“The (DishTV) Board is not acting in line with good corporate governance standards and is not a fair representation of the incumbent significant shareholders of the Company being various banks and financial institutions holding about 45% shareholding in the Company,” Yes Bank wrote in a letter dated September 3 to DishTV’s Board of Directors, according to a disclosure filed with the Bombay Stock Exchange. Yes Bank accused the satellite dish company of approving a rights issue worth Rs, 1,000 crore, despite objections raised by the bank to “dilute the shareholding of the Bank and to prejudice the interests of inter alia the Bank which is the single largest shareholder of the Company as of date”, the letter explained.
Yes Bank charged that the Board was working on behalf of minority shareholders who do not hold more than 6 percent in DishTV as it went ahead with the rights issue announcement in May this year without any consultation with significant shareholders. DishTV’s board is guilty of acting in haste and taking arbitrary decisions while disregarding other options for fundraising, the bank said in the letter.
“The Board has completely sidelined multiple requests of the Bank to reconstitute the Board, inter alia, by appointment of the nominee directors. In this regard, the Bank had issued a letter dated June 19, 2021 to the Board emphasising the need for reconstitution of the Board and not to proceed with the rights issue process till such time as the Board is reconstituted.” read Yes Bank’s 28-page letter.
DishTV is locked in a bitter tussle with Yes Bank for board control of India’s second-largest satellite television company. Yes Bank is the largest shareholder of DishTV at 25.63 percent stake as per filings with the BSE, but it complains of not having fair representation on the board. Yes Bank’s attempt to overtake DishTV might result in a protracted battle.
Yes Bank’s bone of contention with DishTV’s Watcho
Watcho is DishTV’s bet on producing original content which it thought will attract more business from subscribers. The problem, according to Livemint, stems from the fact that no one outside of the company is aware of what is happening with Watcho.
DishTV invested Rs. 693 crore to prop up the content production business in 2019-20, followed by Rs. 685 crore in 2020-21, according to the annual reports. This means that DishTV spent a total of Rs. 1,378 crore at a time when the company’s turnover was down by 8 percent from Rs. 3,556.3 crore in 2019-20 to Rs. 3,249.4 crore last year.
Dish TV has so far only disclosed that Watcho has been downloaded by more than 25 million people which is not convincing for many shareholders as Watcho comes pre-installed with DishTV connections, but it does not reveal active subscribers, Livemint reported citing unnamed sources.
What did Yes Bank demand in its letter?
The complaints were put forth as reasons behind seeking removal of people including DishTV’s managing director Jawahar Goel, who is the younger brother of Subhash Chandra, the chairman of Essel group.
Yes Bank is looking to expel the following directors from the board:
- Rashmi Aggarwal
- Bhagwan Das Narang
- Shankar Agganval
- Ashok Mathai Kurien
The Prashant Kumar-led bank sent the letter as a special notice to move the resolutions for removal at the 33rd Annual General Meeting of DishTV to be held on September 27, 2021.
Subsequently, the bank is looking to replace these directors with a proposal of its own. The proposal includes the following people:
- Akash Suri
- Sanjay Nambiar
- Vijay Bhatt
- Haripriya Padmanabhan
- Girish Paranjpe
- Narayan Vasudeo Prabhutendulkar
- Arvind Nachaya Mapangada
Their proposed candidature will have to be approved by the shareholders at the upcoming AGM.
DishTV’s response to Yes Bank
DishTV filed two letters in response to the issues raised by Yes Bank. The BSE disclosure reveals DishTV’s Board of Directors had appointed a committee, on request of the management of the company, to consider various fundraising options.
“Subsequently after much deliberation and basis recommendation of such Sub-Committee, the Board of Directors had, on June 21, 2021, decided to raise further capital vide a Rights Issue… to ensure smooth continuity of the business and to protect the interest of all its stakeholders,” read the letter dated September 6, 2021.
The company wrote that the Securities Exchange Board of India requires top 2,000 companies to have six directors on the board, and the request for removal of certain directors can be undertaken once the candidature of the proposed new directors is approved by the Ministry of Information and Broadcasting.
DishTV wrote that it will initiate a process to seek approval from the ministry and requested Yes Bank to furnish the details in an appropriate format proposed by the ministry.
“It is pertinent to mention that in case the said approval of the MIB is not received within the statutory timelines, then the Company shall not be in a position to place your proposal at the ensuing Annual General Meeting of the Company in terms of the applicable provisions of the Companies Act, 2013,” concluded DishTV’s letter.
Update, September 18: This report and its headline has been updated following editorial inputs.
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