Videocon-Datacom Deal comes under Scanner

The Income-Tax Department is looking into the tax implications of a deal between Datacom Solutions and the Videocon Group after the former was allotted 2G licences in 21 circles for Rs. 1,507 crore in 2008. In a complex structure, Videocon Telecommunications was originally incorporated as Datacom Solutions. Later, two other group companies, namely Jumbo Techno Service and Oswal Chemicals and Fertiliser, invested Rs. 150 crore in Datacom Solutions. Videocon Group entered by purchasing shares from Jumbo Techno Services. Subsequently, Videocon Group infused fresh funds amounting to Rs. 1,540.22 crore, according to an Income-Tax Department presentation circulated among the members of the Joint Parliamentary Committee (JPC) looking into the 2G scam.

Unlike other telecom companies, post-allotment of a Unified Access Service Licence, shares were issued to the Videocon Group companies at a face value of Rs 10 per share.

Videocon Telecommunications is also under the scanner of telecom regulator TRAI for not meeting mandatory roll-out obligations after obtaining licence and the company has already paid liquidated damages, although under protest. The source of funds to obtain the 2G licences was a loan of Rs. 999 crore to Datacom Solutions from State Bank of India and Rs. 500 crore to Videocon Industries by Central Bank. Another Rs. 8 crore was met by way of internal accruals.

The Department of Telecom (DoT) had slapped a penalty of Rs. 12.45 crore on Videocon Telecommunications for missing its roll-out obligations in January this year. The Income Tax Department is likely to make a presentation to the JPC during its meeting. Besides Videocon, the Department will inform the Committee about investigations into other companies, including the Unitech-Telenor deal and Swan-Etisalat deal.