Whopping valuation, but...
The political and financial fights of Cherukuri Ramoji Rao, owner of Eenadu who once saw himself as the most powerful man in Andhra Pradesh, and how an RIL investment saved media magnate's endeavour
In February 2007, N Rangachari, the adjudicator appointed to conduct the inquiry into Margadarsi, summarised his findings in a report.
It said that the company, "as it stands today, will not be able to refund the public deposits in full because of its legal inability to raise any more deposits."
The company had shown assets of Rs 1316 crore, but was in debt for over twice that amount, to the tune of Rs 2685 crore. Margadarsi could only repay every creditor 49 paise to a rupee.
Cherukuri Ramoji Rao, owner of Margadarsi and Eenadu, refuted the report vehemently. Margadarsi could fulfil all its financial commitments, he said, by divesting itself of 26 per cent of its holdings in another company, Ushodaya Enterprises Limited. That money, he declared, would come from one of the world's largest private equity firms, the Blackstone Group.
Blackstone had valued Ushodaya at a whopping Rs 4770 crore; in an interview to The Hindu, Rao said that the private equity firm was ready to invest Rs 1217 crore in his company.
Had the deal gone through, it would have been the largest private equity investment in Indian media to date.
Text: Praveen Donthi, Caravan India (via Business Standard)
Image Courtesy: Ramoji Rao Film City