The inquiry into Devas Multimedia's deal with Antrix, the commercial wing of Indian Space Research Organisation (ISRO), has found that when the Indian arm of the company was founded in 2004, it had just two shareholders and a paid-up capital of Rs 100,000.

The 2005 deal, which gave Devas permission to use 70 megahertz S-band spectrum without inviting bids, resulted in a huge revenue loss to the exchequer, it is alleged.

The inquiry has found that of the total paid-up capital, Rs 90,000 came from a middle-level Isro employee.

The second shareholder, who contributed Rs 10,000, was a Class IV employee and had been personal assistant (at Isro) to the man who later became the Chairman of Devas Multimedia, M G Chandrashekhar. Chandrashekhar was with Isro from 1988 to 1997.

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The inquiry is being conducted by former cabinet secretary B K Chaturvedi and Isro professor Roddam Narasimha.

The panel was set up to review the procedures and processes followed by Antrix, Isro and the Department of Space.

The report is likely to be submitted to the prime minister in the next few days, possibly tomorrow.

The report says the deal was signed in 2005. At this point, Devas, with its small paid-up capital, signed up with US company Forge Advisors and got foreign direct investment.

However, it was yet to develop the technology. "It's like the government signing a deal with a man in a shop in Lajpat Nagar or Lamington Road to buy Boeing aircraft and the man going to Boeing and saying 'Can you give me the aircraft?'" a top government official said.

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The report adds the Space Commission, in July 2010, recommended the deal be annulled. But the draft note for annulment, which came from Isro Chairman K Radhakrishnan, also said the "government might want to review the annulment".

Even before this, in 2009, after a disgruntled employee (who later turned whistleblower and does not want to be identified) raised questions, Isro set up a committee under the former member of the Space Commission, Dr B N Suresh, to examine the legal, commercial, technical and procedural aspects of the deal. This committee also suggested that the government reconsider the deal.

Though the government is still exploring the sources of money that private equity firms invested in Devas, preliminary inquiries point at companies incorporated in Mauritius and the Cayman Islands.

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Chaturvedi declined to share the details of the report but confirmed it was ready and would be submitted to the Prime Minister's Office on time.

After an alarm was raised over the deal, the matter was referred to the Cabinet Committee on Security (CCS). On February 17, CCS decided to scrap the deal.

Meanwhile, the Principal Director of Audit (Scientific Departments) is reviewing all the commercial deals entered into by Isro.

On its website, Devas Multimedia Private Ltd describes itself as "an Indian company headquartered in Bangalore, which was founded in 2004 by a team of successful satellite entrepreneurs and executives".