Essel Group founder and chairman Subhash Chandra, in an open letter, alleged that certain negative forces were trying to hamper the promoters’ stake sale in entertainment network Zee Entertainment Enterprises (ZEEL).
Chandra said that he would be able to repay the entire dues of the Essel Group only after he sells his stake in ZEEL.
“Post the sale process, we will be positively able to repay the entire dues, but if the lenders react in a panic situation, it will only hurt them and us,” Chandra added, and urged lenders not to react in an “anarchical manner and to maintain patience” till the stake sale is completed.
Referring to the promoters’ attempts to sell stake in ZEEL, Chandra said in the letter, “I am extremely certain that there is no promoter in India Inc, who has dared to sell the jewel of his crown, to pay off the liabilities. While the process is still ongoing, there are some forces which are not willing to see us succeed.”
In November 2018, the promoters of ZEEL also expressed intention to sell 50 per cent of their stake in the company, and media reports suggest that international media and tech companies such as Sony Pictures and a media firm from both US and China were in talks.
The Essel Group holds 41.6 per cent stake in ZEEL. At today’s value, the promoters’ stake is worth around Rs 12,700 crore. At the time of the announcement, the promoters had said that the stake sale “is expected to address the Essel Group's capital allocation priorities”.
Chandra said he was recently in London conducting meetings with potential suitors for ZEEL.
He adds that all the operating companies, especially ZEEL, are doing very well, and that the debt is at the promoter level only.
ZEEL reported revenue of Rs 1930 crore for the quarter ended December 31, 2018 while PAT for the quarter was Rs 603 crore. Dish TV, also promoted by Essel Group, is yet to declare its Q3FY19 numbers. In Q2FY19, its revenue stood at Rs 1020 crore, and net profit was Rs 32 crore.
On Friday, ZEEL saw its share price fall 26.43 per cent from Rs 434.10 on Thursday to close at Rs 319.35 on Friday after touching an intra-day low of Rs 288.95. Group company Dish TV saw share prices fall by 32.74 per cent on Friday.
A report in The Wire claims that there is a link between Chandra’s Essel group and a company currently being investigated by the Serious Fraud Investigation Office (SFIO) for deposits of over Rs 3,000 crore made around November-December 2016, just after demonetisation was announced on November 8, 2016.
The company Nityank Infrapower (it was earlier called Dreamline Manpower) was also involved in a large business deal between Venugopal Dhoot’s Videocon and Essel group back in November 2016. The implications of the report in The Wire, however, would dampen the ZEEL promoters’ stake sale prospects for now say experts.
In response to the Bombay Stock Exchange (BSE) seeking a clarification/confirmation on news items suggesting a link between the Essel Group and a company being probed for suspect demonetisation deposits, ZEEL said in a statement to the exchange, “The company is unaware of the news item referred in your letter or its source or factual correctness of the information contained therein.”
It added that there is no announcement (including impending announcement) by the company which in its opinion needs to be disclosed and which may have bearing on the price or volume behaviour in the company's scrip.”
Chandra, in his letter also extends an apology to lenders and investors saying, “I have not lived up to their expectations, despite the best of my intentions”.