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NDTV share price has plunged 20% and hit the lower circuit on BSE amidst heavy quarterly losses. Yet the company continues to heap lavish remuneration to its top management at the expense of shareholders
NDTV reported net a loss of Rs18.88 crore, for the June 2013 quarter, which is nearly equal to its entire loss of Rs20.34 crore incurred during the 2012-13 fiscal. On a consolidated basis, the company has made a net loss of Rs24.04 crore in first quarter, which is nearly as bad as the Rs26.09 crore net loss for the same period a year ago. Yet, NDTV doled out an excess of Rs24.50 lakh (in managerial remuneration during the June 2013 quarter alone) which is beyond stipulated limits, as per the law. During FY2013, NDTV paid top executives Rs1.68 crore. On Tuesday, NDTV hit its lower circuit (20% down) and was locked at Rs74.8 on the BSE.
In its report, PricewaterhouseCoopers (PwC) auditors of NDTV stated, “We draw your attention to note2 to the Statement regarding managerial remuneration, in respect of subsidiaries, amounting to Rs24.50 lakh paid during the quarter ended 30 June 2013 (Rs167.71 lakh paid till 31 March 2013) in excess of the limits specified in Schedule XIII of the Companies Act, 1956, which is subject to the approval of the central government. In the event that the central government approvals are not received, the aforesaid amounts are to be refunded by such directors. Had these amounts been recognised as recoverable from the director(s), the loss after taxation for the quarter would have been Rs22.12 lakh and loss per share for the quarter would have been Rs3.43.”
The company has reported operating losses in four of the last six quarters. Similarly, year-on-year (y-o-y) quarterly net sales fell in five of the last six quarters. At the same time, NDTV reported a net loss in four of the last six quarters.
Sanjay Dutt of Quantum Securities, and a long-term shareholder of NDTV, has pointed out that while public shareholders have made no money, the promoters and directors pay themselves lavishly. As recently as 12 July 2013, NDTV sought central government’s permission under Sec 640B, for enhanced remuneration to directors, even though there are no profits from operations, nor have taxes paid for many years. Dutt further stated that NDTV’s executive management, a small group close to the promoters, which includes journalists, law firms, tax advisers and consultants, has enjoyed first class business travel, hefty remuneration, ex-gratia bonuses etc, adding up to a massive Rs320 crore over four years (plus ESOPS), even as the company has made losses, failed to pay dividends and has not paid taxes.
Sanjay Dutt alleges that company allegedly broke rules. He said that Prannoy Roy received irregular promoter funding of Rs375 crore by pledging NDTV shares which, according to him, is against the rules. The Moneylife exclusive can be accessed here:
As a result, NDTV has threatened to sue Quantum Securities
This isn’t the first time that NDTV’s top management has shafted its shareholders to fund their lavish lifestyle. The company has been running a flawed business model for years and Moneylife wrote a piece way back in 2010, noting that the company was headed towards losses (Once a glamour stock, NDTV headed for sickness?). The company has been losing viewership and its ratings have gone down due to intense competition in the media industry.
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