NEW DELHI: The Enforcement Directorate (ED) has filed a complaint under the Foreign Exchange Management Act (Fema), 1999 against Myntra Designs Private Limited (Myntra), its related entities, and directors for alleged FDI violations worth Rs 1,654.35 crore, the agency announced Wednesday.The action was initiated by the ED’s Bengaluru Zonal Office based on credible inputs that Myntra and its related companies were engaged in Multi-Brand Retail Trade (MBRT) while posing as “Wholesale Cash & Carry” businesses, allegedly violating the prevailing Foreign Direct Investment (FDI) Policy.ED said its investigation under the provisions of Fema, 1999 revealed that “Myntra Designs Pvt Ltd had declared that they were engaged in the business of ‘wholesale cash & carry’ and invited and received FDI from foreign investors equivalent to Rs 1654,35,08,981 and that they sold majority of their goods to Vector E-Commerce Pvt Ltd (who sold the goods in retail to the ultimate customer),” as reported by ANI.“That Vector E-Commerce Pvt Ltd and Myntra Designs Pvt Ltd are related parties and belong to same group or group of companies,” said ED.It further added that Vector E-Commerce Pvt Ltd was established and consistently used as a corporate vehicle to split the B2C (business-to-customer) transactions into B2B (Myntra Designs Pvt Ltd to Vector E-Commerce Pvt Ltd) and subsequently B2C (Vector E-Commerce Pvt Ltd to retail customers).ED’s investigation also revealed that Myntra Designs Pvt Ltd was carrying out multi-brand retail trading in the guise of “wholesale cash & carry.”“Even otherwise, Myntra Designs Pvt Ltd have not satisfied the condition laid down for “wholesale cash and carry trading” as they have made cent per cent sales to Vector E-Commerce Pvt Ltd which is in contravention of amendment dated April 1, 2010 and October 1, 2010 which permitted only 25 per cent sale to companies belonging to the same group or group companies,” added the agency as quoted by ANI.According to the Enforcement Directorate (ED), Myntra Designs Pvt Ltd and others have violated the provisions of Section 6(3)(b) of the Foreign Exchange Management Act, 1999, as well as the Consolidated FDI Policies dated April 1, 2010, and October 1, 2010, involving an amount of Rs 1,654.35 crore.

Myntra reacts: No official notice from ED

In response to the ED action, Myntra, a unit of Walmart Inc, issued a brief statement, as reported by Reuters, “We have not received a copy of the subject complaint and the supporting documents from the authorities.”“We remain fully committed to cooperating with them at any point of time,” added the company.