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The Investigating Officer,    
Central Bureau of Investigation,
Hyderabad  

Sub : Investigation in Rc No. 19(A)/2011 – News item reported in the press regarding purported statement of Sri Sudarshan, Director, Deloitte Touch Tohmatsu India (P) Limited (Deloitte) under section 164 Cr. P.C against me  
Respected  Sir,
  I am shocked to learn from certain News Papers that Mr. Sudarshan, Director, Deloitte Touch Tohmatsu India P Ltd (Deloitte) had deposed before a Railway Magistrate under Section 164 of Cr P C that they were compelled to increase the valuation of Jagati Publications from Rs 2,500 cr to Rs 3,500 crores under pressure from me. He also appeared to have deposed that on my pressure, the Report was backdated.   You are aware that I am accused No. 2 therein and such statements are not made available to me by the Prosecution Agency. However, the contents of such statements purported to have been made before the Hon’ble Magistrate have found their way into the newspapers run and managed by media houses, which have a corporate and business rivalry with Jagati Publications/Sri Y.S.Jagan Mohan Reddy and there is venom circulated against Jagati Publications/Y.S.Jagan Mohan Reddy by the said media houses, for furthering their own interests. In such context, the  publication of the said statements reported to have been made by prosecution witnesses against the accused, chapter and verse, in the media, has been subjecting us to a trial by media and are also being used to condemn us in the public eye, even before the actual trial begins.   As regards the contents of the statements attributed to Sri Sudhershan, which if are truly reflected in the media reports, seek to paint me in the wrong and attribute acts of pressure from my side on him to overvalue the enterprise valuation of Jagati Publications. While it is replete with implausible statements, I wish to point out to you the following :            
a. I was not in a position of dominance over Sri Sudershan in the matter of valuation, since we have approached the firm for valuation of the enterprise, and we were only providing the facts, figures & Projections over which he had to exercise his professional judgement while rendering his opinion on the enterprise value. It is opposed to natural conduct that a client exerted pressure on a professional, with no wherewithal to be in a dominant position to exert such pressure on the professional, to secure allegedly backdated over valuation. As a professional myself, I am of the bonafide view that the enterprise value of jagati publications at that point of time was of Rs. 3,900-4000 crores and the value reported by Sri Sudershan at around Rs. 3050 crores, was far lesser than my valuation and yet the report was accepted, having regard to the fact that the same was arrived at by a neutral agency with application of the expected objective criterion and parameters.
b.  I wish to also bring to your notice that another corporate entity in the same business as publication of newspapers, namely EENADU of Ushodaya Enterprises Private Limited,owned by Sri Ch.Ramoji Rao was valued at Rs. 6,500 – 7,000 crore by M/s. Ernest &  Young,   a few months prior to our valuation being rendered by Sri Sudershan. The said Ushodaya Enterprises Private Limited had an accumulated loss of Rs. 1,800 crore at that point in time and on the basis of such valuation, a premium of Rs, 5,28,630/- per share of the face value of Rs. 100/- was paid by a purchaser and 26% of the equity was transferred.
c. Any valuation of an enterprise are indicative figures for market forces to apprise themselves of the viability of operations of a Company, and cannot be seen as a handiwork of pressure tactics of any individual, which if accepted, would cloud every transaction and render such transactions investigation worthy.   I am constrained to address you on this inasmuch as the elements in media hostile to Jagati Publications/Sri Y.S.Jagan Mohan Reddy have taken undue advantage of the above and have been subjecting us to a trial by a section of media and seeking to convict and sentence us in public eye, extra-constitutionally, without respecting the process of investigation and the process of law, to which all of us have so far abided. I request you to furnish copies of the statements reported to have been made under section 164 of Cr. P.C by Sri Sudershan.  
d. I need protection from such leaks and disclosures since I am entitled to live in dignity, consistent with Article 21 of the Constitution.  I am shocked for two reasons.
(1) Because the Statement reported to have been made by Mr Sudarshan  before a Magistrate was selectively leaked by some vested interests to the Media openly opposed to us and
(2) Because the Statement reported to have been made by Mr. Sudarshan is absolutely false; it is clear that the Statement that has been reportedly made, if Mr Sudarshan has really made such a Statement before the Magistrate, is obviously under pressure from some people with vested interests, who are losing no opportunity to somehow tarnish our image and implicate us in one case or the other.  
I respectfully submit that Deloitte is an international organization, with presence in almost all important Countries in the World. They are part of Big Four Auditors/Consultants of the World. They are also into Consulting. Their Auditing firm is registered by Institute of Chartered Accountants of India, which is under the Administrative Control of Ministry of Corporate Affairs of Government of India. How could I have influenced them, much less pressurized them?    
Otherwise, at best, such Statements can be used to show us in poor light and damage our reputation in the hope that common people any way do not understand the nitty gritties of Law. After all, everybody in the State knows as to who is so desperate to damage our reputation and gain by that.   Now, coming to the facts of the issue, I submit that the Deloitte submitted the Valuation Report on 16-11-2007, after satisfying themselves about the facts and figures. I never pressurized, never urged and never requested not only Mr. Sudarshan but anybody else in their organization to either backdate the report or increase the valuation. There was no need for me to do so nor was it possible, given the background and standing of Deloitte.   It is extremely important to note that in its Disclaimer clause at page no 28 in the Report, the Deloitte has clearly stated that “The Report is provided exclusively for the Board of JPPL (Jagati) to define a basis for the negotiation with the external investor and cannot be relied upon by external parties or prospective investors. The Investors must make their own investigations, independent assessment and must satisfy themselves about the accuracy and completeness of the statements contained herein. Deloitte is not responsible to any external parties on this valuation.”     
The Disclaimer is very much an integral part of the Report of Deloitte Valuation Report. All those who are reading the Report are expected to necessarily read the   disclaimer. When Deloitte Report so openly says that the said Report is only for the guidance of the Board of Jagati and is not intended to be relied upon by investors, where is any need on my part to pressurize them to give higher valuation? What purpose does it serve? Such disclaimer clauses are found in all the reports of not only Deloitte but also of any consulting firm in the world. This also vindicates the fact that the valuation by any firm, however reputed it may be, is at best a reasonable estimate/ guess and is not intended to be exactly correct.    

Further, for a better appreciation of how investments are made, I would like to submit that it is important to note that no investor makes investments in shares of Companies completely relying on the Market Valuation Report given by a Consulting firm, however reputed it may be. No doubt, it is one of the important guiding factors. The Investors take their call based on many other factors such as viability, profitability & market/industry forecast as well. At any rate, the prospective investors conduct their due diligence before seeking to invest in the companies.     We have all seen as to how the market value of a Lanco share fell by about 80% in just three years time, despite the profit per share increasing by more than 100% during this period. The market capitalization of Lanco fell from Rs 21,000 crores in December, 2007 to Rs 4,000 crores in 2011 i.e. in less than four years, in the face of their profits doubling during the period. We also have seen as to how the market value of one share of INFOSYS fell from Rs 8,000 per share of Rs 5 each in the year 2000 to Rs Rs 2,850 per share of Rs 5 in 2011 despite their business and profits going up by ten times during this period. This is true of most of the companies. That such wide and wild fluctuations are possible in the markets is well known to all our investors. So, any valuation report  has to be taken with guard as per established market practices.  I would like to categorically state that never in my long professional career did I ever behave in questionable manner. I feel sad that knowingly or otherwise, we are targeted and our character sought to be damaged.   Senior director in Deloitte, Mr.Sudarsan’s contention that I have pressurized him to backdate the Report is absolutely false for the reason that the investments had started flowing in to the company from August 2007.    
The allegation of Mr Sudarshan as reported in Media is that the valuation report is not for circulation and for internal consumption is not correct as the disclaimer clause in the valuation report is meant to absolve the responsibility of the valuers so far as projections and estimates are concerned. It is relevant to note that Jagati did not use this document for the purpose of Public Issue of Shares as Jagati did not make any public issue; nor did Jagati solicit investments from public at large. Jagati raised shares only from friends, relatives and associates. This can, by no stretch of imagination, be construed as circulating to the public.   Since the reported statement of Sri Sudershan has the effect of besmirching my reputation, before trial, especially on account of the leaks of the same to the media houses, and as a law abiding citizen I am compliant with the procedures of investigation at the hands of the investigating agency and without prejudice to my contention that my line of defence can be divulged only during the course of cross examination during trial, I humbly request you to provide me an opportunity to establish the falsity of the above in the presence of Sri Sudershan in your office during the phases of investigation by your goodselves.   I hope I will have your indulgence for my releasing this letter to the Media. Much as I would have wished not to release this letter to Media, I am compelled to do so to counter the unprecedented motivated campaign by a section of Media, who are jealous about the increasing readership for our News Paper in such a short period.  
Thanking you       
Yours faithfully               

(V.Vijay Sai Reddy)