The Essar Group has reduced its stake in Loop Telecom to 1.5 per cent, the latter said in its affidavit to the Supreme Court, according to news reports.
Prior to this, it was alleged that the Ruia brothers of the Essar Group have more than 10 per cent stake in Loop Telecom, which is not permissible by law.
According to the affidavit, the Dubai-based Khaitan family owns the remaining 98.5 per cent stake. Kiran Khaitan is the sister of the Ruia brothers.
Earlier, Prashant Ruia, CEO, the Essar Group was questioned by the Central Bureau of Investigation, in relation to the agency?s ongoing probe into the 2G spectrum issue. Loop has also said that Essar had only 2.5 per cent stake in it in September 2007, when the mobile phone company had applied for pan-India mobile permits.
Meanwhile, the Enforcement Directorate (ED) has also been examining the Rs 15.92 billion investments made by the Essar Group in Loop Telecom. However, the operator, in its affidavit, said that between January 2006 and December 2006, the Khaitan family through debentures had invested Rs 29.51 billion in the Essar Group, resulting in the latter having a net debt of Rs 13.58 billion.
Also, the Essar Group has maintained that they had a 9.9 per cent stake in Loop Telecom, one of the nine companies that were awarded mobile permits by A. Raja, former Minister of Telecommunications and IT.
It is believed that it was only post 2008 that Essar revealed that the Khaitans were the owners of Loop Telecom. Prior to that, Essar maintained that ?overseas investors? through several companies controlled Loop.
Indian regulations do not permit any company to have more than 10 per cent stake in two different mobile phone firms. The Essar Group also has 33 per cent stake in Vodafone Essar.
The ED and the CBI are investigating if the Ruias, through a multi-tiered structure using companies such as Loop Communications, Essar Investment, Essar Teleholdings and Santa Trading amongst others and by using instruments such as non-convertible debentures, held more than the 10 per cent permissible stake in Loop Telecom.
The agencies are also investigating both the source of funds as well as the ownership of several of these overseas companies that jointly own stake in Loop Telecom.
Loop Telecom, in its affidavit in the Supreme Court, has also denied charges by the Comptroller and Auditor General of India (CAG) that it was an undue beneficiary of 2G spectrum allocation by A Raja. The CAG said that Loop?s application for mobile permits on September 3, 2007, was done with an altered MOA and added that the company engaged in deliberate misrepresentation of facts and also did not have the requisite paid-up share capital and therefore did not fulfill the eligibility criteria for obtaining mobile permits.
