InvestorQ : Why are the NDTV promoters now raising the tax bogey to delay the Adani NDTV deal?
manisha Kolvenkar made post

Why are the NDTV promoters now raising the tax bogey to delay the Adani NDTV deal?

Crowny Pinto answered.
1 month ago

The NDTV promoters, Prannoy Roy and Radhika Roy, are now trying to take umbrage in a minor clause in a tax dispute to hold up transferring shares to VCPL. It may be recollected that in 2017, the Income Tax department had provisionally barred Prannoy and Radhika Roy from selling a part of their stake since their taxes were under reassessment for non-disclosure of certain income heads. Now the Roys are of the view that the Adani group would require clearance from India's tax authorities for transferring these shares.

Shares in NDTV have been rising rapidly since they realized that Adani was taking over the company as a majority shareholder. The stock of NDTV is already trading at the highest level it has achieved in more than 14 years. Adani took over NDTV by taking over VCPL. Now, VCPL had warrants to convert into a 99.5% stake in RRPR Holdings. Since RRPR holdings was the owner of 29.5% stake in NDTV, the exercise of warrants would automatically entitle Adani to get so much ownership in NDTV.

NDTV has now said that the tax authorities were currently reviewing whether the loans gave rise to an estimated capital gains tax obligation of Rs175 crore since the warrants had virtually amounted to a transfer of controlling interest in the network. Meanwhile, NDTV has invited the Adani group to join its application to the tax authorities for clarification. However, Adani group feels that the Roys are unnecessary postponing the action that has to be statutorily implemented by them.

Meanwhile, both the parties to the case have also separately asked the market regulator to clarify whether the Roys were restricted from selling the stake by a prohibition on them dealing in India's securities market. The deal had preceded the prohibition by nearly 8 years so it may not exactly be applicable. Many of the journalists and politicians have also been worried that a change of ownership could undermine its editorial integrity.