NDTV skyrockets as SEBI orders VCPL to make open offer

The securities regulator has ordered VCPL to make an open offer for NDTV within the next 45 days. The stock was up 20 per cent right from the opening bell, and is stuck in its upper circuit limit.

Securities and Exchange Board of India's (SEBI) has ordered against Vishvapradhan Commercial Private Limited (VCPL) with regards to an investment in the company made in NDTV. SEBI observed that VCPL sought to indirectly acquire control NDTV Limited through loan and call option agreements in 2009. This act obligated the company to make an open offer in-line with SEBI's SAST Regulations.

SEBI probed an alleged violation of takeover norms by VCPL. In 2008, an open offer was made by promoters of NDTV, for which they availed a loan of Rs. 540 crore from Indiabulls Financial Services. To repay the loan, Rs. 375 crore was borrowed from ICICI Bank. The ICICI Bank loan was repaid in 2009 by taking a 10-year loan of Rs. 350 crore from VCPL. In 2009, VCPL was a subsidiary of Reliance Industries, but now its ownership lies with Nahata Group. The clauses of the loan gave VCPL control of up to 52 per cent stake in NDTV.

The stock of NDTV opened with a gap up of 10.77 per cent at Rs. 36.00 per share and the volumes rose by 2,940.24 per cent compared with its 5-day moving average on Wednesday. At lunch hours, the stock was at Rs. 39.00 per share, up Rs. 6.50 or 20.00 per cent.