2G Scam: Karunanidhi's wife MK Dayalu & daughter Kanimozhi own 60% and 20% of KalaignarTV

Survey research organizations in the alleged irregularities in the allocation of 2G licenses are considering a transaction in which more than Rs 200 crore has been transferred from the DB group, based in Mumbai to Kalaignar TV, a station majority-owned by members family of DMK party chief M Karunanidhi.

The reason for the transaction in which Rs 214 crore was transferred in fiscal year a subsidiary of DB Realty in Kalaignar TV with two other companies 2009-10, was an entity called Cineyug to collect more than 30% in television, said a senior official of the DB Realty.

But the operation failed due to the good will and the money has been paid, the official Balwant-Asif, DB Realty CFO and CEO, said.

Officers investigating agencies are concerned by the agreement because the telecommunications arm DB Realty is a company which bagged 2G licenses in 2008. A Raja, Minister of Telecommunications and controversial former figurehead of the DMK, who was arrested by the Central Bureau of Investigation (CBI) on Wednesday, was in charge when the licenses were granted, which would have been lower market prices.

The telecommunications arm of the PP group had sold 45% of the UAE Etisalat for 900 million dollars in 2009. The company, formerly known as Swan Telecom, now known as Etisalat-DB.

The officials from the investigating agencies say the money was transferred in three stages in the course of financial year 2009-10. The first involved transfer of money of around Rs 200 crore from Dynamix Realty to Kusegaon Realty Pvt Ltd.

Cineyug denies links with DB

DB Realty, according to its 2009-10 annual report, owns 99% in Dynamix Realty, a partnership firm. In turn, Balwa and another DB Realty employee, Rajiv Agarwal Batekrishna, have equal stake in Kusegaon Realty, as per documents filed with the Ministry of Corporate Affairs, or MCA.

In the second leg, Kusegaon Realty invested Rs 206 crore in Cineyug Films Pvt Ltd. This amount is classified under the loans and advances category in the audited annual accounts of Kusegaon in 2009-10. Kusegaon owns 49% of Cineyug and the rest is held by the Morani brothers, who run event management companies, according to MCA flings.

For both Cineyug and Kusegaon, the transfer of money amounting to around Rs210 crore accounted for more than 95% of the total balance-sheet size.

In the final leg, Cineyug gave Rs214.8 crore as advances to Kalaignar TV in 2009-10, according to filings with MCA. The owners of Cineyug denied any links with DB Realty.

"There is no business association between Cineyug and DB group. The transaction between Kusegaon and Cineyug is purely a business transaction and at present Kusegaon owns a stake in Cineyug," says Karim Morani, promoter of Cineyug in a faxed reply to a questionnaire sent by ET. "However, I know the promoters of DB Group, i.e. Vinod Goenka, for the last 40 years," he adds. DB Realty is owned by Shahid Balwa and Goenka.According to both Morani and Asif Balwa, the money (Rs214 crore) was transferred to acquire 27-34% of Kalaignar TV, but the deal did not transpire because of differences in valuation.

At this stage, says Balwa, there was no option but to convert what was originally intended to be share subscription money into a loan.

"The loan was secured against an agreement to pledge 100% shares of the promoters of Kalaignar TV which gave a cover of 2.5 times the amount of loan," he says. The money has subsequently been repaid with interest, according to Balwa.

'Kalaignar professionally run'

Karunanidhi's wife MK Dayalu and daughter Kanimozhi own 60% and 20% of Kalaignar TV, respectively. But Sharad Kumar, who owns 20% of Kalaignar TV, says the two ladies had no role whatsoever in any of this."We were looking at investors and we contacted some people. Morani and I go back a long way so this worked out.


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