Amidst takeover battle with Adani, NDTV’s co-founders move SC against SAT order which favoured them

NDTV is currently locked in a battle to stave off a takeover by Gautam Adani, amid fears that his closeness to the ruling government may hamper media freedom. But Adani controls a 29 per cent stake in the channel, through its 2009 loan agreement with VCPL, which has now been acquired by the billionaire. NDTV’s co-founders Prannoy and Radhika Roy had failed to disclose this agreement, and were hence slammed with a Rs 25 crore fine by SEBI for defrauding their shareholders. Although the securities appellate tribunal (SAT) reduced the fine to Rs 5 crore, the Roys have now moved the Supreme Court against that order.

Opposing a favourable verdict?

The channel had even called the SAT decision a verdict in favour of NDTV, since it set aside SEBI’s findings that held the Roys guilty of fraud for not disclosing details of the loan. They have even paid the penalty which was again reduced from Rs 5 crore to Rs 10 lakh. The SAT had also maintained that control of NDTV wasn’t transferred to VCPL directly or indirectly through execution of the loan agreement.

The cycle of debt

The Roys had first picked up a Rs540 crore loan from Indiabulls in 2008, with their shares as security, and then took another Rs375 crore loan from ICICI to pay their dues to Indiabulls. To repay the loan to ICICI, the NDTV co-founders then borrowed Rs350 crore from VCPL, which enabled it to control 26 per cent stake in the channel through a warrant conversion option.

As part of regulatory action over failure to disclose this agreement and its impact on shareholders, SEBI had also barred the Roys from the equity market for two years. As of now Adani has made an open offer to acquire another 26 per cent stake in NDTV which will give him control of the channel. The decision by two Mauritius based funds, which own a 14 per cent stake in NDTV, will be decisive for the future of the news organisation and Indian media.