Lenders complain to ministry about Deccan’s ‘dishonourable intentions’
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Worried over its exposure to T Venkattram Reddy's Deccan Chronicle Holdings Limited (DCHL), a group of lenders has written to the Corporate Affairs Ministry that the Hyderabad-based listed media company, now on the verge of losing its control over IPL team Deccan Chargers, has allegedly squandered away Rs 5,000 crore in just 15 months. This, according to the lenders, reflects not just alleged "gross mismanagement" but also "wrong and dishonourable intentions" of its promoters.
Venkattram Reddy, whose father T Chandrasekhara Reddy was a staunch Congressman and Rajya Sabha member from 1981 till his death in 1993, took over as Chairman of DCHL when he was just 21. He disposed of the family's stakes in an aluminium foil factory, soft drink bottling plants and non-performing hotels. Instead, he focussed on consolidating and expanding the readership of the company's flagship newspapers.
Known for his ostentatious lifestyle, patrons and visitors at Hyderabad Race Club remember him more for his race horses that won him trophies all over the country and his collection of flamboyant cars including Rolls Royce Phantom, Porsche Cayenne S, Lamborghini, Maserati, Ferrari, Land Rover, Audi and Mercedes Benz. But Reddy has had to mortgage this and more, including the company's printing presses and newsprint, to raise money over the last two years.
He is now struggling to keep his holding company DCHL afloat. A lender told The Indian Express that 12 of his cars including four Rolls Royce Phantoms, two Maseratis, two Ferraris and a Lamborghini carrying Hyderabad registration are parked at a lender's farmhouse in Delhi. "The Delhi-based finance company has taken the cars since DCHL does not have money to repay its debt," the lender alleged.
Several phone calls, text messages and mails to Venkattram Reddy for his response remained unanswered.
The debt raised by mortgaging personal assets must have been Reddy's last recourse. What has puzzled lenders is how the company with a turnover of less than Rs 1,000 crore (Rs 976 crore in 2010-11 to be precise) can allegedly utilise as much as Rs 5,000 crore between March 31, 2011 and June 30, 2012, without any significant addition to assets. During this period, Deccan promoters — Venkattram Reddy, Vinayak Ravi Reddy and P K Iyer — have reduced the company from a net cash position of Rs 390 crore (cash plus fixed deposits less debt, as on March 31, 2011) to a net debt position of Rs 4,300 crore (as on June 30, 2012).
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