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How did Hungama Ltd’s Tk2 lakh investment make Tk13cr in profit?

  • Published at 07:26 pm July 22nd, 2017
  • Last updated at 02:55 am July 23rd, 2017
How did Hungama Ltd’s Tk2 lakh investment make Tk13cr in profit?
Hungama Bangladesh Private Limited – an Indian digital media company – invested Tk2 lakh in Bangladesh and has sent back nearly Tk13cr in profits to India. The profit is a whooping 320 times its original investment. Bangladesh Bank is treating the subject as an “unusual business activity.” As such, the central bank has twice asked the chairman of Bangladesh Telecommunication Regulatory Commission (BTRC) via letters on their opinion on “Hungama Bangladesh Private Limited sending excessive dividend to non-residential shareholders.” Bangladesh Bank alleges that Hungama invested only Tk2 lakh in Bangladesh and has sent back profits in crores. In 2015, it sent back Tk6.74cr as dividend and in 2014 it was Tk6.07cr. The total dividend of the past two years is 320 times the original investment in Bangladesh. The central bank, in its investigation, found that Hungama Bangladesh has just one employee. It has no fixed assets in Bangladesh. The fact that a “small-capital” managed to raise profit 320 times its original investment has given Bangladesh Bank a cause for concern. In the letters to BTRC, Hungama is referred to as a “disreputable company with 100% foreign ownership” by Bangladesh Bank. Hungama Bangladesh is a subsidiary of India’s Hungama Digital Media Entertainment Private Limited. The company is helmed by Neeraj Roy, who serves as both the managing director and the chief executive officer. Hungama provides a diverse array of mobile services ranging from WAP, CRBT (Caller Ring Back Tone), IVR (Interactive Voice Recognition) and music streaming.
The Hungama office has just one employee, who only shows up from time to time
Bangladesh Bank analysed the financial reports of Hungama and found that the majority of its income came from selling various services to different mobile operators. Bangladesh Bank Deputy General Manager (Foreign Exchange Investment Department) Md Ali Akbar Farazi signed the letter that was conveyed to the BTRC. In the letter, Bangladesh Bank asked if the provision of any such services required taking permission from the BTRC, and asked if there was any justification in permitting a “disreputable company which is fully owned by foreigners” and whether there should be any regulation in mobile phone operators charging such exorbitant prices in providing WAP, CRBT, IVR and music streaming services. Recently, Hungama applied to the BRRC for a shortcode service. The shortcode has been requested for e-entertainment services (music, wallpaper, animation, games, videos). Hungama paid the BTRC Tk1.15 lakh (VAT inclusive) through a cheque. The shortcode application bears the authorisation of CEO-MD Neeraj Roy, followed by his phone number in India. The pad bears a Gulshan address, but no Bangladesh contact number or e-mail address. The BTRC has said that they will look into the matter after Bangladesh Bank expressed its concerns. The office of Hungama Bangladesh is located on Road 126 in Gulshan. They share an office with an accounting firm. A visit to the office on Thursday revealed that the digital media company occupies just one room, which often remains closed, even on weekdays. A CIMA employee said that the Hungama office has just one employee, who only shows up from time to time. Hungma is registered with the Bangladesh Office of the Registrat of Joint Stock Companies and Firms with the number C-86484. The contact number on the application was called and the receiver said it was the Mumbai office of Hungama. The received said Neeraj Roy was not in the office and his contact number was not permitted to be given out. After persisting, the call was transferred to a woman who identified herself as Priyanka, overseeing the Mumbai operations of Hungama. She said that Hungama operates out of their Gulshan office in Bangladesh. She failed to provide a reason when asked why the office was closed on weekdays. Priyanka also said that mobile phone users in Bangladesh purchase content from them. When asked for details, she could not provide any further insight. She took the caller’s number and said that the legal department of Hungama Digital Media will contact them with the details. But as of this report was written, nobody from Hungama reached out. Officials at several mobile phone operators in Bangladesh have revealed that their users often download songs, wallpapers, ringtones or welcome tunes from various content providers. The users are charged from their account balance. Businesses like Hungama share the profits with the mobile phone operators. Said profit has amounted to Tk13cr, which has been transferred back to India as dividend for the shareholders. BTRC Secretary Md Sarwar Alam said the central bank has informed that this firm has no fixed asset in the country and has only one employee. He said: “We have asked all the mobile phone operators to provide us with information to help with our investigation. Afterwards, we will decide on our next course of action.”

This story was first published on the Bangla Tribune

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