New Delhi: The government will go in for a
thorough probe into the proposal of the owners of Rajasthan
Royals to induct of 100 per cent foreign equity into its IPL
franchisee.
After deferring a decision on the proposal of Jaipur
IPL Cricket (JIPL) to bring in FDI, the Foreign Investment
Promotion Board has asked the investigating arm of the Central
Board of Direct Taxes to file a detailed report.
"The proposal has now been sent by FIPB to Central Board
of Direct Taxes investigation arm for a detailed report," a
finance ministry official said.
JIPL had sought "to induct 100 per cent foreign equity
by way of issue of shares for consideration other than cash".
According to sources, security agencies had also raised
concerns over the source of overseas funding of the franchise.
The proposal from JIPL is one of the 17 proposals that
were deferred by the FIPB, an official release said.
Last October, the FIPB had rejected a proposal from JIPL
to allow induction of foreign equity. The company had
reapplied, which was also deferred in the recent meeting of
the board on April 9.
JIPL is the only IPL franchisee that approached the
government to allow induction of foreign equity, the official
added. Last year, JIPL had sought permission from the
government to induct foreign equity capital worth over USD
5.82 million (about Rs 26.7 crore).
The company had sought to issue shares to the England-
based Emerging Medial (EMIPL) against USD 50,48,885.25 deposit
paid by the British firm to the Board for Control of Cricket
in India (BCCI). It had also sought to issue shares to EM
Sports Holding Mauritius (MHC) for USD 7,73,480.99 against the
same amount paid as franchise fee by MHC to BCCI on behalf of
JIPL.
The department of economic affairs had earlier gave no
objection to the transaction, subject to satisfactory proof of
foreign exchange. The proposal did not entail physical flow of
FDI into the country.
JIPL, which is a wholly-owned subsidiary of MHC, was
incorporated in March 2008 for managing and operating the
Rajasthan Royals team, co-owned by actor Shilpa Shetty, that
won the first season of the IPL tourney in 2008.
MHC is a joint venture between EMIPL, Tresco
International and two other firms based in Hong Kong and
the Bahamas.
PTI
First Published: Friday, April 23, 2010, 21:35