INSUBCONTINENT EXCLUSIVE:
even more rarely does it come after a single-day 26 per cent rout in the stock.
The special situation has arisen because of Indian
Analysts who believed the tremors would reach other shadow-banking entities like Dewan Housing Finance Ltd were half right
But the shock waves have now spilled beyond finance to reach the glamorous world of television content.
Subhash Chandra, the founder who
controls 41 per cent of Zee Entertainment Enterprises, is putting half his shares on the block after making wrong-way leveraged bets in
unrelated industries such as infrastructure, a mistake the tycoon acknowledged in an open letter on Friday evening
BloombergQuint estimates the burden at Rs 17,000 crore ($2.4 billion) across 87 operating companies as of March 31, 2017
The implosion of the highly rated lender raised financing costs for everyone who had borrowed short-term funds to invest in long-term assets
Shanghvi, apartment complexes and windmills
The collateral for these forays in most instances was shares of their successful, publicly traded operating companies.
But as both Shanghvi
and Chandra recently found out, collateral can wear thin very quickly
All it takes is a whistleblower complaint of financial irregularities or a news article insinuating links with a company allegedly dealing
in unaccounted-for cash to make the stock price plunge
with lenders does seem to have bought Chandra time to conclude the sale of his crown jewel.
Zee, where I worked briefly in the 1990s, is a
The network also boasts of 35 per cent Ebitda margins despite heavy investment in Zee5, a fast-growing digital app
multibillion-dollar plan to dominate e-tailing in India
Demand for digital video in India is exploding as Ambani drives down data prices
But a quick deal is critical
Lenders have agreed to a standstill
General elections will be held soon; and the opposition Congress party, which has started fancying its chances in the polls, is no fan of
The TV mogul has also put a chunk of his road portfolio on the block, though with the beleaguered ILFS also looking to offload its transport
investments, buyers are spoiled for choice
If the pressure to come up with liquidity forces Chandra to cede control of his TV empire, then the new owner will have the deadbeat
infrastructure financier ILFS to thank.
