Shares of Deccan Chronicle Holdings Ltd, which publishes the Deccan Chronicle chain of newspapers, sank to a new low on Monday on reports that IFCI has filed a wind-up petition against it. The stock had already been under pressure last week because of margin calls and the reports of filing of wind-up petition by IFCI only added to the weakness in the counter.

Meanwhile, the company informed today that promoters pledged an additional 14.46 per cent stake with Religare Finvest.

Last week, the promoters of DCHL had announced the pledging of 11.28 crore shares forming 54 per cent of the equity capital with Future Capital Holdings Ltd to raise funds.

Heavy Selling

On the NSE today, the stock slumped to Rs 16.70 at the close, a loss of Rs 1.85 or 9.97 per cent. There was a huge volume of trading of 38.03 lakh shares. The stock opened at Rs 18.40, only slightly less than the previous close of Rs 18.55. But the adverse news reports led to a huge selling pressure in the counter.

According to media reports, IFCI had alleged that DCHL had ‘almost become insolvent’ and wanted the AP High Court at Hyderabad to order the winding up of the company. DCHL was alleged to have defaulted on redemption of 250 unsecured redeemable NCDs on June 26 this year and owed to IFCI Rs 27.80 crore.

The company has been in the news of late — there were reports that it was trying to sell off stake in its IPL cricket team Deccan Chargers and its MD also was relieved of his responsibilities only on Sunday.

DCHL had clarified that it was approached by multiple parties to acquire stake in its IPL Team and it had appointed Religare Capital Markets Ltd to advise it on the issue. It was only an exploratory move and ‘no conclusive/firm decision has been taken on the issue’, the management had said.

The company said that its board of directors had accepted the resignation of Mr N. Krishnan as Managing Director and to relieve him with effect from July 29. No reasons were given for the move.

But what was surprising was that a company with such a huge financial liability (media reports said that IFCI alleged that DCHL had secured and unsecured debts running into thousands of crores of rupees) had completed a share buy back costing about Rs 227 crore only last year.

The Hindu Business Line competes with The Financial Chronicle.

(This article was published on July 30, 2012)
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