Probe diversion of Dish TV funds, say small investors
Dish TV's minority investors include IndusInd Bank, Aditya Birla Sun Life Flexi Cap Fund, and Phoenix ARC. This comes after Yes Bank expressed dissatisfaction with Dish TV's management in 2020 and demanded a board reconstitution.
Mumbai: A group of minority investors of Dish TV India Ltd has demanded a probe into alleged diversion of funds by Zee Entertainment Enterprises Ltd (ZEE) from a unit of the country’s third-largest satellite TV provider, which was part of the series of transactions that led to Subhash Chandra and Punit Goenka being barred from holding any board positions at any listed company by the market regulator.
In a letter dated 11 July, Dish TV’s minority investors, which together own 10.15%, have reiterated their demand for a special shareholder meeting even as the investors expressed their disappointment at the performance of the two directors in ensuring strong corporate governance standards in the company.
“We would also like to draw your immediate attention to a recent ruling by Sebi against your sister company, Zee TV," Rajeev Sangoi, who calls himself a coordinator for the minority investors of Dish TV, wrote in the letter addressed to Shankar Agarwal and Rashmi Agarwal, the two independent directors.
“In points 25 and 26 on pages 8 and 9 of the said order, Sebi successfully traced a fund transfer of ₹25 crore from Dish Infra Services Pvt. Ltd to Zee Entertainment Enterprises. It is crucial to note that Dish Infra Services Pvt. Ltd is a wholly owned subsidiary of Dish TV Ltd. Considering that minority investors in Dish TV are also affected by this misappropriation, it is the duty of independent directors such as yourselves to promptly initiate an independent investigation into this diversion and other instances of fund misappropriation within Dish TV by the promoters. We have already written to Sebi regarding this matter and have attached both the Sebi order and our letter to them," as per the letter, a copy of which was reviewed by Mint.
Dish TV’s minority investors include IndusInd Bank, which has a 2.34% stake, Aditya Birla Sun Life Flexi Cap Fund (1.59%) and Phoenix ARC (1.27%), and the investors claim that the current two-member board has lost credibility and the trust of investors. For this reason, minority investors want K. Badri Narayanan, Satish Kumar Yanmandra and Jeet Sen Gupta to be inducted as independent directors.
This latest revolt by minority investors for control of Dish TV founded by Subhash Chandra comes 22 months after the then-largest shareholder, Yes Bank Ltd, expressed its dismay over how the company was run, and demanded a board reconstitution, including appointing seven directors.
Chandra had borrowed over ₹5,000 crore from Yes Bank, and his inability to service the loans made the lender invoke shares of Dish TV that were pledged with the bank. Last December, Yes Bank transferred its shares to JC Flowers Asset Reconstruction Co, making the asset reconstruction company the largest shareholder, owning 24.19%.
Chandra’s family, as a promoter, held 4.04% stake as of 31 December.
The tenures of Rashmi Aggarwal and Shankar Aggarwal ends later this year. Rashmi Aggarwal’s second term as independent director ends at this year’s AGM while Shankar Aggarwal’s five-year term ends on 24 October.
Dish TV didn’t respond to an email query.
Since Yes Bank blew the bugle for investor revolt in September 2021, Dish TV shareholders have voted against the candidature of nine board members.
Dish TV has dismissed allegations of corporate misconduct, and over the last 21 months rebuffed demands for holding a special shareholder meeting. During this time, Yes Bank and Dish TV have filed cases before various courts to adjudicate if an EGM should be convened.
