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finance | IST

Yes Bank wants to look into Dish TV books; says some deals "dubious"

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Yes Bank, the single largest shareholder in Dish TV with 25.63 percent stake, suspects that all is not kosher in the company’s books, CNBC-TV18 learnt while speaking to officials of the bank.

The battle for board control at Dish TV, the country’s second-largest satellite television services provider, may not end anytime soon, with Yes Bank mulling legal action against the company if it is unable to get board seats, two people directly involved in the matter told CNBC-TV18.
Yes Bank, the single largest shareholder in Dish TV with 25.63 percent stake, suspects that all is not kosher in the company’s books, CNBC-TV18 learnt while speaking to officials of the bank.
The bank “strongly suspects” that certain investments made by Dish TV are “dubious” in nature, and there are several related party transactions that have not been disclosed.
“We are 25 percent equity holders (in Dish TV), why should we not have a right to look into their books? There are governance concerns at Dish TV and also their related companies, and we won’t know unless there is a forensic audit,” said a senior Yes Bank official who did not wish to be quoted.
On September 4 in its special notice, Yes Bank asked Dish TV to consider and pass the resolution to remove five directors from the company’s board. This includes the founder-promoter & director of Dish TV Ashok Mathai Kurien and Jawahar Lal Goel who is the Managing Director and Chairperson of the firm. Rashmi Aggarwal, Bhagwan Das Narang, and Shankar Agganval are the other directors Yes Bank sees to remove at upcoming the 33rd Annual General Meeting scheduled to be held on September 27, 2021.
The bank also seeks to nominate seven directors on the board of Dish TV. In the same September 4 special notice, it said, "... propose the appointment of Akash Suri as Non-Executive Non-Independent Director, Sanjay Nambiar as Non-Executive Non-independent Director, Vijay Bhatt as Independent Director, Haripriya Padmanabhan as Independent Director, Girish Paranjpe as Independent Director, Narayan Vasudeo Prabhutendulkar as Independent Director, and Arvind Nachaya as Independent Director."
“Unless we have a board seat and get to look into the books of the company, how will we know the extent of the problem?,” questioned a senior official at Yes Bank.
If Yes Bank manages to win shareholder approval to reconstitute the board on 27 September, it may be able to get these seats. But if the resolution is not passed or put to vote, the bank will take legal recourse to cement its position on the board, said people aware of the matter.
“We have sent them letters asking to explain certain investments, but the management has not been co-operating with us at all,” another person added.
When asked about the quantum of Dish TV’s investments that may be suspect, the people quoted earlier said they would not be able to arrive at a figure without a forensic audit, but the figure may be “significant.”
One such investment has been red-flagged by the company’s auditors too. Walker Chandiok & Co. LLP, Dish TV’s statutory auditor noted that the company’s investment in its OTT platform Watcho could not be qualified as the management has not carried out any impairment assessment on the Rs 1,378 crores of investment made in it over the past two years.
The notes to accounts disclosed by Dish TV for its financial results for the quarter ending March 31, 2021, read, “In line with the business plan of investing in new-age technologies, inter alia, Watcho the OTT platform, networking equipment and customer premises equipment (CPE), Dish Infra Services Private Limited, a wholly-owned subsidiary Company had made significant progress in augmenting these new-age technologies in the previous year. The subsidiary Company had contracted with aggregators for content and related infrastructure and recorded Rs. 55,200 lacs as intangible assets under development and Rs. 68,585 lacs as related capital advances as of 31 March 2021. However, the process could not be completed within the planned timeframe due to COVID-19 lockdown and restrictions imposed across the country during the year. The management of the subsidiary Company is in the process of concluding all the planned investments in the near future. As further described in note 10, management has concluded that no material adjustments is required in the carrying value of intangible assets under development and the related advances. (Iii) Auditors' Comment on (i) or (II) above:
Refer to report above, as per the subsidiary auditor in the absence of such aforementioned impairment assessment, we are unable to comment upon adjustments, if any, that may be required to the carrying values of such intangible assets under development and the related advances.”
Mint first reported that Yes Bank had written two letters to the Dish TV management, seeking an explanation into Rs 1378 crores of investments made in Watcho over the past two years. The report said that Dish TV invested 21.3 percent and 19.2 percent of its revenue in each of those years (FY20 and FY21), respectively, in a business into which no one outside the company has any visibility. This is making investors scowl.
However, Dish TV has dismissed the report. Responding to CNBC-TV18’s queries on this story, Dish TV said, "We would like to say that this is all incorrect. And we would not like to add any comment on that.
When contacted about the story, Yes Bank’s MD & CEO Prashant Kumar said, “We will not make any further comments in addition to what we have already communicated to the company  which is in the public domain.”