Yes Bank, Bank of Baroda, HSBC, ICICI Bank, Citibank, IDBI Bank, HDFC Bank, Standard Chartered Bank and DBS Bank operate Vivo India’s accounts in branches across Gurgaon, Mumbai, New Delhi, Noida and Badshahpur.
Chinese mobile phone maker Vivo India has urged the Enforcement Directorate (ED) to unfreeze its bank accounts so it can continue its business, contending that the debit freeze of all its ten bank accounts has “jeopardised its very existence” in the country.
Vivo India sent a representation to ED on July 7, two days after the phone maker and 23 associated companies were raided by the central agency.
Before launching nationwide raids on 48 premises belonging to Vivo India and its related entities, ED reached out to nine banks directing a debit freeze of all 10 bank accounts belonging to Vivo India.
‘Our Legitimate Funds’
Orders issued by ED were served to Vivo India on July 6, according to the company’s representation.
Vivo India wrote to ED that it is unable to use Rs 251.91 crore lying in its accounts after debit freeze orders. It said, “The direction of debit freeze of all the bank accounts of Vivo will lead to a situation of commercial and civil death, and while we are committed to cooperating with the investigation, such an irreversible action, even if temporary, jeopardises the very existence of Vivo.”
The company said, “The situation is further aggravated as there are immediate payments to be made towards statutory dues, salaries, rent, monies for daily business operations, including refund of monies to consumers who have cancelled online orders and servicing of finance facilities from various banks.”
The debit freeze has caused “hardship” to all its operations and is “disrupting” its business operations, said the company.
“The said action is resulting in depriving us to use our legitimate funds in order to meet our operational expenses and statutory dues,” it said. “If this position continues, Vivo and its operations will come to a complete standstill, resulting not only in substantial commercial losses being suffered by Vivo, but will also deprive the exchequer of a sum of Rs 451 crore payable towards various statutory dues.”
It also said that “further exposes Vivo towards penalties and litigations for non-fulfilment of its obligations.”
Last week, acting on a petition filed by Vivo India, the Delhi High Court had directed ED to decide on the company’s representation.
Appearing on behalf of the company, senior advocate Sidharth Luthra, assisted by advocate Divyam Agarwal, contended that monthly payments of around Rs 2,826 crore had to be made towards statutory dues, salaries, rent and monies for daily business operations.
Vivo India said in its July 7 representation that “we are surprised to see the orders being served to all of our bankers, directing them to debit-freeze the bank accounts and not to allow any debts till further orders from your office… Issuance of the orders, handed to Vivo after midnight of July 5, are surprising as searches are being carried out without any prior intimation to Vivo.”
“It is pertinent to note that as of date, Vivo is neither aware of the allegations against it, nor the ‘reasons to believe’ on the basis of which the orders were passed,” the company wrote to the ED. “Since its incorporation, Vivo has undertaken substantial capital expenditure and more recently, has been allotted industrial land measuring approximately 170 acres by Uttar Pradesh to bolster its manufacturing capabilities, establish a new manufacturing facility with a proposed investment of Rs 6,090 crore (approximately), and further realise ‘Make in India’ initiative.”
The Chinese firm said it has been “consistently at the forefront of generating employment in India. “Furthermore, the said new facility will create jobs for 40,000 more people on completion of all the phases,” it said.
It wrote, “In the interest of continuing our business operations and (for) the almost 9,000 employees (we currently have), request you to permit us to operate the bank accounts as normal.”
The company assured cooperation with the investigation.
In a press statement last Thursday, ED said Vivo India remitted Rs 62,476 crore — almost half of its turnover of Rs 1,25,185 crore — out of India, mainly to China. “These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India,” said the agency.
ED has seized 119 bank accounts of various entities with a gross balance of Rs 465 crore, including fixed deposits of Rs 66 crore of Vivo India, 2 kg gold bars and about Rs 73 lakh in cash.