TREND PRESENTATION

ALEKYA(PGDM-IB) ANUSHA(PGDM) FLORANCE(PGDM) GOUTHAM(PGDM) KASHYAP(PGDM-IB)

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The Deccan Chronicle saga turns murkier

The 75-year-old newspaper, which identified itself with the people not only in Hyderabad but also in three regions, Andhra, Rayalaseema and Telangana, is for the first time facing an acute crisis. The promoters of the media company, named as Deccan Chronicle Holdings Limited (DCHL) after it went public, are facing criminal charges of forgery, fraud and concealment after they had pledged 54 per cent of shares to Future Capital. Karvy, a stock broking firm, filed a complaint with the Hyderabad police against the promoters, T Venkattram Reddy, T Vinayak Ravi Reddy and P K Iyer, charging them with tricking the firm, when they pledged the shares and raised funds.

Will Deccan Chronicle survive the acute financial crisis and the criminal cases staring in the face of its promoters?

ABOUT COMPANY
Deccan Chronicle is an Indian English language daily newspaper. It is published in Hyderabad, India by Deccan Chronicle Holdings Limited. Supplements are "TV Guide", "Sunday Chronicle", "Chennai Chronicle", and "Bangalore Chronicle". It also supplies other weekly features like "School Chronicle" and "Teen Chronicle". Since May 2004, it started printing the International Herald Tribune in Hyderabad and sold for Rs 30 per copy

Owners of the DC
The company started its operations in AP as a partnership concern in 1938. The late T Chandrasekhar Reddy took over the operations in 1976 after the earlier promoters declared bankruptcy. Mr. Reddy subsequently handed over the operations to his two sons T Venkattram Reddy and T Vinayak Reddy, who have been managing its operations since late 1970s

Decline
The charge against the promoters was that the shares already held by the Future Capital in the way of pledge were said to have been partly released by its depository. The DCHL raised Rs 170 core from Future Capital.

Then followed news that financial institution IFCI Ltd had filed a petition in the Andhra Pradesh high court to wind up the operations of Deccan Chronicle Holdings for failing to redeem non-convertible debentures (NCDs) worth about Rs. 25 crore.

THE LOAN THAT STARTED IT ALL:

Early 2012: DCHL and Aviotech borrow Rs 170 crore (Rs 1.7 billion) from Future Capital. Lien created on 60.4 million shares held by Karvy on promoters' behalf May 28: Shares are worth roughly Rs 180 crore (Rs 1.8 billion) at a price of Rs 30 each. However, Future wants additional pledge of 52 million shares June 1: Promoters tell Karvy that agreement with Future Capital has been terminated. They move part of 'freed' shares to Religare enterprises, another depository

July 26: Future Capital tells exchanges that promoters have pledged 54% of their shares
July 31: Karvy files police complaint against promoters August 2: Stock dips to Rs 13. At this price shares pledged to Future worth less than Rs 150 crore (Rs 1.5 billion)

A newspaper that wanted to fly

The financial woes for the DCHL piled up because of promoters leapt into non-publications business like cricket and the book trade, represented by the Indian Primary League (IPL) team Deccan Chargers and the Odyssey book houses.

Apart from these investments, their ventures like Financial Chronicle and their acquisition of Asian Age, too, are understood to have been the undoing of the promoters.

Another venture, an air cargo business in which the promoters of Deccan Chronicle were seeking to invest, did not finally take off.

A defining moment for the company came in 2008. Riding on Indian Premier League (IPL) frenzy, Deccan Chronicle Holdings bought the Deccan Chargers franchisee for $107 million. The franchise gave Deccan Chronicle a visible national brand, but the teams first outing in the IPL was a disaster; it finished last in the league. After its sponsor Jaypee Group withdrew from sponsorship, the team revamped its administration, going on to win the second season of IPL.

It is understood that the IPL had eaten into not only profits but also revenue being earned by Deccan Chronicle

Conclusion
The publisher of Deccan Chronicle is in deep trouble after expanding into other businesses and accumulating debt. The current problem Deccan chronicle is due to unrelated diversification and the managements loss of focus.