Hyderabad: State-owned Canara Bank, which led a consortium of creditors to Deccan Chronicle Holdings Ltd (DCHL), said on Tuesday that it had offered the debt-laden publisher the option of a one-time settlement of its dues and rejected a debt recast.
“Promoters of Deccan Chronicle (DC) approached us to restructure their loans, as the default is very big and we declared it as a fraud. We suggested we may not restructure the loan," said R.K. Dubey, chairman and managing director of Canara Bank.
Canara Bank has exposure of ₹ 350 crore, only a part of which was secured by collateral, to DCHL, which has defaulted on loans to the tune of ₹ 4,000 crore.
Dubey said that the management of DCHL is yet to respond to the bank’s offer of a one-time settlement.
He said the bank is open to withdrawing cases it has filed against the publisher if DCHL promoters settle their dues through a one-time payment.
Canara Bank has filed several cases against DCHL management to recover dues, including a winding-up petition pending before the Telangana and Andhra Pradesh high court.
Dubey alleged that the company had mortgaged same properties it had pledged to Canara Bank with other banks and financial institutions as well.
Canara Bank is exploring legal options to sell the mortgaged assets to an asset reconstruction company. To sell the assets the bank needs approval of the courts and Reserve Bank of India, Dubey said.
Based on a complaint filed by Canara Bank in July 2013, the Central Bureau of Investigation (CBI) has booked a case of fraud against DCHL chairman T. Venkattram Reddy, vice-chairman and managing director T. Vinayak Ravi Reddy and vice-chairman P.K. Iyer, along with auditors C.B. Mouli and Associates, after searching their offices and homes.
DCHL promoters couldn’t be reached for a comment. A person at the company’s corporate headquarters said Venkattram Reddy, Vinayak Ravi Reddy and Iyer were all out of town.
The OTS option will not be easy for DCHL to accept because of the involvement of a number of lenders, some of which are fighting for the control of mortgaged assets on different legal forums, said Satish Kantheti, joint managing director and equity research head at Zen Securities Ltd.
Many lenders have classified loans made to DCHL as non-performing assets and initiated the process of recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act.
The Sarfaesi Act allows banks and financial institutions to seize and auction properties—both residential and commercial—when borrowers fail to repay loans.
Under the Act, DCHL’s two printing presses in Kompally and Kondapur in Hyderabad were seized by Indiabulls Housing Finance Ltd and Kotak Mahindra Bank Ltd, respectively.
Some lenders also invoked pledged shares after the firm allegedly failed to repay loans, leading the combined promoter shareholding to fall from 73.83% in June 2012 to 24.06% as of March 2014. As a result, Religare Finvest Ltd is the single largest shareholder in DCHL with a 14.45% stake, followed by ICICI Bank Ltd with 9.81%.
Troubles at DCHL surfaced in July 2012 when its then managing director N. Krishnan resigned.
Analysts have traced the debt burden to expansion into unrelated businesses including an aviation venture, book store chain Odyssey and the Indian Premier League franchise Deccan Chargers, which was terminated in 2012 after it failed to pay the franchise fee of ₹ 100 crore.
DCHL publishes the English-language newspapers Deccan Chronicle, Financial Chronicle and the Asian Age and the Telugu daily Andhra Bhoomi.
HT Media Ltd, publisher of Mint and Hindustan Times, competes with Deccan Chronicle Holdings in some markets.