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Deccan Chronicle Holdings restrained from selling assets

A tribunal ordered DCHL against alienating, encumbering or creating third-party interests over property
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First Published: Mon, Dec 24 2012. 11 43 PM IST
The order relates to assets of Deccan Chronicle Holdings that are mortgaged to public sector lender Canara Bank. Photo: Kumar/Mint
The order relates to assets of Deccan Chronicle Holdings that are mortgaged to public sector lender Canara Bank. Photo: Kumar/Mint
Hyderabad: The Debt Recovery Tribunal (DRT) Hyderabad, on Monday passed an injunction order restraining financially troubled newspaper publisher Deccan Chronicle Holdings Ltd (DCHL) from disposing of its assets that are mortgaged to public sector lender Canara Bank.
The tribunal ordered DCHL against alienating, encumbering or “creating third-party interests” over property that includes land and printing presses until further orders.
The tribunal also asked DCHL why the bank’s claim of pledged properties worth Rs.347 crore should not be attached in case DCHL fails to furnish sufficient security. The matter has been posted for further hearing on 21 January. Canara Bank was mandated by the finance ministry with conducting a forensic audit of the accounts of the Hyderabad-based Deccan Chronicle Holdings, publisher of English dailies Deccan Chronicle and Asian Age, financial daily Financial Chronicle, and Telugu newspaper Andhra Bhoomi.
Canara Bank and DCHL officials could not be reached for a comment late Monday evening.
Bangalore-headquartered Canara Bank moved the tribunal on 12 December after it found that the management of Deccan Chronicle Holdings was trying to dispose of assets that were mortgaged to the bank. It petitioned the tribunal that DCHL had re-mortgaged the properties pledged with it to other banks, including ICICI Bank Ltd and Axis Bank Ltd, for availing of loans.
Faced with bounced cheques and indifference from the publisher’s management, the bank approached DRT to restrain the company from disposing of its assets, it contended in its petition.
The matter came up for hearing before the presiding officer of the debt recovery tribunal on 20 December.
Canara Bank on 8 September categorized its loans to Deccan Chronicle Holdings as a non-performing asset.
Promoters of DCHL T. Venkattram Reddy, T. Vinayak Ravi Reddy and P.K. Iyer were made respondents to the petition along with ICICI Bank, Axis Bank and the Board of Control for Cricket in India. DCHL previously owned the Hyderabad cricket franchise of the Indian Premier League, which was eventually won by the Chennai-based Sun Group in a bidding in October.
The DRT’s order on Monday pertained to Deccan Chronicle Holdings alone.
In its petition, Canara Bank has claimed assets of DCHL including land at Guindy industrial estate in Chennai and seven printing presses in Chennai and Andhra Pradesh.
GE Capital Services India is also seeking to take possession of the printing presses. The financial services firm lent Rs.100 crore to DCHL to purchase the machines under a hire purchase agreement, and is seeking recovery of the amount through a civil court.
Deccan Chronicle Holdings stock fell 1.53% to Rs.5.80 on BSE Ltd on Monday, while the benchmark Sensex gained 0.07% to 19,255.09 points. The DRT order was served after market hours.
Deccan Chronicle Holdings plunged into a crisis after it emerged that its management has availed of several loans from various banks and financial institutions ranging from Rs.5 crore to Rs.511 crore. Estimates on the quantum of the total debt vary from Rs.1,200 crore to Rs.5,000 crore. A forensic audit by Deloitte is expected to clear the air over the financial health of the company.
Four of DCHL’s independent directors resigned on 8 December and were replaced by three additional directors. Earlier in July, its managing director
N. Krishnan resigned. The company did not state the reasons behind the resignations of its directors.
Some of its lenders have taken the company to court and moved the debt recovery tribunal seeking recovery of dues and liquidation of assets mortgaged to them.
Various financial institutions such as IFCI Ltd, Jammu and Kashmir Bank Ltd, Axis Bank, ICICI Bank, Kotak Mahindra Bank Ltd, Yes Bank Ltd, Tata Capital Ltd, PVP Capital Ltd, National Pension System Trust, and Royal Sundaram Alliance Insurance Co. Ltd have all moved the courts.
Besides these institutions, Hongkong-based newsprint supplier Adonis Ltd and Chennai-based print trader Photon Infotech Pvt. Ltd have also moved the high court of Andhra Pradesh.
Latest in the series was Kolkata-based Concast Group that had extended Rs.15 crore to DCHL through its arm Concast Cement, which approached the Calcutta high court, DNA newspaper reported on Sunday.
HT Media Ltd, publisher of Mint and Hindustan Times, competes with DCHL in some markets.
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First Published: Mon, Dec 24 2012. 11 43 PM IST