Yum Restaurants Under Investigation

According to a report on business-standard.com, “US-based Yum Restaurants, which owns the franchise of KFC and Pizza Hut in India, has come under the Enforcement Directorate’s (ED) scrutiny for allegedly failing to bring in Rs 390 crore ($80 million) foreign investment in the country after getting the government approval.”

“The company, however, denied having received any show-cause notice, or any wrong-doing. The ED issued show-cause notice last week to the firm and asked Yum Restaurants India to reply within 30 days of receiving it, according to sources.”

“‘Yum Restaurants India has not received show cause notice by the Enforcement Directorate and would also like to clarify that no show cause notice has ever earlier been served to the company during the course of its operations in India,’ a company spokesperson said in its response.”

“Yum was granted permission by the Foreign Investment Promotion Board (FIPB) in 1993 where it had said it will bring in 80 million dollars in India in two years in two tranches of 40 million dollars each. Besides, it had also said that its business in India would be ‘foreign exchange-neutral.’ The company, however, brought in $35.5 million only, allegedly leading to a violation of the Foreign Exchange Management Act, and also the FIPB licence agreements, sources said.”