HYDERABAD: Probing into the issuance of Global Depositary Receipts by Farmax India Private Limited, the Enforcement Directorate (ED) has seized movable and immovable properties to the tune of Rs 65.42 crore.During the investigation, the ED seized 23 immovable properties of Farmax India’s managing director Morthala Srinivasa Reddy and his brother M Malla Reddy, who is the company’s executive director.
The seized properties also include equity shares of Farmax in the name of promoters and the shares of MSR India Ltd, which were originally held by Srinivasa Reddy and later transferred to his brother and other family members.The ED’s probe revealed, “MD of FIL in connivance with Arun Panchariya & others issued GDRs in the name of his company in two tranches in 2010 and did not deliberately repatriate the GDR proceeds worth USD 71.45 million to India as per the statutory requirements.”
It further added, “Vintage, FZE, Dubai - wholly owned entity of Arun Panchariya was the sole subscriber to the GDRs. For that purpose, Vintage, FZE, Dubai had availed a loan from Euram Bank, Viena vide a loan agreement dated May 05, 2010. Under this agreement, the company had agreed that the entire GDR proceeds shall be pledged to secure the loan granted by Euram Bank to Vintage, FZE. The loan was sanctioned by Euram Bank to Vintage, FZE solely for the purpose of subscribing to the GDRs and in turn the GDR proceeds received by FIL were pledged for securing the loan advanced to Vintage.”
Meanwhile, the probe also revealed that out of the funds raised abroad, USD 15.60 million was diverted to its subsidiary - Farmax FZE, Dubai - a shell company in UAE, and from there to various other entities controlled by Arun Panchariya. Another USD 56.57 million was adjusted by Euram Bank against non-repayment of loan by Vintage FZE.