Deccan Chronicle suffers Rs 1,040 cr net loss, promoters' holding slips to 38%
Deccan Chronicle Holdings has announced a net loss of over Rs 1,040 crore for the 18 months period ended Sept 2012.
The ailing publishing company, which had extended financial year by six months to September 2012, saw promoters' holding slipping to 38.4% from a high of 78.83% in March 2011 with lenders invoking pledged shares and networth eroding by more than 76%.
Though the company disclosed its audited financials to shareholders after 15 months, it did not make any provisions for accrued and unpaid interest on its mounting borrowings taking shelter under the negotiations with banks for debt restructuring. Also, though it lost control over the Indian Premier League cricket team, the media house did not recognise the contingent assets and liabilities emanating out of such termination of franchise.
Revealing its liabilities for the first time ever since it fell it crisis, the company said the total liabilities stood at Rs 4,042 crore by September 2012, up by more than six times in one-and-a-half years of time from Rs 559 crore in March 2011.
Days after NSE suspended the DCHL stock and BSE excluding the stock from BSE-500 index, the board of the debt ridden company met on Monday to take on record audited financial results for the quarters ended September and June and for the 18 months year ended September 2012.
According to DCHL vice chairman PK Iyer, some of the company's lenders have invoked the pledge on shares offered by the promoters as collateral security to raise funds. Without identifying the lenders who have invoked the pledge, he said the lenders appropriated the shares against the dues payable to them.
"As a result, the promoters' shareholding as reflected in the depository has reduced from 78.83% to 38.40% as at 30 September 2012," said Iyer, adding that the "promoters have contested the invocation and appropriation of the pledge by the lenders."
Disclosing the legal actions of the lenders for the first time to the shareholders, Iyer said some of the lenders initiated legal actions and winding up petitions to recover their loans at different forums and classified monies lent to the company has non-performing asset. He said the company has not made provision for the accrued and unpaid interest as "the company is negotiating with the banks for restructuring of its liabilities."
While the company claimed fixed assets including intangible assets under development (brand) of Rs 2,905.31 crore, its liabilities amounted to Rs 3,987.5 crore after "restructuring of the operations of the company and recasting of the financial statements," said Iyer.
He said as a result of restructuring operations and recasting financial statements for 15 months period ended June 2012, the income from operations got reduced by Rs 370.99 crore and expenditure went up by Rs 572.4 crore, while profit fell by Rs 943.39 crore.
Though the Board of Control for Cricket in India (BCCI) had terminated its Indian Premier League franchise and awarded the team in a fresh bid process to the Chennai-based media group Sun TV during last quarter, the Hyderabad-based media house hopes to recover damages. DCHL had contested the decision of BCCI and filed statement of claim for damages.
"As per legal opinion, the company is confident of positive outcome. As it is a contingent asset and based on the principle of prudence, it is not recognised in the books of accounts," said Iyer.
The company's auditors CB Mouli & Associates in a limited review report dated 21 January 2013 have qualified the accounts for the 15 months period ended June 2012. In the absence of sufficient information, they expressed inability quantify the effects of restructuring of operations and reinstatement of assets and liabilities and non-provision of interest on borrowings.