Deccan Chronicle Holdings Limited is almost insolvent, says Industrial Finance Corporation of India Ltd

TNN | Jul 29, 2012, 03.22AM IST

HYDERABAD: Deccan Chronicle Holdings Limited (DCHL) has liabilities running into thousands of crores of rupees that may lead to the erosion of the entire net worth of the company and make it commercially unviable and insolvent, Industrial Finance Corporation of India Ltd (IFCI) has said in the winding-up petition which it has filed in the high court against the Hyderabad-based company.

Contending that DCHL was unable to discharge debts of its creditors and had almost become insolvent, IFCI urged the high court to order winding up of the company under the relevant sections of the Companies Act 1956. The high court was also requested to appoint an official liquidator and restrain the company and its officials from disposing of, transferring or encumbering the company's assets pending the admission hearing and final disposal of the petition.

The petition was filed by IFCI on Friday after DCHL defaulted on redemption of 250 unsecured redeemable non-convertible debentures (NCDs) on June 26 this year and failed to pay up its dues of Rs 27,80,47,945 despite "repeated requests and demands".

The NCDs were part of a Rs 150 crore NCD

issue made by way of private placement by DCHL with Infrastructure Development Finance Company (IDFC) last year at an interest rate of 11.25% per annum for a tenure of 364 days. In July last year, 250 of these NCDs were acquired by IFCI from IDFC.

IFCI said DCHL had massive secured and unsecured debts running into thousands of crores of rupees with various banks, financial institutions, non-banking finance institutions etc. and feared that many more winding up petitions may be filed by other creditors as the company had defaulted on several liabilities.

It also cited the recent order of a London court ordering the company to pay Pounds 10,533,478 (around Rs 90 crore) to Tim Wright, the former chief executive of its Indian Premier Leagueteam Deccan Chargers, for breach of employment contract as one of the major liabilities facing the company.

In its petition, IFCI also revealed that DCHL chairman T Venkattram Reddy had visited their offices in Delhi on June 30 of this year and given a stamped undertaking acknowledging the company's liability of Rs 25 crore plus interest on the NCDs with a promise to make the full payment to IFCI by July 4 this year.

IFCI also said that following this meeting, DCHL had arranged for a payment of Rs 2,80,47,945 via RTGS (real time gross settlement) towards interest of 11.25% per annum on the NCDs and gave two cheques, dated July 4, for the principal amount of Rs 25 crore drawn on ICICI Bankat Chennai as well as for Rs 7,36,718 drawn on ICICI Bank, Secunderabad. The cheque of Rs 25 crore, however, was dishonoured by the bank on grounds of insufficient funds.

After this, IFCI filed an application before the Debt Recovery Tribunal in Delhi for recovery of Rs 25,17,28,944 against DCHL on July 16, this year.

IFCI said that the action of DCHL in failing to redeem the NCDs on the due date was sufficient to establish that the company had no funds to pay off its dues in the first instance and the letter of DCHL requesting IFCI for a cure period (grace period) of 30 days to redeem the dues with interest had further established that the company was unable to pay off the dues and reconfirmed its inability to pay up the amount due to IFCI.

DCHL officials could not be reached for comments despite repeated attempts.