Dish TV Institutional shareholders call for EGM, seek to remove 2 directors
The institutional shareholders of satellite broadcaster Dish TV India sought the removal of two directors said to be from subsidiaries of the Essel Group at an Extraordinary Shareholders’ Meeting (EGM). They have also sought to nominate three of their nominees to the Board of Directors.
In a notice to the exchanges, Dish TV said its shareholders, who own 45 percent in the company, want to appoint K Badri Narayanan, Satish Kumar Yanmandra and Jeet Sen Gupta to the board. At the same time, the shareholders sought to remove Rashmi Aggarwal and Shankar Aggarwal from the board members. The date of the Extraordinary General Assembly meeting has not been set yet.
In early March, the company’s shareholders rejected the nomination of four independent directors, leaving it with only two independent directors, Rashmi Agarwal and Shankar Aggarwal.
In an explanation of this move, the shareholders said that the current board of directors does not act in accordance with good corporate governance standards and does not represent a fair representation of the company’s current major shareholders who own about 45 percent of the company’s shares.
The notice stated that the board of directors is acting at the request of some minority shareholders who own 4 percent.
“Dish TV has made a significant investment of Rs. 1,218 crore (20 per cent of total net fixed assets, intangible assets, investments and capital work-in-progress of Rs. 6,012 crore) in Watcho, the leading OTT platform in the fiscal year 2020.” The investments were eligible in the fiscal year. 2020 (same year of investment) and financial year 2021. After questioning the investments by lenders and investors, the company made an impairment of Rs 203 crore in the financial year 2022, it said.
During the 2020 financial year, the Essel Group companies defaulted with several lenders including bank loans to Essel Group companies secured by Dish TV Shares mortgage. The notice read: “We apprehend that with the expectation of a loss of majority interest on invoking Dish TV shares mortgaged from the Bank and other lenders, the above funds may have been diverted by the promoters for other purposes.”
The notice states that the independent directors, who now make up the majority of the directors, have also failed in their statutory duty to render unbiased and independent judgment, particularly on matters of key board appointments in the interest of the company and the public. Shareholders have lost complete confidence in the credibility of the Board of Directors as evidenced by shareholders voting against all of the company’s proposals in the last 14 months.
The notice stated that the board had abused its power by continuing to appoint directors proposed by the promoters holding a 4 percent minority interest. “A mechanism has been developed to continue the selective appointment of new directors proposed by the Promoter on a quarterly basis when a request for their appointment is rejected by shareholders to retain control of the Board at any cost. The above actions of the Promoters have led to an unstable Board since March 2022 and have adversely affected the corporate governance and financial performance of the Company “.
The promoters, the Jawahar Joel family, lost control of the company after they defaulted on loans worth Rs 5,000 crore made by Yes Bank. After the promoters defaulted, Yes Bank called Dish TV’s pledged shares and now owns 25 percent of the company’s shares. These loans were later transferred to JC Flowers, the Yes Bank joint venture along with several other bad loans.