Past few hours, the Internet was abuzz with claims that Raghav Bhal had sold off his website to Haldiram’s. There were reports that the company was going through tough time after it sent 45 of its 200+ employees on ‘leave without pay’ for indefinite time citing tough financial times along with added pressure of coronavirus crisis. However, this is what has actually happened.
In late 2018, TheQuint founder Raghav Bahl and his wife Ritu Kapur acquired controlling stake (66.42%) in a listed firm called Gaurav Mercantiles for Rs 5.64 crore. As per the Economic Times report, they spend another Rs 2 crore on the open offer. The acquisition price was Rs 42.5 per share. Bahl’s acquisition of the ship-breaking company raised curiosity and the July 2019 disclosure that the ship-breaking company may get into media business by acquiring the firm of own promoter group led a surge to the share price. In July 2019, the share prices of Gaurav Mercantile hit the 52-week high of Rs 151 per share. On 6th May 2020, Gaurav Mercantile’s share price closed at Rs 250/share.
Gaurav Mercantiles was earlier engaged in ship breaking, trading and investment but had been concentrating on ship breaking for years now. The ET report further stated that on 17 July 2019, the new board members of Gaurav Mercantiles would decide whether the firm would buy stake in Quintillion Media which runs the online portal The Quint. The new board members of Gaurav Mercantiles who were to decide fate of The Quint were the original promoters of The Quint, Raghav Bahl and Ritu Kapur. So essentially, Raghav Bahl and wife had bought a company, which will now decide to buy another company, which was already owned by Raghav Bahl and wife.
Haldiram’s buys The Quint?
Not quite. At least not literally. As per the VC Circle report, Elara Capital Plc, a UK-based investment bank and Delhi-based Agarwal family of Haldiram snacks own convertible warrants in Gaurav Mercantiles. Raghav Bahl, through direct investments or related entities will retain majority stake in Gaurav Mercantiles after the convertible warrants are converted into equity. Haldiram’s owners may get upto 17-18% stake in Quintillion Media while Elara Capital Plc may get upto 10% equity stake. The equity deal for Gaurav Mercantiles buying Quintillion Media is reportedly valued at Rs 12 crore. The paid-up capital of Quintillion Media is Rs 85 crore and the company was known to be burning cash.
Raghav Bahl and web of investments
In May 2019, Bahl was under the Enforcement Directorate scanner for alleged non-disclosure of foreign assets, a property bought in London, UK for 31 million pounds. The Enforcement Case Information Report (ECIR), a police FIR equivalent, was lodged by the federal agency in the month of June after taking cognisance of an Income Tax Department complaint against him and others. The I-T Department had filed a charge sheet against Bahl before a court in Meerut under the provisions of the anti-black money law or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act of 2015.
On October 11, 2018, the IT officials had searched The Quint owner’s premises. Sleuths from the department had raided his residence in Noida to search for documents and other pieces of evidence related to the case. Raj Kumar Modi, in an admission to the tax officials under oath, had alleged Bahl of using his shell company to launder money and evade tax. Modi is the Managing Director of PMC Fincorp, a shell company, which Bahl had allegedly invested money in. Modi has reportedly made a statement to IT officials where he claimed that Bahl’s chartered accountant had given him ₹100 crores in cash “to convert into white”.
According to reports, Raghav Bahl and his wife have invested ₹3.03 crore in the penny stock company PMC Fincorp LTD. In spite of the company not indulging in any trade activity, the price of the shares shot up to ₹848/share in the next two years from the initial price of ₹5.50/share when Bahl had bought them. Bahl had then sold his shares following which the share prices appear to have crashed again. However, in a press release, Bahl had denied the allegations levelled against him. He has asserted that every transaction had been fully disclosed and assessed to tax.
Raghav Bahl and Network18
In fact, even earlier media venture of Bahl, Network 18, was a mesh of investments, cross investments and borrowing instruments. In 1993, Bahl founded Network18 which soon grew into one of the largest media houses in India. A June 2014 report by LiveMint states that in May 2014, Reliance Industries Limited, took over Network18 by paying Rs 4,000 crore to take complete control.
In 2012, Mukesh Ambani’s RIL had bought debentures, debt investment in Network18 which were convertible to equity shares at any time within 10 years. The debt investment by Reliance infused the cash into the company by at that time. Next two years, Bahl spent in laying off employees and closing loss-making ventures. Two-and-a-half-years after the debt investment, RIL converted the debentures into equity to take full control.