Deccan Chronicle suffers Rs 1,040 crore loss in 18 months
Deccan Chronicle , which had extended its financial year by six months, saw its promoters ’ holding slipping to 38.4% from 78.83% in March 2011.
The ailing publishing company, which had extended its financial year by six months, saw its promoters ’ holding slipping to 38.4% from 78.83% in March 2011, with lenders invoking pledged shares. The publisher of English dailies Deccan Chronicle, Financial Chronicle and Asian Age and Telugu daily and weekly Andhra
Bhoomi also saw its net worth eroding by more than 99% to Rs 10 crore from Rs 1,280 crore during this period. For the September 2012 quarter alone, the company suffered a net loss of Rs 100 crore on revenue of Rs 149 crore, compared with a profit of Rs 21 crore on sales of Rs 238 crore in the same quarter a year ago.
The media firm, which disclosed its financials to shareholders after 15 months, however, did not make any provisions for accrued and unpaid interest on mounting borrowings. Also, though it lost control of its Indian Premier League (IPL) cricket team, the company did not recognise the contingent assets and liabilities emanating from termination of franchise. DCHL said its total liabilities stood at Rs 4,117.44 crore in September 2012, up nearly four-and-a-half times from Rs 928.46 crore in March 2011.
According to DCHL vice-chairman PK Iyer, some lenders invoked the pledge on shares offered as collateral. “As a result, the promoters ’ shareholding as reflected in the depository has reduced to 38.4% from 78.83% as on September 30, 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, 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 as non-performing assets. He said the company did not make provision for 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 crore, its liabilities amounted to Rs 3,987 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 the 12-month period ended March 2012, the income from operations got reduced by Rs 371 crore and expenditure went up by Rs 572 crore, while profit fell by Rs 943 crore. The Board of Control for Cricket in India had terminated its IPL franchise and awarded the team in a fresh bid process to the Chennaibased media group Sun TV during last quarter. DCHL, which contested the BCCI decision and filed statement of claim for damages, said it hopes to recover 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 January 21, 2013 have qualified the accounts. On Tuesday, the DCHL stock lost 4.95% at Rs 5.57 on BSE the day the exchange’s benchmark Sensex lost 120 points at 19,981 points.