NDTV denies that its ownership has changed hands. But questions remain

In a little over two weeks, New Delhi Television Ltd (NDTV), the holding company of two of India’s oldest news channels, has issued two clarifications to stock exchanges BSE and NSE that there has been no change in the ownership of the company. The channel has been in the middle of a storm, with government agencies accusing it of criminality in its financial conduct and the proprietors terming it a witch-hunt.

The latest clarification came on Friday afternoon, after a leading newspaper carried a front page report on how businessman Ajay Singh, said to be close to the BJP, has taken controlling stake in the company.

“...we wish to inform you that the promoters of the company have not entered into any agreement for sale of their stake in the company to any person,” the company said in its response to BSE’s query after newspaper reports.

NDTV’s listing on the Bombay Stock Exchange (BSE) shows three ‘promoter and promoter group’, which include journalists Prannoy Roy and Radhika Roy and a private limited company called RRPR Ltd. Till recently, this company was owned entirely by the journalist couple, who also founded NDTV. Together, they control 61.45% stake.

Does it mean that the company has not been taken over by Ajay Singh?

Going by NDTV’s response to the BSE, this seems to be the case for now. However, the newspaper still says that the negotiations are on and that a formal announcement is expected when the deal is firmed up.

The Roys own just over 32% of the shares in the company if one were to exclude the RRPR holding’s shares, a company which was founded in 2007, to fund the purchase of shares. RRPR which owns 29.2% equity in NDTV now, started borrowing money from financial institutions, starting from the Rs 501 crore loan from Indiabulls, then the Rs 375 crore loan from ICICI bank in 2008 and finally an interest free loan of Rs 350 crore from Vishvapradhan Commercial limited, reported to be connected through a web of companies to Reliance Industries then. Vishvapradhan advanced another loan of Rs 53.85 crore to RRPR. The initial Rs 350 crore was utilised to repay the ICICI bank loan.

Interestingly, as per the terms of the loan agreement, VCPL was given the right to convert the Rs 403.8 crore loan into 99.99 per cent equity, which would take away ownership of RRPR from the Roys, and effectively bring down their combined individual equity to a little over 32% from the 61.45% they currently control.  

The newspaper report, which talks about the channel’s takeover by the SpiceJet promoter, however, says that the deal would give Ajay Singh a 40% controlling stake leaving the Roys with a 20% stake. If the contents of the reports are true, this would entail a dilution of the individual equity held by the founder journalists.  

Interestingly in July 2017, SEBI had reportedly issued a notice to VCPL for what it called violation of its takeover regulations and for not making a public announcement and open offer after acquiring control over substantial promoter holding in NDTV. SEBI is probing the loan agreement between VCPL and RRPL.

However, NDTV, in a response to the BSE and the NSE after a newspaper reported the SEBI correspondence had said that “allegations raised in the article with respect to a change in control/ownership of NDTV are without any merit”. It also said that the pattern of shareholding of the promoters, the Roys and RRPR which comes to 61.45% continues, without any change since August 2008.

While the assertion that the three promoters continue to hold controlling stake may be true, the assertion to BSE and the NSE on ownership turns out to be factually incorrect if the BSE listing is to be believed. For example, the shareholding pattern for the quarter ending September 2008 shows 55.66% of the total shares with 3 individuals/Hindu undivided family and just 7.57% with body corporates, September 2009 records show 37.17% with the individuals/Hindu undivided family and 26% with the body corporates. It is only the June 2010 listing which shows 32.26% with the individuals, the Roy couple in this case, and 29.18% with the body corporate, RRPR.

Moreover, with so much of speculation on its sale, a more substantial release from the channel on the facts pertaining to its current ownership could have eased matters.