Fresh legal battle brews between Dish TV and lenders on board recast
A new legal battle is brewing between satellite television station Dish TV India and its lenders.
This comes at a time when the company’s board of directors recommended the names of two new managers, while retaining the three names recommended by the lenders.
The lenders, who own a majority stake in the company, demanded the removal of the existing two-member board of directors of S Aggarwal and Rashmi Aggarwal. Banking sources said that they indicated that there are gaps in corporate governance, but the board of directors has not taken any decision yet.
The lenders have sent two letters to the board stating that the majority of stakeholders have lost confidence in the current board. This is because they do not act in the interest of their stakeholders, according to filings to the exchanges.
“After receiving the lenders’ communication, the board of directors recommended, instead of resigning, two more names to the board with no decision taken regarding the three names sent by the lenders. All shareholders are suffering with the decline in share prices and the increase in losses,” a banking source said.
For the financial year 23, the company reported a loss of Rs. 2,029 crore on revenues of Rs. 1,110 crore.
An email sent to Dish TV India elicited no response. Dish TV shares closed flat at Rs. 18.14 on Tuesday.
Subhash Chandra’s family, who now owns less than 4 percent in the company, lost their shares in Dish TV after the promoted entities defaulted on loans and mortgaged shares were seized by banks.
On June 1, Dish TV India said that application notices sent by the lenders were deemed invalid because the shareholders failed to issue four notices. Seven notices were submitted in duplicate but the originals were not provided.
No authorization has been provided besides the notices of the 11 entities – being corporations, trusts and partnerships – by their boards of directors, governing bodies or other entities. Therefore, these individuals were not authorized to call an extraordinary general meeting and send notices under Section 100 of the Companies Act 2013, the company said.
Among the lenders, YES Bank had the most exposure to Dish TV India at Rs. 5,000 crores. The bank now owns about 25 percent of the shares in the company.
The loan to Dish TV, along with bad loan portfolio of Rs. 20,000 crore has been transferred to a joint venture with JC Flowers.