According to the ED, Advantage Strategic’s business activities were controlled by Karti Chidambaram. As per the ED official, Vasan Health Care did not follow Foreign Exchange Management Act (FEMA) provisions, nor informed the Reserve Bank of India, for share transfers to the overseas investors.
ED officials said that the notices have also been served on the foreign investors, seeking their response to allegations of multiple FEMA contraventions. The ED is probing into foreign investments in the Chennai-based Vasan Health Care, both in the primary and secondary market. According to the ED, the amount relating to alleged contravention by Advantage Strategic in the sale of Vasan shares is about Rs 45 crore. Therefore, show cause notices have also been issued to the company, its directors and Mr Karti, who “appears to be the controller and ultimate beneficiary in these transactions”.
The said company had got investments from venture capital firms, Sequoia, and West Bridge, based in Mauritius, and also through the investment arms of global firm GIC-Singapore. According to the ED official, the overseas investors acquired Vasan’s compulsorily convertible preference shares directly from the company, against the investment of Rs 432 crore in different phases from February 2009 to November 2014.
The shares were acquired at the face value of Rs 100 each. The ED alleged that instead of getting equity shares from the company directly, the investors acquired them from existing shareholders, including Vasan promoter A M Arun, his and his father-in-law Dwarakanathan’s partnership firm AMA Associates, and Advantage Strategic Consulting. (UNI)