Fame deal: ADAG moves Sebi, alleges Fema violation

The Anil Dhirubhai Ambani Group (ADAG) firm Reliance MediaWorks has approached market regulator the Securities and Exchange Board of India (Sebi) seeking a probe into the sale of Fame India to Inox Leisure at a price much lower than it had offered.

ICICI Securities on behalf of three ADAG firms--Reliance MediaWorks, Reliance Capital and Reliance Capital Partners-- has alleged violation of many regulations by Fame India, in a public announcement today.

The allegations are made on the grounds of "the FEMA (Foreign Exchange Management Act), the Income Tax Act and corporate governance norms on fairness, transparency and disclosures", in relation to the Fame promoter's stake sale to Inox.

Reliance MediaWorks, in association with its two other group companies, is currently in race to acquire a controlling stake in Fame. The ADAG firm has announced an open offer for a 52 per cent stake in the theatre chain at a price of Rs 83 per share, aggregating to Rs 180 crore.

Earlier this month, promoters of Fame had sold 43 per cent of their stake to Inox. Inox had also acquired another 7 per cent from the open market, taking its total stake to 50 per cent. Following this Inox made an open offer for a further 20 per cent stake in Fame at Rs 51 a share.

Besides alleging underpricing of the open offer, the ADA Group firms also alleged that it suspected violation of the FEMA in relation to certain security arrangements made in relation to the foreign currency convertible bonds issued by the target company (Fame).