A clutch of banks led by the public sector Canara Bank is likely to meet later this week to decide on bad loans worth more than Rs 5,000 crore given to Deccan Chronicle Holdings (DCH) amid indications that the cash-starved media group has opened up discussions to sell a significant stake in the company. A business house controlled by an influential south Indian politician is a frontrunner."Canara Bank is conducting a forensic audit of DCH," a source said. "The government is aware of the Deccan Chronicle Holdings’ (DCH) situation. The government wants to study systemic failure in the case of DCH," a top government source said, requesting anonymity.
The total exposure of banks to DCH is about R5,000 crore, of which public sector banks account for R3,800 crore.
Deccan Chronicle Holdings publishes the English language Deccan Chronicle, The Asian Age and Financial Chronicle newspapers and Andhra Bhoomi, a Telugu daily.
Sources said that banks were likely discuss on Friday a corporate debt restructuring (CDR) plan, a lifeline that will allow DCH’s management to stagger loan repayments over a longer period of time with a moratorium of a few months.
Despite repeated attempts by telephone and text messages to reach him, T Venkatram Reddy, chairman, DCH, did not respond to Hindustan Times.
Deccan Chargers — a Twenty20 cricket team owned by a group company —was also thrown out of the Indian Premier League as the promoters failed to present a bank guarantee of R100 crore to the Indian cricket board.
Negotiations were on with various potential suitors to buy a major stake in the company. A business house controlled by a very influential politician with interests in media is being talked about as a major contender.
HT has also learnt that the corporate affairs ministry could order an investigation to scrutinise the books of the company and see if there have been irregularities in their audits.
"The promoters' role is in question and there could be investigations on that to see if they have been involved in any kind of unfair practice," said a government official, who refused to be identified.
The banks involved officially declined comment for this story.
"While we would chalk out the future course of action, it is possible that the lenders would have to take the hit," said a spokesperson for a private sector lender.
The finance ministry has also set up a two-member panel to look into the issue.