The Deccan Chronicle Holdings Limited (DCHL), which publishes English daily, Deccan Chronicle with over one million circulation, and Financial Chronicle, is set to change hands from its present chairman T. Venkattram Reddy by 19 March. Reddy failed to meet the commitment to repay over 15 banks and other lenders whose total debt stands at around Rs 5,200 crore.
This puts an end to the high profile corporate life of 57-year-old Venkattram Reddy, who inherited the profit making Deccan Chronicle from his father, late T. Chandrasekhar Reddy two decades ago. After shutting his other businesses like IPL franchise, Deccan Chargers and aviation venture Deccan Aviation, Venkattram Reddy is all set to leave the media industry now.
Kolkata based Srei Infrastructure and Finance Limited (SIFL), which had acquired around 24% equity shares in the DCHL against its borrowings of around Rs 220 crore last September, is permitted by the Hyderabad High Court to hold a meeting of DC group’s lenders and stakeholders in Hyderabad on 19 March.
SIFL will put in place a new management at the meeting. In all likelihood, another Kolkata based financial expert and former chairman of Network 18 Media, Manoj Mohanka will take over as the new chairman of the DC group. SIFL representatives are in touch with different banks and financial institutions to this arrangement.
Enquiries made by this paper to contact SIFL’s directors failed to elicit any response, but an aide of vice-chairman Sunil Kanoria, who preferred not to be quoted, said that Srei was “definitely trying to revive the DC group by pumping in fresh funds and fresh management and fresh approach to run it professionally”.
Initially, SIFL, which emerged as the key negotiator to broker a deal to effect debt restructuring of DCHL, wanted to continue the present management led by Venkattram Reddy. However, the company changed its mind after the arrest of Venkattram Reddy in a CBI case last year. “Now there is no other go but to change the head as the new investors are not ready to accept Reddy,” said the source in SIFL.
Venkattram Reddy and his younger brother and the group’s managing director Vinayak Ravi Reddy were arrested on 8 February 2015 in the banks fraud case filed by the CBI. They told the lenders that they would make part payment to the tune of around Rs 200 crore to repay at least the interest, but failed to do so, according to sources in Canara Bank, which moved the investigating agency.
The Canara Bank case follows a series of court and police cases in the last three years alleging criminal breach of trust, forgery and fraud on the part of the DC management over a period of time. A probe launched by the Serious Frauds Investigation Office in the Ministry of Corporate Affairs too found in December 2014 that the DC management was guilty.
A consortium of 12 banks had been formed in 2014 to recover the total dues through a common negotiation process as the DC group mortgaged multiple times its properties and shares to them and it was difficult to find out who is holding mortgage of which property. At a stage, Andhra Bank, which lent Rs 380 crore to the DC group, sought a stay on the auction of DC properties by other banks.
Sources in the Canara Bank told this paper on Friday that the bank might not oppose SIFL finding a debt restructuring route to revive the DC group during the 19 March meeting. Canara Bank has lodged a complaint with the CBI against Venkattram Reddy and Ravi Reddy on charges of forgery and submission of false documents as security to raise a series of loans from its Secunderabad branch since 2012.
However, there is a hitch from other major lenders like ICICI Bank and Yes Bank who claim that they too have a role in deciding the next management of the ailing media group. ICICI Bank, which possesses around 24.9% shares in the total paid equity of Rs 56 crore, is planning to approach the High Court seeking restraining full powers to SIFL in conducting the lenders meet, sources said.
Overall, the lender banks are aware of the urgency of the 19 March meeting to settle the debt restructuring of DCHL group as the RBI is particular about the process at the earliest. All the lender banks are ready to cooperate with the SIFL on the condition that the SIFL should not allow any backdoor controlling of the present DC directors in the future set up.