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Peepul Capital looks for clarity on Deccan Chronicle debt

BS Reporter/Hyderabad 25 Nov 12 | 12:29 AM

Hyderabad-based private equity firm Peepul Capital, which had approached the lenders' consortium with an investment plan for Deccan Chronicle earlier, still wanted clarity on the debt size and the likely stand of the bankers before taking any call.

While reiterating his interest, C Srinivasa Raju (Srini Raju), co-founder of the over $700-million private equity fund on Thursday said they still had to understand the debt level of the company. "Our investment will depend on the debt and banks have to decide how to overcome the crisis," he told reporters. The last balance sheet of the company is available only up to March, 2011.

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The question of how much debt is there on the books of Hyderabad-based Deccan Chronicle Holdings Limited (DCHL) is weighing on the minds of prospective investors even after Minister of State for Finance Namo Narain Meena scaled down the company's debt exposure to public sector banks.

Meena told Parliament yesterday seven public sector banks had an exposure of Rs 1,090 crore to the company, far below compared with around Rs 3,800 crore suggested in September by Union financial services secretary DK Mittal.

The financial distress in DCHL came to light when the company defaulted on redemption of nonconvertible debentures held by IFCI and the multiple charges allegedly created by it over the shares already pledged to Future Capital.

The full picture on this was clear only after Mittal said the total debt could be around Rs 5,000 crore.

Going by the minister's statement, the total debt now is Rs 2,290 crore (Rs 1,090 crore to public sector banks and Rs 1,200 crore to private banks and other financial institutions). This is less than half of Rs 5,000 crore figure suggested by Mittal.

However, it is still not clear as to how the promoters would bail themselves and the company out of the present crisis.

Sources pointed out that the success of any infusion of equity to bail out the company besides securing the interests of the lenders also depends on how the bankers would work out a plan with future investors.

For now, the bankers and investors are awaiting the report of the ongoing forensic audit on the accounts of DCHL to make their next move.

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