The shadow of Rana Kapoor over the Dish TV-Sure Financial institution tussle

Subhash Chandra, Essel Group chairman, has alleged that Kapoor, the disgraced former boss of Sure Financial institution, had threatened to name again loans totalling 3,300 crore made to his group except he agreed to merge Dish TV with Videocon D2H again in 2016.

Chandra’s startling allegation varieties a part of a grievance he filed in September 2020 on the Gautam Buddh Nagar police station in Uttar Pradesh. Though the grievance is greater than a 12 months previous, its particulars haven’t been disclosed in public. Appearing on this grievance, a duplicate of which was reviewed by Mint, the UP police began an investigation, and has now frozen Dish TV shares owned by Sure Financial institution.

“[T]he firm (Dish TV) has been knowledgeable that crime department (Gautam Buddh Nagar) has issued a discover to Sure Financial institution Restricted (YBL), limiting YBL from dealing in and/or exercising any rights over 44,53,48,990 fairness shares of the corporate held by YBL until completion of the investigation or until additional orders,” Dish TV knowledgeable the exchanges on 6 November.

Chandra’s grievance in September final 12 months was made six months after Sure Financial institution’s boss Kapoor was arrested by the Enforcement Directorate, the federal monetary company, in a separate case of cash laundering. Kapoor, on the time of his arrest, denied any wrongdoing.

“Pursuant to a prison conspiracy between Sh. Rana Kapoor and V.N. Dhoot (former chairman and MD, Videocon), it was proposed to us that Sh. Rana Kapoor and V.N. Dhoot had devised a plan… which was meant to cheat us for merger of Videocon D2H and Dish TV and (the) acquisition of promoter shares of Videocon D2H by the promoter entities of Dish TV/associates,” reads the police grievance filed by Chandra. “When the mentioned plan was initially proposed to us, we rejected the identical outrightly as we had no real interest in the growth of (the) DTH enterprise by merger, and many others.”

“After we confirmed our reluctance to this transaction, we have been pressurised to just accept the proposal… else YBL, who had prolonged a number of loans to us, would create issues in day-to-day banking operations, impacting Essel Group as an entire and Sh. Rana Kapoor will make sure that the monetary services already prolonged to us (aggregating to the tune of 3,300 crore) will even be recalled. As recalling of (the) monetary services would have had an adversarial impact, beneath the stress of Sh. Rana Kapoor and Sh. V.N. Dhoot, we agreed to work on the traces dictated by Sh. Rana Kapoor and Sh. VN Dhoot.” Basically, the grievance alleges that the merger occurred beneath duress.

On 11 November 2016, Dish TV introduced its plans to merge with VideoconD2H.

“It is a nice day for Dish TV and its shareholders,” Dish TV Chairman and managing director Jawahar Goel had advised analysts again then, as he proclaimed that the corporate was “excited to take the subsequent large leap on this journey”. Goel succeeded his elder brother Chandra, who stepped down as chairman in 2015.

Chandra’s allegation will likely be investigated, however for now, it’s nothing wanting shocking. It’s because he didn’t disclose that he was arm-twisted into the deal even when he first wrote an open letter in January 2019, after the shares of three of his listed firms—Zee Leisure Enterprises Ltd (ZEEL), Zee Media and Dish TV—plunged.

“My suggestion made to my brother Jawahar Goel to purchase D2H from Videocon was yet one more key error, which costed me and Jawahar each a fortune,” Chandra had written within the open letter.

This long-drawn-out saga has now come to a head as Dish TV’s board is ready to carry its annual common assembly on 30 November. Whether or not YBL, which is searching for to recast the Dish TV board and wrest management, will get to train its voting rights, which it wields by way of the shares which have been seized by the police, may decide the longer term course of Dish TV.

Conditional credit score

Chandra has additionally declared in his grievance that when he succumbed to Kapoor’s demand, Sure Financial institution over a interval of eighteen months gave 4,210 crore to seven privately-held companies of the Essel Group. The promoter group in Dish TV pledged 25.69% of their shares with the financial institution because the underlying collateral.

Lower than a month after Dish TV introduced its merger with VideoconD2H in November 2016, the trickle of cash to Essel group-linked companies started. Sure Financial institution first loaned 450 crore to Pan India NetworkInfravest Ltd in December 2016, in accordance with disclosures made by the privately held firm to the ministry of company affairs. In January 2017, Sure Financial institution launched 750 crore to Mumbai WTR Personal Ltd, 500 crore to RPW Tasks Ltd and adopted it up with one other 125 crore to the identical firm.

13 months later, in February 2018, Essel Enterprise Excellence Providers Ltd and Final Mile On-line Ltd obtained 400 crore every and Essel Company Assets Personal Ltd acquired 500 crore. In Could 2018, Sure Financial institution gave 400 crore to Pan India NetworkInfravest Ltd and 275 crore to RPW Tasks Personal Ltd. Lastly, in June 2018, Residing Leisure Enterprises Personal Ltd obtained the final tranche of 410 crore.

“YBL officers (who’re named) provided 10% further mortgage (at 10% of 4,210 crores, it labored out to 421 crores) at low cost price of curiosity and for an extended tenure of ten years,” Chandra states in his grievance. “Our individuals took a mortgage of fifty million USD in an abroad entity. For this additionally, they misled and took the letter of consolation dated 30 Could 2016 from (ZEEL managing director) Punit Goenka, stating that he’ll undertake to maintain the wholly-owned subsidiary of ZEEL liquid. They assured that this doesn’t turn out to be any assure or enterprise and they’ll by some means discover a method to write off this USD 50 million over the tenure of ten years in lieu of us agreeing to merge (the) D2H enterprise of Dhoot’s with Dish TV.”

Chandra claims that he paid 900 crore in curiosity on the 4,210 crore mortgage however as soon as Essel Group stopped paying curiosity to Sure Financial institution, the financial institution invoked the share pledge.

“We’re sufferer of the conspiracy of Sh. Rana Kapoor and Sh. V.N. Dhoot and different accused individuals (who have been) appearing in live performance with one another,” Chandra alleges. “All of the above was carried out in execution of a pre-designed plan to cheat the complainant, which reveals that the accused individuals are liable to be prosecuted beneath Part 420 of (the) IPC for dishonest and dishonestly inducing the complainant (Dish TV).”

“Since a prison investigation into the FIR lodged on (a) grievance by Dr. Chandra is underway, we chorus from making any feedback on the claims being made by Sure Financial institution,” mentioned a spokesperson for the Essel Group. “We strongly deny the allegations relating to (the) contrasting views of Dr. Chandra (with) regards to (the) merger. In an open letter dated 25 January 2019, (the) merger was referred (to) as a ‘mistake’ since Dr. Chandra needed to succumb to pressures from Sure Financial institution and its executives and had no possibility however to make suggestions to his brother for a similar. Additional, the disputes with Sure Financial institution have been additionally disclosed in (the) open letter issued in August 2021.”

Kapoor couldn’t be contacted as he’s incarcerated and is being questioned by the ED and the Central Bureau of Investigation in a number of instances. Calls and textual content messages to Dhoot went unanswered.

Dhoot is dealing with prison investigations for allegedly investing within the firms of the husband of former ICICI Financial institution MD Chanda Kochhar as a kickback for loans acquired from the financial institution. Sure Financial institution’s Kapoor and household are dealing with fees of receiving kickbacks in lieu of loans prolonged by the financial institution. In March 2020, the central financial institution took management of Sure Financial institution to stop its collapse beneath the burden of NPAs, and requested the State Financial institution of India (SBI) to choose 49% fairness in Sure Financial institution. SBI has since introduced down its possession to 30%.

On 15 November, Sure Financial institution filed a petition earlier than the Allahabad Excessive Courtroom towards the UP police seizing its shares, in accordance with an government aware about the event. The manager additionally mentioned that the financial institution has written to the ministry of company affairs, asking the regulator to dismiss the present board of Dish TV and supersede it with an impartial board. Lastly, the financial institution has additionally complained to the market regulator, the Securities and Trade Board of India.

Excessive stakes

There’s a lot at stake for Sure Financial institution. An government at Sure Financial institution mentioned that just about a fourth of the Financial institution’s complete non-performing loans is on account of the cash borrowed by Chandra and entities managed by him. Sure Financial institution reported 28,609.5 crore in NPAs within the 12 months ended 31 March 2021, of which 6,500 crore is in loans to Chandra and the Essel Group.

An e mail despatched to Sure Financial institution searching for remark went unanswered however a senior government dismissed the fees levied by Chandra.

For now, it stays to be seen how the court docket will adjudicate the end result of Chandra’s grievance. However analysts and banking executives contend that this case is essential as a result of it’ll have ramifications on the financial institution’s loans made to different enterprise homes, a few of whom at the moment are dealing with monetary difficulties.

“For nearly twenty months, Essel Group didn’t elevate any grievance and solely after Kapoor obtained arrested, Essel Group has complained that it was pressured to take a mortgage,” mentioned a retired government of SBI. “Will we understand what this means? Which means if this rivalry is admitted, nearly all enterprise teams which have run into monetary difficulties may doubtlessly come round and blame the banks.”

Lastly, there may be yet one more query that continues to be unanswered. Chandra in his second open letter (in August this 12 months) had mentioned that he had paid 91.2% of his borrowings to his collectors.

However Sure Financial institution claims that an impressive quantity of 6,500 crore borrowed by Chandra and entities owned by him stays unpaid. So, what will we make of Chandra’s assertion?

A spokesperson for Essel didn’t supply a remark to this query however an government mentioned that Chandra did write about points with an unnamed financial institution in the identical letter.

“Sadly, there may very well be one case (one lender), the place there are disputes and either side appear fixated on their perception on the variety of debt(s) claimed and payable. The distinction in numbers, on this case, is large. The problems are pending within the court docket(s) for dedication,” Chandra wrote within the letter dated 3 August.

The unnamed lender

That unnamed financial institution seems to be Sure Financial institution. Sure Financial institution emerged as the biggest shareholder in Dish TV in Could final 12 months after it invoked the shares of the promoters. The financial institution’s revolt towards Dish TV began when the board of Dish TV in February this 12 months accredited a 1,000 crore rights concern regardless of objections from Sure Financial institution.

YBL believes that Dish TV has sufficient cash and the rights concern is to shore up the promoter’s possession within the firm even because it dilutes the possession of different minority shareholders. For that reason, the financial institution first sought reconstitution of Dish TV’s board, searching for the elimination of 5 of the six administrators. An organization court docket in Mumbai will adjudicate the legality of Dish TV’s calls for later this month.

Sure Financial institution is peeved with the way in which Dish TV’s board has gone about with its plans for holding the annual common assembly (AGM). First, Dish TV’s scheduled AGM on 27 September was deferred by the board because it sought time to look at Sure Financial institution’s calls for for the board reconstitution. The corporate had two months, or till 30 November, to carry its annual shareholder assembly. Later, on 27 October, Dish TV once more requested the Registrar of Firms to permit it time till 31 December to carry the AGM. Nevertheless, a day after the UP police seized the shares, Dish TV, on 7 November, knowledgeable the exchanges that it’ll maintain its AGM on 30 November.

In a response to a query in regards to the extension of the AGM, dated 8 November, a Dish TV spokesperson mentioned the corporate at all times abides by the best requirements of company governance.

Disclosure: The Hindustan Instances Ltd, the promoter entity of Mint’s writer HT Media Ltd, lately acquired fairness shares in Dish TV Ltd as a part of its treasury administration operations, in accordance with inventory trade disclosure

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