There is more trouble ahead for the Reddys' owned Deccan Chronicle Holdings (DCHL). Its shares hit the lower circuit on Wednesday before recovering marginally, closing at Rs 11.03, down Rs 1.22 or about 10 per cent.
The sharp fall comes just a day ahead of the scheduled auction for the sale of its Indian Premier League cricket team, Deccan Chargers, through which the debt-ridden company hopes to liquidate some of liabilities to get over the immediate crisis.
The spate of bad news has continued for some time. The recent slide in the prices was triggered by a finance ministry official's statement that the actual debt would be around Rs 5,000 crore, more than three times the Rs 1,500 crore filed earlier with the registrar of companies.
In the past three days, the share prices of DCHL have fallen 24 per cent and in two months by a whopping 62 per cent.
|CUP OF WOES|
Also, it emerged that the company's former chief executive, Timothy Wright, had approached the high court here to claim Rs 100 crore due to him. He has already won the case in a London court and sought interim protection of the money due to him in view of the management's bid to sell the IPL team. The court on Wednesday asked Wright's counsel to go to the lower court where the petitioner had already filed a case, seeking implementation of the London court's order. The London court had awarded a little over 10 million euro to Wright, since he was removed before the contracted period.
The central government recently stated that a forensic audit of the accounts and debts by Canara Bank, the lead banker of the lenders' consortium, was under way to study if there had been a systemic failure. Yesterday, the Bombay high court directed the IPL sale proceeds be deposited with ICICI Bank, after paying five per cent to the Board of Control for Cricket in India. That triggered heavy selling.
Last week, a consortium of 28 banks reportedly met to discuss the liabilities of DCHL. However, there was no conclusion.
Apart from these fresh problems, the management is facing a criminal charge in a case filed by Karvy Broking, accusing it of forgery and breach of trust. The winding-up petition filed against the company by IFCI is also expected to come up for hearing at the Andhra Pradesh high court this week.
DCHL revenues for the financial year ended March 2012 were Rs 869 crore.