Responding to the ministry of corporate affairs (MCA) report highlighting that despite no direct equity in Loop Telecom, the Ruias of the Essar group indeed had substantial interests in the telco, Loop Telecom, in a letter to the department of telecommunications has stated that the company fully complied with the licensing norms and had submitted the certified shareholding structure in the company to the DoT, clarifying that the Essar group held less than 9.99% equity.
In a letter to the DoT secretary, Siddartha Behura, Loop Telecom noted, ?Since the relevant date (date of application), the indirect equity holding of Essar group in Loop Telecom Pvt Ltd has at no point exceeded 9.99 % as permitted under the licensing guidelines?. The company in its communication to the DoT has stated that of the remaining equity, the interest was held by Loop?s promoters, the Khaitan group, through its investment/holding companies, including Santa Trading Pvt Ltd and BPL Communications.
Loop also clarified that in 2005-06 and 2006-07, Essar group firms had subscribed to NCDs of Rs 1,592 crore in Santa Trading, which in turn (through its subsidiary BPL Communication) invested Rs 2,951 crore in debt securities of Essar group companies. ?As of relevant date (at the time of issuing licences), the Essar group owed the Khaitans Rs 1,359 crore.
The issue came to notice when the MCA wrote to the DoT alleging that despite the Essar group not being a major shareholder in STPL, it had invested a huge amount of money in that company?s NCDs and also appeared to have provided the funding for STPL through BPL Communications.