Debt Restructuring of Deccan Chronicle
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MBA Core, NMIMS Debt Restructuring of Deccan Chronicle Submitted to Prof. Anupam Rastogi Submitted by: Shubhangi Saraf – C049 Saurabh Dhole – D023 Swati Muchchal – D038 Vamsi Krishna Reddy – E062 ACKNOWLEDGEMENT We would like to express our profound gratitude to Professor Anupam Rastogi for his exemplary guidance, the monitoring and constant encouragement throughout. The opportunity given to us to do ‘Debt Restructuring of Deccan Chronicle’ to us was very fulfilling and we have learnt a lot through the course of the assignment. We would also like to thank him for helping us find the resources necessary to complete the assignment. 2 | P a g e EXECUTIVE SUMMARY Deccan Chronicle Holding Ltd. is an Indian company with the core business of publishing newspapers with a huge market share in South India. In the past five to six years it had diversified and invested into a lot of areas related and unrelated with its core business. The company had been doing very well till almost the end of 2010 and even in some months of 2011. It had acquired a team called Deccan Chargers in the bididng of IPL and the company was totally new to this area. The problems however began to come due to multiple reasons like slowdown of ad expense, unable to meet its debt obligations, new business having longer gestation periods etc. Though the company wanted to put in plea for Corporate Debt Restructuring, it wasn’t able to do so due to failure to meet all requirements of the CDR cell. BCCI also cancelled the license of Deccan Chronicle and has sold the team to Sun TV. Now the company is awaiting the results of Forensic Audit that is being conducted on its books by Canara Bank and Banks could enter into bilateral restructuring deal with the company at a later stage 3 | P a g e CONTENTS S.No Topic Page No. 1 About the company 4 -5 2 History 6 3 Indian Newspaper Industry 6-7 4 Financials 8 5 Strengths 9-10 6 Timeline 11 7 Losing its Credit Rating 12 8 Questions over CARE’s ratings 12-13 9 Importance of Credit rating 14 10 Winding up Petition by IFCI 15 11 IPL Team 15-16 12 Interview excerpt with the Chairman 17 13 The CDR mechanism 18-24 14 CDR failure 25-26 15 Fraud Case 26-27 16 Present Status 28 4 | P a g e ABOUT THE COMPANY Deccan Chronicle Holdings Ltd. (Deccan Chronicle) is one of the leading newspapers companies in the state of Andhra Pradesh in India. The company is engaged in the printing and publishing of newspapers and periodicals. It publishes English daily newspaper in Andhra Pradesh, Tamil Nadu and Karnataka. It also publishes daily, weekly and monthly editions of Andhra Bhoomi, a publication in the Telugu regional language. Deccan Chronicle Holding limited is the publisher of largest circulated English newspaper in South India – Deccan Chronice’ with a circulation of over 1.45 million copies per day across Andhra Pradesh, Tamil nadu, Karnatak and Kerala with Eleven editions from Hyderabad, Vijaywada, Rajahmundry, Vishakapatnam, Anantpura, Karimnagar, Nellore, Chennai, Coimbatore, Bengaluru and Kochi. DCHL also publishes ‘Asian Age’ an ERnglish daily newspaper in Mumbai, Delhi, Kolkata and London; Finacial English daily ‘Financial Chronicle’ out of metro cities of delhi, Mumbai, Hyderabad, Banagluru and Chennai: Telegu Daily, weekly, monthly ‘ Andhra Bhoomi’ in Andhra Pradesh. Deccan Chronicle is an Indian English-language daily newspaper. It is published in Hyderabad, India by Deccan Chronicle Holdings Limited. The newspaper's name derives from the originating place, the Deccan regions of India. Supplements are "TV Guide", "Sunday Chronicle", "Hyderabad Chronicle", "Chennai Chronicle", and "Bengaluru Chronicle". It also supplies other weekly features like "School Chronicle" and "Teen Chronicle". The newspaper has a total readership of over 10.88 lakhs. The Asian Age is an Indian daily newspaper with editions in five major cities, of whom four are located in India and one which is located in England. The newspaper was launched in February 1994, simultaneously in Delhi, Mumbai and London. At present, it has editions in Delhi, Mumbai, Kolkata, Bangalore and London. The Asian Age brings out supplements and special sections on movies, etc. The newspaper is especially popular for its international coverage (far more extensive than in other Indian dailies). Previously, its weekend supplement carried articles and stories of interest from The New York Times and International Herald Tribune. Andhra Bhoomi is a Telugu daily newspaper. It covers the whole of Andhra Pradesh with editions from Hyderabad, Vijayawada, Visakhapatnam, Rajahmundry, Anantapur, Karimnagar, Nellore, etc. It also comes with a monthly magazine named Andhra Bhoomi Sachitra Vaara Patrika. With a circulation of 3,65,794, it covers whole of Andhra Pradesh and some parts of South India with Bangalore (mainly) Financial Chronicle (FC) is an Indian English-language daily newspaper published since 2008. The newspaper primarily covers Indian economic and international business topics, and financial news and issues. Financial Chronicle completed its launch objective of five-city simultaneous publication within the first year itself. Financial Chronicle has had the shortest run-up to a newspaper launch in the history of Indian print journalism. It also has the record of reaching the maximum number of publication centres in the shortest span of time. Financial Chronicle boasts India's youngest team of media professionals. 5 | P a g e DCHL also operates the following divisions which were operated through wholly owned subsidiaries and since merged with the company with ffect from 1st April 2010. Deccan Chargers known in short as DC was a cricket franchise based in the city of Hyderabad in the Indian Premier League. The team was one of the eight founding members of the IPL in 2008. The media group acquired the franchise for an amount of USD 107 million on 24 January 2008. Franchise termination Due to financial problems Deccan Chronicle Holdings Ltd, the team owner of Deccan Chargers announced an sale of their team by auction. The sale, announced in a newspaper advertisement on Thursday, will be through a bidding process that will be completed on 13 September, with the winning bid announced on the same day. However the auction for the franchise on 13 September 2012 has ended with no results as the team's owners rejecting the sole bid they received from PVP Ventures.It was reported that Deccan Chargers owner rejected the bid by PVP ventures as DCHL's bankers were not happy with PVP's plan to divide the bid amount in two parts over the next ten years.[8] Later on 14 September 2012, the BCCI announced that the Decaan Chargers IPL franchise was terminated due to various violations of BCCI codes by DCHL. and the tender will be called for new team. DCHL moved to court to sort their issues with BCCI on termination. Odyssey aims to fulfill the aspirational needs of consumer, positioned as neighborhood leisure store offering consumer lifestyle products that includes books, music, stationery, gifts, toys, pens, eye ware etc., having over 50 stores spread across the States of Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, National Capital Region. 6 | P a g e HISTORY The company started its operations in AP as a partnership concern in 1938. The late T Chandrashekar Reddy took over the operations in 1976 after the earlier promoters declared bankruptcy. Mr Reddy subsequently handed over the operations to his two sons T Venkattram Reddy and T Vinayak Ravi Reddy who have been managing its operations since late 1970s. 1976: T 1938: started in AP as 1994 : Asian Age Chandrashekhar took partnership concern launched over operations 2008 : Deccan Chargers 2004: Financial 2005: Odyssey acquired launched as subsidiary Chronicle launched as subsidiary 2010: Both the subsidiaries bought 2012 : Troubles began undet Deccan Chronicle Holdings Ltd. INDIA NEWSPAPER INDUSTRY The important observation in the printing ink industry is that though the volume & value are increasing by 10-15 %, the average price over the years does not seem to be increasing. This indicates that the growth potential is coming from the C & B print quality segments of the market. The average price per kg of inks in India is significantly lower than that of developed markets. This confirms that the consumption of printing inks in India is influenced by the C & B print segments. India, in the next 5 years is on the path of upgrading its benchmark of quality because of the digital technology revolution in pre-press, press and post-press. This would ensure keeping in tune to consumer’s preference for quality for an ultimate handshake of the printed product locally - globally. This could lead to a value growth in the range of 20 -25% against the volume growth of 12 -15%. 7 | P a g e This decision to support quality up gradation needs to be taken at the level of print buyers & consumers, as the pressure on printing ink manufacturers is very high to reduce prices at the cost of quality. In other words, while we have prospered in the growth segment; we still need to upgrade ourselves from C to B and B to A quality segment. The price & value growth would be high, the consumption level in volume terms could also be high. Owing to, better yield & lower wastage; leading to global benchmarking of quality – environmentally safe and efficient manufacturing standards, etc…… The quality expectations of the printers keep on increasing, leading to higher average prices & better contributions to profit. Thereby, assuring good investment in research ‘n’ development.Out of world’s 100 largest newspapers India holds 17 newspapers Rise in population & literacy would ensure the continued growth of the newspaper industry Huge scope for growth - with 258 million literate adults in India, who don’t read any publication With increased number of publications; readers are exercising choices; leading to increased habit of reading 2 newspapers among current readers.