 "Dish TV board rejects lenders plan to appoint directors, cites lapses")
The two-member board of Dish TV India, the satellite TV broadcaster of the Essel Group, has rejected a notice by majority shareholders to appoint three of their nominees to the board and said they made "numerical and procedural lapses."
Lenders, who own a majority stake in the company, had asked the board on May 15 to call a meeting for shareholders to appoint their nominees. Alongside, lender-shareholders sought the removal of the two Essel Group-affiliated directors, Rashmi Aggarwal and Shankar Aggarwal, from the board.
Dish TV, in a notice to the stock exchanges on Thursday, four notices were not issued by company shareholders as per a register and seven notices were submitted in duplicate and not original. No authorisation has been submitted along with the notices of eleven entities—companies, trusts, and partnerships—by their board of directors or governing body or other entities, authorizing such individuals to call for an extraordinary general meeting and send notices under Section 100 of the Companies Act, 2013, it said.
Media tycoon Subhash Chandra’s family, which owns less than 4 per cent stake in the company, lost control of Dish TV after promoter entities defaulted on loans and banks seized their pledged shares. In their notice, lenders had said the two-member board is not acting in line with good corporate governance standards and is not a fair representation of the significant shareholders of the company holding about 45 per cent stake.
"Dish TV made a significant investment of Rs 1,218 crore (20 percent of total net block of fixed assets, intangibles, investments and capital work in progress of Rs 6,012 crore) in Watcho, its flagship OTT platform in FY 2020. ''The investments were qualified in FY2020 (year of investment itself) and FY2021. Upon lenders and investors questioning the investments, the company had made an impairment of Rs 203 crore in FY2022," said the lenders' notice.
Essel group companies, in FY20, defaulted on multiple lenders including loans raised by pledging of Dish TV Shares. "It is our apprehension that anticipating loss of majority shareholding due to invocation of pledged Dish TV shares from banks and other lenders, these funds may have been diverted by the promoters for other purposes," the notice said.
The notice said the board is acting at the behest of a few minority shareholders who hold a four percent stake in the company. Independent directors, who now constitute the majority of the board, have failed to perform their statutory duty to bring an unbiased and independent judgment, especially on matters of key appointments on the board. Public shareholders have lost complete faith in the board’s credibility as reflected by shareholders voting against all proposals of the company in the last 14 months.