Zee and Essel group chairman Subhash Chandra on Friday evening issued a dramatic and unusual statement claiming that “negative forces” were trying to sabotage Zee Entertainment’s strategic sale, while acknowledging that he had committed mistakes.
The immediate trigger for the sharp drop in shares (Zee Enterprises fell over 26%, Dish TV by nearly 33% and Essel Propack 16%) appeared to be a news report on the website thewire.in, which mentioned alleged links between the group and Nityank Infrapower and Multiventures, a company that is under the scrutiny of the Serious Fraud Investigation Office (SFIO) for deposits of over Rs 3,000 crore during or after demonetisation.
“For the first time in my career of 52 years, I am compelled to apologise to our bankers, NBFCs and mutual funds since I believe that I have not lived up to their expectations, despite the best of my intentions,” he wrote in a letter published after market hours on Friday.
“Despite the loss-making projects, we continued to pay the interest and the principle, by borrowing funds against our shareholdings in listed companies,” Chandra wrote in the note.
His efforts to repay creditors, Chandra said, was on account of his “obsession” with not walking away from difficult situations.
The Essel Group promoter said the company’s inability to handle debt worsened after the IL&FS meltdown. “The IL&FS meltdown stopped the rollovers, diminishing our ability to service our borrowings,” he said.
He said wrong bets in the infrastructure sector combined with the meltdown of IL&FS had resulted in “Rs 4,000 crore to Rs 5,000 crore” of losses. The wrong infrastructure bets had left the company with non performing assets, he admitted.
Chandra admitted that the ballooning debt was also a result of some other decisions, notably the acquisition of DTH operator Videocon D2H. He termed the acquisition a key error that cost him and his brother Jawahar Goel a “fortune”.