Breaking its silence a couple of weeks after questions were raised over its financials and related transactions, Deccan Chronicle Holdings (DCHL) on Thursday said it is indeed facing a liquidity crunch.
“The real issue is a liquidity crisis that has arisen due to significant reduction in ad spend by domestic and multinational companies in India,” DCHL chairman T Venkattram Reddy said in a statement in the company’s English language daily Deccan Chronicle.
Speculation has been rife that the company has about `2,000 crore debt including huge borrowings from various banks and institutions.
It has also allegedly defaulted in repayments.
IFCI has already filed a winding up petition against the company following its default in redeeming the non-convertible debentures worth about `25 crore. These NCDs are a part of the total NCD placement by DCHL to raise about `150 crore in 2011.
Karvy Stock Broking, too, has filed a complaint with the police alleging that the DCHL promoters had forged documents to misrepresent the total number of shares they hold in order to pledge the shares. The complaint is still being investigated.
“The networth of DCHL far exeeds its current outstanding. The loan outstanding and the overdue sums relate to payments that were due only in the last couple of months,” Reddy said in the statement.
According to him, the company had incurred debt in the usual course of business and there was no truth in claims that the quantum of debt runs into thousands of crores.
However, sources said, various banks that had lent money to DCHL are now feeling the heat and are busy examining the guarantees that were submitted while taking loans.
“After Satyam scam, any allegation is being examined closely. All the banks that had advanced funds to DCHL are now reviewing the documentation filed by DCHL. Though it is too early to say that there was any insufficiency in the documentation, most of them are keen on keeping the records ready to face any eventuality,” said a source.
Incidentally, the Deccan Chronicle promoters also have a £10.5 million (`91 crore) claim pending from Tim Wright, former chief executive of Deccan Chargers, the Indian Premier League team owned by them. A London high court judge had awarded the compensation to Wright last month.