ED seizes over Rs 65 crore of Venkateshwara Hatcheries in FEMA probe

Nine properties worth more than Rs 65 crore of prominent hatchery company-- Venkateshwara Hatcheries Pvt Ltd-- have been seized under the foreign exchange law for allegedly making illegal foreign remittances to purchase a 90-acre house in the UK, the Enforcement Directorate said on Monday.

The seized assets are located in Maharashtra and Karnataka and the ED case, being probed under the provisions of the Foreign Exchange Management Act (FEMA), pertains to these remittances made by the company from 2011 to its wholly-owned subsidiary named Venky's Overseas Limited (VOL), UK.

The total value of these properties is Rs 65.53 crore, according to the ED.

Venkateshwara Hatcheries Pvt Ltd (VHPL), the agency said in a statement, had declared the business of VOL to the RBI as agriculture and mining (rearing of ducks, hens etc).

After the incorporation of the VOL, the VHPL remitted 'huge funds' in the guise of equity infusion. 

"However, no such business activity was ever initiated by VOL even after lapse of more than 11 years from its incorporation."

Probe found the VHPL made remittances to the tune of GBP 73,96,069 (equivalent to Rs 65.53 crore) to the VOL since its incorporation till date, the ED said.

 The VOL immediately after its incorporation purchased a 90-acre immovable property named “Alexander House” in the United Kingdom through the funds remitted by VHPL with a view to provide convenience to the directors and employees of VHPL, it said.

Probe found that all the funds remitted by the VHPL to VOL subsequently were utilised for repayment of loan obtained by VOL from Barclays Bank, UK which was taken for acquisition of the said immoveable property.

"Investigation established that VHPL had no intention to conduct bonafide business through its subsidiary VOL and it was created as a front to purchase an immoveable property in the UK for the ultimate enjoyment by the directors, employees and family member of VHPL," the ED alleged.

Considering this as a violation of the law, the agency seized the equivalent value of properties held in India under the provisions of section 37A of FEMA.