ED slaps Rs 660 cr notice on Videocon for forex violations
New Delhi: Enforcement Directorate (ED) has issued a Rs 660 crore showcause notice to consumer electronics major Videocon Group on charges of violation of foreign exchange laws.
The notice, under provisions of the Foreign Exchange Management Act (FEMA), has been issued by the Mumbai office of the agency after its probe found that the group has "contravened" the law as it failed to comply with RBI norms by not declaring funds generated by some wholly owned subsidiaries the group had raised overseas few years back, according to ED sources.
"The group has been charged under section 6 (3) of FEMA which talks about transfer or issue of any foreign security by a person resident in India. The show cause notice has said that the violation done by the group is worth Rs 660 crore," they said.
When contacted, Videocon Group Chairman Venugopal Dhoot told PTI that they have "not yet received any notice in this regard so far."
He, however, said the matter could be related to "non-submission of quarterly returns and there would be no monetary penalty to the company. Also, FEMA violation is not a criminal offence."
Sources said the group raised loans worth USD 100 million abroad and subsequently invested these funds into the Indian arm of the company, allegedly in violation of Reserve Bank of India (RBI) and FEMA guidelines.
The agency has been probing the case since 2011-12 and it has now asked the group to reply to the notice within a month following which the charges will be adjudicated.
The Mumbai-based diversified Videocon group has interests in consumer durables, DTH services, oil and gas and real estate.