Blackburn Rovers owners have assets in India seized over foreign investments crackdown

Venky’s, the owners of Championship football club Blackburn Rovers, have had nine properties worth £7m, across two different Indian states, seized by the government as part of a crackdown on money leaving the country.

Following raids by the Directorate of Enforcement (ED), an arm of the Indian government set up to target money laundering, foreign exchange management and seizing the assets of fugitives, assets worth more than £7m were seized by the state.

However, the deal in question does not relate to their ownership of Blackburn Rovers, but the purchase of a converted farmhouse near Bolton in 2011 which they purchased from footballer turned businessman Gary Neville.

In a statement the ED said it has seized 9 “immovable properties” located in the western states of Maharashtra and Karnataka worth over £7m (INR 65.53 Crore).

All the properties were registered to Venkateshwara Hatcheries Pvt Ltd the ultimate beneficial owners of Blackburn Rovers, as well as a sprawling global chicken and pharma business, headquartered in the city of Pune in Maharashtra state.

Venky’s was established in Pune in 1971 by the late Padmashree Dr B.V. Rao, fondly referred to in India as “The Father of the Indian Poultry Industry”. 

Shares in the business are traded on the Indian stock market, but the three siblings of the founder family run all aspects of the business. Brothers Balaji Rao and Venkatesh Rao, as directors and their sister Anuradha Desai as chair, while her husband Jitendra Desai is also a senior director.

They haven’t attended a game at Ewood Park since Mr Desai was hit on the shoulder by a snowball thrown by a protesting fan in January 2013, angered at relegation from the Premiership the previous season and the ensuing chaos at the club.

However, they have continued to fund the Championship club to the tune of £184m according to the most recent accounts.

The recent raids were made under the provisions of Foreign Exchange Management Act (FEMA), 1999, “a civil law enacted to consolidate and amend the laws relating to facilitate external trade and payments and to promote the orderly development and maintenance of foreign exchange market in India”.

ED initiated the investigation in connection with what it called “the illegal remittances made by the company since 2011” and conducted through a wholly owned subsidiary named “M/s Venky’s Overseas Limited (M/s VOL), UK.”

Venky’s Overseas Limited was set up to facilitate the business of “Agriculture and Mining, rearing of ducks, hens etc” but, said the investigators, “no such business activity was ever initiated” by the owners of the business.

It named a figure of £7,396,069 which had been used to purchase what it refers to as “an immoveable property named ‘Alexander House’ having total area of 90 acres in United Kingdom”.

According to property website Zoopla the property concerned has been valued at between £906,000 – £1,359,000, but reports at the time claimed the purchase price was £5m when Gary Neville sold the property to the Indian business dynasty, through agents Knight Frank.

The ED alleges at that all money transferred through the business was used to pay off a bank loan from Barclays to buy the property and was purchased “with a view to provide convenience to the Directors and employees of VHPL” and that an “investigation established that [the company] had no intention to conduct bona fide business through its subsidiary… and it was created as a front to purchase an immoveable property in the UK for the ultimate enjoyment by the directors, employees and family member.”

Therefore, the equivalent value of properties held in India have been seized under the provisions of Section 37A of the Foreign Exchange Management Act, 1999 (FEMA).

Further investigation is under progress, said the Directorate of Enforcement.

Blackburn Rovers said in a statement in response to the raids: “The club wishes to reiterate that it has received all the necessary undertakings from the parent company, VHPL, as it always has done, to be able to meet its financial obligations for the foreseeable future, in satisfaction of all the regulatory requirements in this regard.”

However, the latest move against Venky’s only follows an earlier restriction which the Indian government placed on domestic businesses trading overseas, thus squeezing Rovers’ tight summer transfer budget.

And in August Venky’s reported a 60% drop  in first-quarter profits of 194.1 million rupees ($2.35 million) for the June quarter, compared with 492.8 million rupees in the same quarter last year, blaming lower sales of chicken and oilseed.

Possibly unrelated, but a new business called Venky’s Overseas Limited was registered in January 2023 as an “overseas entity” in Jersey with Kevin Guy of Zedra Corporate Solutions of Chelford, Cheshire, serving as “due diligence agent”.

Zedra describes its service thus: “We provide agile solutions to wealthy families, entrepreneurs, companies, and funds which generate efficiencies in a scalable and sustainable way.”

There are no directors, but the three beneficial owners are named as Balaji Rao, Venkatesh Rao and Anuradha Sitendra Desai. 

In other news, Venky’s have deployed their head of finance to the board of Blackburn Rovers.

M Sreenivasa Rao join the board alongside chief executive Steve Waggott, finance director Mike Cheston, director Gandhi Babu, non-executive director Robert Coar (the former chairman) and operations and management consultant Suhail Shaikh.