Governance concerns at Essel Group-owned Dish TV India Ltd. drove Yes Bank Ltd.’s attempt to overhaul the company’s board, two people in the know said on conditions of anonymity. The lender holds 25.6% stake in the company.
The decision to seek the ouster of five directors, including the managing director, was taken after months of discussions with Dish TV’s board on governance standards, the people said. The bank thinks the current board is not fit to run the company, the two people said.
Dish TV owes over Rs 6,000 crore to banks and other lenders.
Specifically, Yes Bank was concerned about a Rs 1,000-crore rights issue approved by the board in June.
According to the bank officials quoted above, the rights issue was seen as a way for the promoters to increase their stake in Dish TV, as other shareholders were unlikely to participate. This raised red flags for the lender.
Over 94% of the company’s shareholding is public, which includes lenders such as Yes Bank, Housing Development Finance Corp., IndusInd Bank Ltd. and Clix Capital, according to stock exchange disclosures.
On Sept. 6, Dish TV disclosed to the exchanges that Yes Bank, in its capacity as a large shareholder in the company, had sent a letter proposing to replace five directors on the company’s board, including Managing Director Jawahar LaL Goel.
The other directors which Yes Bank is seeking to oust from Dish TV’s board include Rashmi Aggarwal, Bhagwan Das Narang, Shankar Aggarwal and Ashok Mathai Kurien.
In their place, Yes Bank is seeking to appoint its stressed assets management head Akash Suri as non-executive non-independent director. The bank is also seeking to appoint Sanjay Nambiar, Vijay Bhatt, Haripriya Padmanabhan, Girish Paranjpe, Narayan Vasudeo Prabhutendulkar and Arvind Nachaya, as directors on Dish TV’s board.
The notice will be placed in front of Dish TV’s shareholders in the upcoming annual general meeting on Sept. 27, for voting. Yes Bank is expecting the support of some of the other large shareholders to help pass the proposals, one of the two people quoted above said.
According to a report in the Hindu Businessline, the company said that the proposed new directors can be appointed only after obtaining approvals from the Ministry of Information and Broadcasting.
Queries mailed to Yes Bank and Dish TV on Wednesday morning were not immediately answered.
For the quarter ended June, Dish TV reported a net profit of Rs 56.15 crore, marginally higher than Rs 55.16 crore reported a year ago. In the January-March quarter, the company reported a net loss of Rs 875.75 crore.
Dish TV’s total income in the April-June quarter fell 10.5% year-on-year to Rs 399 crore. Total expenses fell 14% from a year ago to Rs 324 crore. Bloomberg Quint