Institutional shareholders of satellite broadcaster Dish TV India have requested the removal of two directors said to be affiliates of the Essel group at an extraordinary meeting of shareholders (EGM). They have also sought the nomination of three of their Board nominees.
In a notice to stock exchanges, Dish TV said its shareholders, who own 45 percent of the company, want the appointment of K Badri Narayanan, Satish Kumar Yanmandra and Jeet Sen Gupta to the board. At the same time, the shareholders requested the removal of Rashmi Aggarwal and Shankar Aggarwal as directors of the board. The date of the EGM has not yet been set.
In early March, the company’s shareholders rejected the nomination of four independent directors, leaving it with just two independent directors, Rashmi Aggarwal and Shankar Aggarwal.
Explaining the move, shareholders said the current board is not acting in accordance with good corporate governance standards and is not a fair representation of the company’s owning significant shareholders who hold about 45 percent of the company’s shares. company.
The notice said that the Board is acting at the behest of certain minority shareholders who own 4 percent.
“Dish TV made a significant investment of Rs 1,218 crore (20% of total net block of fixed assets, intangibles, investments and ongoing capital work of Rs 6,012 crore) in Watcho, its flagship OTT platform in FY2020 ‘The investments were rated in fiscal year 2020 (year of the investment itself) and fiscal year 2021. When lenders and investors questioned the investments, the Company had made an impairment of Rs 203 crore in the fiscal year 2022, he said.
During fiscal year 2020, Essel group companies defaulted on multiple lenders, including bank loans to Essel group companies secured by Dish TV Shares pledge. “We fear that by anticipating the loss of controlling interest due to the revocation of Dish TV shares promised by the Bank and other lenders, the promoters may have diverted the aforementioned funds for other purposes,” the notice said.
The notice said that the independent directors, who now make up a majority of the Board, have also failed in their legal duty to render an independent and impartial judgement, especially in matters of key Board appointments in the interest of the company and the public. Shareholders have completely lost faith in the Board’s credibility, as reflected in shareholder votes against all of the company’s proposals in the last 14 months.
The notice said the Board has abused its power by continuing to appoint directors proposed by promoters who hold a 4 percent minority stake. “A mechanism has been developed to continue to selectively appoint new directors proposed by the promoters every three months in the face of rejection of the request for their appointment by the shareholders in order to maintain control of the Board at all costs. The promoters’ past actions have led to an unstable board of directors since March 2022 and have negatively affected the company’s corporate governance and financial performance,” the notice said.
The promoters, the Jawahar Goel family, had lost control of the company after they defaulted on Rs 5,000 crore loans from Yes Bank. After the promoters defaulted, Yes Bank invoked the promised shares of Dish TV and now has a 25 percent stake in the company. These loans were later transferred to JC Flowers, a Yes Bank joint venture along with several other bad loans.