Essel Group Chief Apologises, Alleges “Negative Forces” at Play

“I believe that I have not lived up to your expectations, despite the best of my intentions,” wrote Subhash Chandra.

(Photo Courtesy: Twitter/ @subhashchandra)

Subhash Chandra, Chairman, Essel Group and Zee Media.

Essel Group chairman Subhash Chandra on Friday, 25 January, said his company is in a financial mess and has blamed the same for the aggressive bets on infra, which has gone out of control since the IL&FS crisis and also the acquisition of Videocon's D2H business.

Apologising to lenders, Chandra also alleged that some negative forces are out to sabotage his efforts to raise money through a strategic sale in the flagship company Zee Entertainment Enterprises.

The admission incidentally came after Zee shares tanked a whopping 26.43 percent on the BSE to Rs 319.35 Friday, while other group company shares like Dish TV plunged 32.74 percent to Rs 22.60.

In an open letter, Chandra did not disclose the exact quantum of debt, limiting himself to say that rolling over debt has been difficult since the IL&FS crisis and the group has been able to honour its loan commitments till December.

“I am compelled to apologise to our bankers, NBFCs and mutual funds, since I believe that I have not lived up to your expectations, despite the best of my intentions.”

Chandra, in the letter.

Without divulging if the group has defaulted on any debt servicing commitment, he urged lenders not to react in "an anarchical manner and maintain patience" till the process of ZEE Entertainment's stake sale is completed.

"Post-sale process, we will be positively able to repay the entire dues, but if the lenders react in panic, it will only hurt them and us," he warned and claimed that he is not desirous of keeping a "single rupee" and that no promoter ever has decided to sell his "jewel crown" in face of financial troubles as he is trying to do.

The strategic sale, announced last November, will halve the promoter holdings, but is facing troubles from negative forces which are "sabotaging" by "hammering" the stock price.

Chandra claimed he had achieved successes through meetings in London recently and cited the 26.43 percent price correction to Rs 319.35 on Friday as an attempt to derail the sale process.

Using "negative force" in singular, Chandra said the troubles have been on since June 2018 and was followed up by anonymous letters to bankers, non-bank lenders, mutual funds, and shareholders.

He also maintained that none of the operating firms of the group is facing trouble and it is only the promoters who are facing trouble due to different business calls.

Admitting to some of his mistakes, he said wrong bets have caused losses to the tune of Rs 4,000-5,000 crore on Essel Infra alone.

“As most other infra companies, even we have made some incorrect bids. In usual cases, infra companies have raised their hands and have left their lenders with non-performing assets, but in our case, my obsession of not walking away from a situation, has made me bleed Rs 4000 crore to Rs 5000 crore.”

Chandra said the decision to acquire Videocon's D2H business in November 2016 (completed in March 2018) in has cost him and brother Jawahar Goel a "fortune".

Another "mistake" was the decision to take on the debt of all group companies during the division of the family business, he said, adding most of the new business calls have not worked, causing debt to mount.

Chandra said he has written a number of complaints to the police, Maharashtra home minister and SEBI since November 2018, but alleged that none of this yielded any result.

"I must also mention that there is no systematic protection against the insidious attacks on us by the mentioned negative forces, but we will continue to seek the support of the system to thoroughly investigate the matter," he said.