The government is issuing a show-cause notice to Music Broadcast Private Limited, which runs Radio City, a FM radio channel, on why its licence should not be cancelled as it finds the operations of the company in violation of FM radio licence norms.
The government has also sought additional information from the company on its ownership pattern, funding structure as well as its working agreement with other companies.
The government has given the P K Mittal-promoted MBPL one week to furnish all the information it has sought. "We find that the operations of the company do not conform to the licence norms. This became clearer once they provided us with additional information on the operations. We expect the company to give a reply to the show-cause notice as well as the additional information that we have sought," said an information and broadcasting ministry official.
The official also said the government would cancel the licence of the company if it did not furnish satisfactory answers to its clarifications. "We want to ensure that the operations of the company are well within the guidelines. If we find that the company is violating the norms, its licence will be cancelled," said the official.
In its notice, the government has told the company that it is not clear about the ownership and shareholding pattern of MBPL.
The government has also sought more clarification on MBPL's relationship with companies like Digiwave, which provides programming content as well as loans for funding the operations of MBPL.
The government has also sought the ownership pattern of Digiwave as well as its shareholding structure. Government has also sought the structure of the board of directors of MBPL.
The show cause notice also points out that the funding agreements between MBPL and Digiwave have been signed much after the loans were sanctioned. "It has been communicated to MBPL that it is unusual as the agreement normally precedes the actual sanctioning of funds," the official said.
The government also said that the debt equity ratio of the company is in the ratio of 10,000:1, which is very unusual. "A debt equity ratio of 1:1 or 1:2 is the normal norm, but a ratio of 10,000:1 is unusual. We have sought clarifications on this," he said.
