPL lent NDTV a ₹403 crore loan in 2009 against which RRPR had issued warrants, which were convertible equity shares aggregating to 99.99 per cent of the share capital of RRPR. When Adani bought a 100 per cent stake in VCPL on August 23, it started the proceedings to exercise these warrants and get a 29.18 per cent controlling stake in NDTV. 

Once these shares are formally under Adani-owned VCPL, Adani will commence an open offer which will allow NDTV’s public shareholders to sell their NDTV shares to Adani at a price of ₹294 per share. With a 29.18 per cent stake as well as likely support from foreign portfolio investors such as LTS Investment Funds and other entities like Drolia Agencies, GRD Securities, Adesh Broking and Confirm Rebuild, Adani could easily have control of over 50 per cent stake and control the company’s operations. For this reason, veteran journalists and promoters of the Delhi-based media company, the Roys, have been trying to delay or prevent the transfer of promoter-owned shares to Adani.

Previous letters issued by NDTV include seeking clarity from the Securities and Exchange Board of India and postponing the AGM by a week to September 27. On Wednesday, promoters also noted that approval from the Income Tax Authorities is also required.

Delays notwithstanding, Adani has announced a tentative open offer date of October 17.

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