The Enforcement Directorate (ED) has made a significant move by seizing nine immovable properties worth a total of Rs 65.53 crore belonging to Pune-based food production company Venkateshwara Hatcheries Private Limited (M/s VHPL) in the states of Maharashtra and Karnataka. This action follows an investigation into the company’s illegal remittances dating back to 2011.
The ED’s inquiry focused on the unlawful remittances made by Venkateshwara Hatcheries Private Limited to its wholly-owned subsidiary, Venky’s Overseas Limited, United Kingdom (M/s VOL). During its investigation, the ED discovered that M/s VHPL had reported M/s VOL’s business activities to the Reserve Bank of India as being related to agriculture and mining, particularly the rearing of ducks and hens.
However, a deeper examination by the ED revealed that, despite substantial equity infusion from M/s VHPL, M/s VOL had not initiated any legitimate business activities, even after more than 11 years since its incorporation. This raised suspicions about the true nature of these transactions.
The ED investigation found that M/s VHPL had remitted a significant sum of GBP 73,96,069 (equivalent to Rs 65.53 crore) to M/s VOL since the subsidiary’s incorporation. Following its establishment, M/s VOL used these funds to purchase the “Alexander House,” a 90-acre property in the United Kingdom. This property acquisition was primarily intended to provide convenience and benefits to the directors, employees, and family members of M/s VHPL.
The ED concluded that M/s VHPL had created M/s VOL as a front to purchase this immovable property in the UK. The subsidiary was not intended for legitimate business activities, but rather to serve as a vehicle for the ultimate enjoyment of the acquired property by the stakeholders of M/s VHPL.
Under Section 37A of the Foreign Exchange Management Act (FEMA), 1999, the ED has seized the equivalent value of properties held in India. This action signifies a crackdown on illegal financial activities and sends a clear message that such practices will not be tolerated.
