Shares in Deccan Chronicle Holdings (DCHL) have hit fresh life-time lows Thursday. The stock traded over 4.5 per cent lower at Rs 13.30 on the BSE today.
Here are the reasons why the Hyderabad based media firm's shares have crashed.
1) Hyderabad-based Karvy Group has filed a police complaint against the promoters of DCHL for alleged forgery and misrepresentation. The case was filed against DCHL chairman T Venkataram Reddy and T Vinayak Ravi Reddy and P K Iyer, both vice-chairman of DCHL.
2) Karvy says promoters fudged ownership to pledge shares and the owners forged documents in the name of Karvy Group.
3) The case comes close on the heels of a petition filed by IFCI in the Andhra Pradesh High Court. Contending that DCHL is unable to discharge debts of its creditors and may become insolvent, IFCI on Friday urged the High Court to order winding up of the company under the relevant sections of the Companies Act, 1956.
4) IFCI alleged that DCHL defaulted on redemption of 250 unsecured redeemable non- convertible debentures (NCDs). An NCD is a fixed-income debt issued by a company, where the issuer agrees to pay a fixed interest the investment. These debentures cannot be converted into shares of the issuing company.
5) IFCI had invested Rs 25 crore in 250 NCDs issued by DCHL. The NCDs, carrying a coupon rate of 11.25 per cent per annum for tenure of 364 days, were to mature on June 26, but DCHL allegedly defaulted in repaying the redemption amount.
6) The NCDs were part of the Rs 150 crore issue made by way of private placement by DCHL with Infrastructure major IDFC last year. In July last year, 250 of these NCDs were acquired by IFCI from IDFC.
7) The promoters of cash-strapped DCHL have pledged 54 per cent of their stake with Future Capital Holdings. The three promoters, who together held 73.83 per cent in the company and were individually holding 24.61 per cent each, have pledged their majority of shareholding to Future Capital. After the pledging, the three promoters are left with unpledged shares of 6.61 per cent each, or together 19.83 per cent stake in the company.
8) DCHL chairman T Venkataram Reddy wrote in the Asian Age that the net worth of DCHL far exceeds its current outstanding. "DCHL is grateful and fully committed to its lenders, who have supported it in all its endeavours. It is actively engaging with them to find a solution to the current liquidity issue," Reddy wrote in the newspaper. The Asian Age is owned by DCHL.
9) Shares in the company have lost over 40 per cent of their value over the last week since July 26. It is down 60 per cent for the month since July 3, 2012. The DCHL scrip, which was offered at a premium of Rs 152 on a face value of Rs 10 during its initial public offer in December 2004, currently has a face value of Rs 2 after being split in January 2007.
10) Analysts that NDTV Profit spoke to asked investors to stay away from the company.
"The performance does not look great. It is a debt ridden company. Pledging of shares is a big concern. Though investors are making losses, I would still urge them to sell," Siddharth Sedani, AVP (portfolio management service) at Microsec Capital said.
(With inputs from PTI and agencies)
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