Mumbai: In an “open letter” on Friday, Subhash Chandra, Chairman, ZEE & Essel Group, apologised to bankers, NBFCs & mutual funds for “not having lived up to their expectations.” The latter emanated hours after Zee Group suffered a loss in market capitalisation to the tune of Rs 14,000 crore after the shares of its entertainment arm tanked over 30 per cent.
This was in the wake of a media report which said promoter company, Essel Group, was allegedly involved in money laundering post-demonetisation. In the letter, Chandra admitted that his company was in a financial mess and blamed the aggressive bets on infra, which had veered 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 were out to sabotage his efforts to raise money through a strategic sale in the flagship company Zee Entertainment Enterprises.
In the open letter, Chandra did not disclose the exact quantum of debt, merely saying that rolling over debt had 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 said 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, we will be positively be 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.” He also said no promoter ever has decided to sell his “jewel crown” in the face of financial troubles, as he is trying to do. Referring to “negative force” in singular, Chandra said the trouble has 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 had caused Rs 4,000-5,000 crore losses to Essel Infra alone. “Like most other infra companies, even we have made some incorrect bids. In most cases, infra companies have raised their hands and 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,” he claimed. The shake-up in Zee shares occurred after the report claimed that the SFIO was probing a company, Nityank Infrapower, for deposits of over Rs 3,000 crore made just after demonetisation that was announced on November 8, 2016. It also claimed that Nityak Infrapower and a group of alleged shell firms had carried out financial transactions that involved a few companies associated with the Subhash Chandra-led Essel Group between 2015 and 2017. Essel maintains that Nityank is an independent firm.
