New Delhi, Sep 24 (UNI) The Enforcement Directorate (ED) said today that it recently conducted search operations under the Foreign Exchange Management Act (FEMA) at thirteen premises connected to the group companies of BC Jindal and Shyam Sunder Jindal, its directors, and other officers. The premises searched were located in Delhi NCR and Hyderabad.
The searches were conducted over suspected FEMA violations by the BC Jindal group entities, especially Jindal India Thermal Power Ltd. (JITPL), Jindal India Powertech Ltd., and Jindal Polyfilms Ltd., concerning their overseas investments, the alleged parking of funds in their own overseas entities, and the round tripping of funds.
The ED initiated the investigation based on specific input that BC Jindal Group entities, beneficially owned by Shyam Sundar Jindal, his wife Mrs. Shubhdra Jindal, and son Mr. Bhavesh Jindal, remitted Rs. 505.14 crore outside India to their own overseas entity, Topaz Enterprise DMCC, Dubai. This was done to acquire the shareholding of another overseas entity, Garnet Enterprise DMCC (GED), under the guise of an Overseas Direct Investment (ODI).
It was gathered that between the financial years 2013-2014 and 2016-17, Jindal Poly Films Ltd (JPFL) made substantial investments totalling Rs. 703.79 crore in Jindal India Powertech Ltd., which were further invested in JITPL to set up a coal based thermal power plant in Odisha. In the financial year 2018-19, instead of recovering the Rs. 703.79 crore investment from JIPL, JPFL chose to write it off and sold it at a significant loss to its own promoters and group companies. This is seen as a typical method of siphoning off public investors’ money, as JPFL is a listed entity.
Subsequently, on May 2024, JIPL received Rs. 853.72 crore from JITPL by redeeming preferential shares. Instead of repaying this amount to the listed entity JPFL, JIPL allegedly siphoned off Rs. 505.14 crore to Shyam Sundar Jindal’s personal entity in Dubai, Topaz Enterprise DMCC, to acquire a 100% stake in Garnet Enterprise DMCC.
It was gathered that Garnet Enterprise DMCC, Dubai, is a wholly owned subsidiary of Topaz Enterprise DMCC. Garnet Enterprise DMCC, in turn, holds a 48% stake in Jindal Polyfilm Netherlands B.V., which owns 100% stakes in other step down subsidiaries, namely JPF Dutch B.V., JPF USA Holding LLC, USA, and other foreign entities. All these overseas entities are beneficially owned by Shyam Sundar Jindal and his family.
It is suspected that the BC Jindal group is routing its own funds out of the country under the guise of ODI and parking them abroad. During the search action, certain documents related to overseas entities and their acquisition were recovered. According to these documents, Shyam Sundar Jindal is the beneficial owner and 100% shareholder of Topaz Enterprise DMCC and is the key person controlling its finances and those of other overseas entities.
Documents recovered during the search indicate that the Rs. 505.14 crore was transferred outside India through a sham transaction as an ODI, based on a fraudulent valuation of the foreign entity’s shares. Two different valuation reports were obtained from two related valuers, showing that the valuation was artificially enhanced to enable a larger remittance out of the country.
Data suggests that Shyam Sundar Jindal and his group entities hold multiple overseas entities in the Netherlands B.V., USA, Belgium, Italy, Kerkrade B.V., Luxembourg, Singapore, China, United Arab Emirates, Germany, etc. It is suspected that funds from India have been placed in these overseas entities in contravention of FEMA provisions.
Shyam Sundar Jindal was not available in India during the search, as he had travelled to Hong Kong citing official work and has not yet returned. He has yet to join the investigation. Further investigation into the matter is ongoing.
