Sunday, September 24, 2017

Reports and denials: Who knows what's happening between NDTV and SpiceJet's Ajay Singh

The news of Ajay Singh, the chairman of low-cost carrier SpiceJet, taking over NDTV has been floating around on the social media for the past one week. A news report carried by a leading daily suggests that the deal has already been finalised, and under the deal terms, Singh will own 40 per cent in the private broadcaster whereas its existing promoters - Prannoy Roy, Radhika Roy and RRPR Holding Pvt Ltd - will hold 20 per cent equity (down from the current 61.45 per cent stake).
Both the sides have refuted the reports of any such deal. In a corporate announcement, NDTV told Bombay Stock Exchange (BSE) that "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 is mindful of its obligations under Clause 30 of the Listing Regulations and shall promptly intimate you of any event required which is required to be disclosed under the said regulations."
Keeping these denials aside, there are reasons against and in favour of the report. NDTV is currently mired into an alleged financial fraud controversy. In June, the properties of NDTV promoters were raided by CBI that resulted in brouhaha across different sections of the media. The financial condition of NDTV is not hunky-dory either. It has been reporting net losses on standalone basis for the past five consecutive years. Singh has a habit of turning around loss-making businesses. Delhi Transport Corporation and SpiceJet are two such examples.
At SpiceJet, he has turned the airline profitable after his takeover in 2015. It is now the third-largest airline in India in terms of market share. For the past two financial years, the airline is generating net profits which is a big feat given that it had registered net losses of Rs 1,003.24 crore in 2013/14.
The simplest explanation for Singh taking over NDTV is that he could turn into a white knight and revive the fortunes of NDTV. Singh, who is close to the BJP government, can do an encore of his turnaround strategy, and will be able to handle controversial matters through his solid networks. But that's a deductive reasoning, and there could be more to it than meets the eye.
23/09/17 Manu Kaushik/Business Today

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