With tax claims and CBI case, NDTV may not be a SpiceJet for Ajay Singh

Should he indeed acquire majority ownership in NDTV, Ajay Singh's navigational abilities will be put to severe test by several air pockets

Three years after he famously took over the then-troubled airline Spicejet, Ajay Singh of 'Ab ki Baar, Modi Sarkar' fame is rumoured to have picked up a 40 per cent stake in listed broadcaster New Delhi Television (NDTV). Though The Indian Express on Friday reported citing unnamed sources that Singh was all set to take control , both NDTV and Singh have denied the deal and the reported details. Like SpiceJet then, NDTV is facing a challenging business environment, further complicated by tax claims, allegations, and regulatory issues.

Though the circumstances create a sense of déjà vu, there are some key differences between the SpiceJet acquisition and the reported NDTV acquisition.

Complaints by minority shareholder

Though SpiceJet was facing a cash crunch and struggling to pay statutory dues and other bills, it was not involved in messy legal battles with shareholders. On the other hand, a number of proceedings against NDTV have been initiated based on complaints by its minority shareholder Quantum Securities. The broking firm run by Sanjay Dutt, who was once a consultant for the media group before falling off, has instituted proceedings in the Delhi High Court and has been closely following up with regulators such as the Securities and Exchange Board of India (Sebi), Reserve Bank of India and the income tax department. Even the Central Bureau of Investigation (CBI) case was initiated based on a complaint by Quantum. While authorities could go cold, would a vocal third party who has raised difficult questions of law and regulation stay silent?

Complex holding structure

Senior journalist Prannoy Roy has been the face of the channel and owns over 61 per cent of the shares along with his wife Radhika. But, these shares are not unencumbered. It has been widely reported how the shareholding of RRPR holding, a promoter firm of NDTV controlled by the Roys, is entangled in a Rs 403.85 crore loan agreement with Vishvapradhan Commercial, a company originally floated by the Reliance group. This company has since moved base to Gurgaon and is controlled by the family of Mahendra Nahata. While, in the normal course, it would be assumed that the acquirer would pay off these loans to have a clear title over these shares, there arises a question about the risk of regulatory action. Business Standard last month reported that Sebi has issued a show cause notice to Vishvapradhan for alleged change of control in NDTV in 2009, citing terms of the loan agreement.

Swamy and friends

The perceived proximity of the potential acquirers to the ruling dispensation is a reason for some experts to feel that this deal might work. But, even within the right wing, there have been severe critics of any attempts to make peace. Right wing strongmen Bharatiya Janata Party MP Subramanian Swamy and Chennai-based ideologue S Gurumurthy and their formidable army of twitter followers have been strong critics of NDTV, the Roys, and their financial dealings. Right wing portal Pgurus.com had recently questioned the credentials of the potential acquirers. Would they agree to a structure that allows the previous owners to continue? Would they agree to not take the various proceedings to their logical conclusion?

Singh’s navigational abilities would be put to severe test by these air pockets. If he cruises through these, the Archana complex, that houses the iconic channel, would never be the same again.