(14 July 2008 8:00 pm)

MUMBAI: The information and broadcasting ministry has issued a show cause notice to Bharti Telemedia, the DTH arm of Sunil Mittal's Bharti Enterprises, for 'violation' of foreign direct investment (FDI) and other norms in its direct-to-home (DTH) services. Bharti Telemedia had recently got the DTH licence.

In the notice, the ministry has asked Bharti Telemedia to provide justification failing which the government could consider suspending the licence till such time the company obtains necessary approvals from FIPB and meets the eligibility conditions, reports PTI.

A spokesperson from Bharti, however, maintained that the company has complied with all the licence conditions and has communicated this to the government.

"It has been found that Bharti Telemedia does not have FIPB approval for foreign investment coming into it on a pro-rata basis through investing companies. This has resulted in violation of existing FDI policy and in turn the eligibility criteria of the guideline," says the notice.

In the notice, the ministry asked the company to clarify on the shareholding of Bharti Enterprises, which holds 60 per cent in Bharti Telemedia.

The shareholding pattern of another company Bharti Airtel, which has 40 per cent stake in the DTH arm, shows a total foreign investment of 21.6 per cent in the form of FDI.

The FDI component in a DTH venture allows for a cap at 20 per cent. The total foreign equity holding, including FDI/NRI/OCBs/FIIs, can't exceed 49 per cent.