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YES Bank must take the lead in deciding next steps for Dish, say proxy advisory firms
Three weeks after Dish TV shareholders voted for the ouster of promoter Jawahar Goel, proxy advisory firms say that YES Bank should take the lead and decide the future management strategy for the satellite television provider.
The company has a major vacuum at the top management level and is facing major headwinds in the continuity of operations, especially as the shareholders also voted against the ouster of Dish TV CEO, Anil Kumar Dua, something, which sources indicate that YES Bank did not want.
Investors and shareholders are balking as no clear picture emerges regarding Dish TV’s future management.
After ousting Goel from the Managing Director helm, according to sources, YES Bank may no longer be looking to appoint the new Managing Director of Dish TV.
“It seems that the main objective was to ensure that the erstwhile management was removed as it was having an impact on the company’s business. It had sought to appoint new directors only to ensure that there is a turnaround of the business and to protect its own investments,” noted a source.
Further, a lot of litigation continues to be pending as well and the bank would be keen on selling its stake in the company and exiting as and when possible.
In an interview to BusinessLine in January, Yes Bank MD and CEO Prashant Kumar had said that the lender has nothing to do with Dish TV. “We have exposure to the Essel Group, which is an NPA. One of the securities is the Dish TV share. We are trying to see how we can increase the value of our security. But the group is trying to stall everything. They are not repaying,” he had said.
YES Bank is currently the largest shareholder in Dish, holding 25.6 per cent of the company shares. It was also the primary driver seeking the ouster of the promoters, Essel Group from the helm. Proxy advisors now believe that it is the responsibility of the bank to lay out the next steps for the company.
Shriram Subramanian, MD of InGovern Research Services, a corporate governance advisory firm, said , “YES Bank needs to take the lead on what will be the future direction of the company and what the board constitution and management of Dish TV would be. As the single largest shareholder it has a responsibility to the company and the 74 per cent majority shareholders to ensure that there is no further value destruction. If YES Bank continues to be a shareholder watching from the sidelines, it would erode the morale of senior management and erode the value of the company. When the company seems to have cleaned up its books and moving towards debt free status, it needs shareholders that have the confidence of the board and management and visa-versa.”
Bid to continue business
In response to BusinessLine’s queries, a Dish TV spokesperson said the current board of directors will continue to take all steps which are required to not only comply with the regulations but also to ensure that the business of the company continues in an uninterrupted manner.
For the appointment of the MD as well as additional directors (the Dish TV board needs two additional directors to comply with regulation), the existing board “will take necessary and expedient steps to ensure compliance of law in this regard.”
The decision on the nomination of the Managing Director will be taken by the Nomination and Remuneration Committee. Regarding the timeline for the new appointments, the spokesperson said, “In terms of the extant provision, appointment of a new Director is required to be approved by the shareholders at the subsequent general meeting or 90 days, whichever is earlier. The approval of the appointment of directors, once done by the board post MIB approval, shall be placed before the shareholders in compliance of the above mentioned provision.” The Hindu BusinessLine