Infotel Broadband Services, the only company that made a successful bid for a pan-India wireless and broadband spectrum licence, committing to pay Rs 12,847 crore, had an equity capital of just Rs 2.51 crore and no reserves or surplus as on September 25 last year. The authorised capital on that date was Rs 3 crore.

The company’s filings with the registrar of companies (RoC) reveal it was incorporated in February 2007 and began commercial operations only on April 1 last year as an internet service provider. There were no profits in 2008-09 and the cash and bank balance was just Rs 18 lakh at the end of that year.

This has raised questions about whether the company was a front for anyone else interested in wireless spectrum.

In the late hours of June 12, it came to light that Mukesh Ambani’s Reliance group was to invest Rs 4,800 crore in Infotel by buying fresh equity to be issued by Infotel. This deal will take the Reliance stake to 95 per cent in the company’s capital, which will rise to Rs 5,052.63 crore after the new equity issue.

On June 11, a day before the wireless spectrum auction closed, Infotel Broadband altered its articles of association and memorandum of association to increase its authorised capital from Rs 3 crore to Rs 6,000 crore, as per the filings with RoC.

As of September last year, there were only two shareholders of Infotel Broadband -- Infotel Digicomm with a 99.9996 per cent stake and Kamal Kumar Sharma with 0.0004 per cent. This shareholding pattern was the same as stated in a department of telecommunications (DoT) release on the ownership details of all wireless spectrum applicants as on March 23 this year.

The DoT release further revealed that Infotel

Digicomm had a net worth of Rs 30.06 crore.

As per DoT rules, a bidder for the wireless spectrum had to deposit earnest money of Rs 250 crore which Infotel Broadband did. The

RoC filings for 2008-09 reveal a small borrowing of Rs 57 lakh. The parent company Infotel Digicomm’s RoC filings for the same year reveal a borrowing of Rs 181.59 crore.

The parent company also had only two shareholders as in September last year, when its equity capital was just Rs 6 lakh. The shareholders were Digivision Communications (99.98 per cent stake) and Kamal Kumar Sharma (0.02 per cent).

There is no e-record of Digivision Communications’ filing, if any, of annual returns with RoC. But its incorporation filings reveal it was incorporated on February 19, 2008, with an authorised capital of just Rs 1 lakh. Here, too, there were only two shareholders -- Kamal Kumar Sharma and Vikash Agarwal.

Not much is known about Sharma. But his name figures in the 2008-09 annual report of the Bombay Stock Exchange-listed HFCL Infotel as the chairman of one of its subsidiaries, Infotel Tower Infrastructure. Mahendra Nahata is the chairman of HFCL Infotel.

The name of Vikash Agarwal crops up as one of HFCL Infotel’s “key officials” on the BSE website. His designation is given as assistant vice-president, corporate finance, of HFCL Infotel.

It is possible for a company with a small capital base to enter large businesses if it has the ability to borrow from banks or other sources.

Whether Infotel Broadband could have arranged for Rs 12,847 crore to pay for the broadband wireless spectrum licence fee on its own could have been an open question. But the question has been settled, with Reliance taking it over.

Financial Chronicle emailed a questionnaire to Infotel’s company secretary, Puneet

Anurag, and its minority shareholder, Kamal Kumar Sharma, but got no response for five days.

The payment deadline for all successful wireless spectrum bidders is June 22.