Dish TV Institutional shareholders call for EGM, seek to remove 2 directors

The notice said the Board is acting at the behest of certain minority shareholders holding merely 4 percent stake in the company

Institutional shareholders of satellite broadcaster Dish TV India have sought removal of two directors who are said to be Essel group-affiliates in an extraordinary shareholders meeting (EGM). They have also sought the nomination of three of their nominees on the Board. 

In a notice to the stock exchanges, Dish TV said its shareholders, who own 45 per cent in the company, want appointment of K Badri Narayanan, Satish Kumar Yanmandra and Jeet Sen Gupta on the board. At the same time, the shareholders sought removal of Rashmi Aggarwal and Shankar Aggarwal as directors from the board. The date of the EGM has not been fixed as yet.

In early March, shareholders of the company had rejected the candidature of four independent directors, and left it with only two independent directors, Rashmi Aggarwal and Shankar Aggarwal.

Explaining the move, the shareholders said the present board is not acting in line with good corporate governance standards and is not a fair representation of the incumbent significant shareholders of the company holding about 45 per cent stake of the company.  

The notice said the Board is acting at the behest of certain minority shareholders holding 4 per cent.

"Dish TV made a significant investment of Rs 1,218 crore (20 percent of total net block of fixed assets, intangibles, investments and capital work in progress of Rs 6,012 crore) in Watcho, its flagship OTT platform in FY 2020. ''The Investments were qualified in FY2020 (year of investment itself) and FY2021. Upon lenders and investors questioning the investments, the Company had made an impairment of Rs 203 crore in FY2022, it said.

During FY 2020, the Essel group companies defaulted with multiple lenders including Bank loans to Essel group companies secured by pledge of Dish TV Shares. "It is our apprehension that anticipating loss of majority shareholding due to invocation of pledged Dish TV shares from Bank and other lenders, the aforesaid funds may have been diverted by the promoters for other purposes, " the notice said.

The notice said the Independent Directors, who now constitute the majority of the Board, have also failed to perform their statutory duty to bring an unbiased and independent judgement, especially on matters of key appointments on the Board in the interest of the company and the public shareholders have lost complete faith over the credibility of the Board as reflected from shareholders voting   against all proposals of the company in the last 14 months.

The notice said the Board has abused its power by continuing to appoint directors proposed by promoters having a minority stake of 4 per cent. "A mechanism has been developed to keep selectively appointing new directors proposed by promoter's every three months upon rejection of requisition for their appointment by shareholders to retain control of the Board at all costs. The above actions of promoters have led to an unstable board since March 2022 and have adversely affected corporate governance and financial performance of the company," the notice said.

The promoters, the Jawahar Goel family, had lost control of the company after they defaulted on loans worth Rs 5,000 crore given by Yes Bank. After the promoters defaulted, Yes Bank invoked the pledged Dish TV shares and now holds 25 per cent stake in the company. These loans were later transferred to JC Flowers, Yes Bank joint venture along with several other bad loans.