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On September 1, 2022, the Directorate of Enforcement (ED) announced the seizure of immovable property valued at Rs. 8.94 Crore located in Thanjavur. This action pertains to M/s G V Films Limited, Chennai, and is taken under Section 37A of the Foreign Exchange Management Act (FEMA), 1999, in connection with the alleged siphoning of foreign exchange through the issuance of 6.4 million Global Depository Receipts (GDRs) totaling Rs. 345.6 Crore.
The investigation, conducted under the provisions of FEMA, 1999, unearthed attempts by M/s G V Films Limited to misuse the proceeds from their Global Depository Receipts. The company opened an account with Banco Efisa S.A., Lisbon, Portugal, specifically for managing GDR proceeds.
M/s G V Films Limited is reported to have conspired with M/s Whiteview Trading Corporation, registered in the British Virgin Islands. Under this conspiracy, M/s Whiteview entered into a ‘Credit Agreement’ with Banco Efisa S.A. and obtained a loan of US$ 40 million, ostensibly to subscribe to the GDRs issued by M/s G V Films Limited.
Subsequently, M/s G V Films Limited entered into an ‘Account Charge’ Agreement with the bank, pledging the entire GDR proceeds as collateral for the loan taken by M/s Whiteview. As a result, M/s Whiteview Trading Corporation subscribed to all 6.4 million GDRs, with M/s G V Films Limited pledging the US$ 40 million proceeds against this loan.
Through these actions, M/s G V Films Limited effectively siphoned off US$ 40 million, equivalent to Rs. 172.8 Crore, which should have been repatriated to India for its intended purposes.
Additionally, M/s G V Films Limited, as part of a premeditated plan to facilitate the siphoning of foreign exchange, issued 16,00,00,000 underlying equity shares valued at Rs. 172.8 Crore, corresponding to the 6.4 million GDRs. These shares were subsequently marketed and sold within the Indian market through various subscriber entities.
The seized asset, identified as the G V Complex—a multi-screen theatre located in Thanjavur—is valued at Rs. 8.94 Crore as per the annual reports of M/s G V Films. Notably, its market value is believed to be significantly higher, and further confirmation is being sought from the Competent Authority.
The investigation under the Foreign Exchange Management Act, 1999, remains active as authorities continue to explore the full extent of the alleged violations.