NDTV: Auditors Raise Doubts Over The Beleaguered Media Company‘s Ability To Continue As Going Concern

IANSMonday, November 18, 2019 3:42 am IST
Prannoy Roy
Prannoy Roy

NDTV's auditors are of the view that there is a significant doubt on the ability of the company to continue as a going concern.

The report was submitted to the board of directors of NDTV on November 12 by BSR & Associates, Chartered Accountants signed by its partner, Rakesh Dewan.

The auditors' report that the parent company which runs the television business, current liabilities exceed its current assets by Rs 88.92 crore. These conditions, along with other conditions cast a significant doubt on the ability of the company to continue as a going concern, BSR said.

"We draw attention to Note I of the statement' wherein it is explained that company, which runs television business, has incurred a net loss of RS 10.16 crores (Rs 1,016 lakhs) and Rs 1.17 crores (Rs. 117 lakhs) during the quarter and six months period ended 30 September 2019: and, as of that date, the company's current liabilities-exceed its current assets' by Rs 88.92 crores (Rs 8,892 lakhs)," the auditors said.

"Management has said that the company has initiated certain strategic and operational measures to mitigate the uncertainty. Accordingly, they have prepared the statement on a going concern basis. Our conclusion is not modified in respect of this matter," the report said.

In a note to the board of directors of NDTV, the auditors have reviewed the statement of unaudited results for the quarter ended 30 September 2019 and year to date results of the period from 1 April to 30 September 2019.

NDTV announced that after five consecutive quarters of profit, the NDTV group has declared a loss of Rs 10.27 crores. Of this, a loss of Rs 10.16 crores were from the television operations mainly due to a fall of advertising revenues, a challenging environment arid the slowdown in the overall economy.

In August this year, NDTV co-founders Prannoy and Radhika Roy were stopped from flying abroad by authorities at Mumbai airport. The airport authorities did not let the two fly as per a request filed by the Central Bureau of Investigation. Prannoy and Radhika Roy are being investigated by the CBI in a money laundering case.

Earlier in June this year, Prannoy and Radhika Roy suffered a huge setback when the Income Tax Appellate Tribunal (ITAT) has upheld addition of Long Term Capital Gains Tax (LTCG) against them for realising share sale consideration ‘in the guise of loan.

The ITAT order came within a week of markets regulator the Securities and Exchange Board of India (Sebi) banning the group chairman Prannoy Roy and director Radhika Roy from accessing the capital market for two years. SEBI also banned the couple from holding any key managerial position after it found the duo guilty in Vishvapradhan Commercial Private Limited (VCPL) loan case.

The 137-page detailed order by Delhi ITAT referred to a series of transactions, whereby the promoters (Prannoy and Radhika Roy) had sold NDTV shares to RRPR, their own holding company, at a substantially low price and further those shares were pledged to VCPL to raise a huge interest free loan of over ₹400 crore.

During the assessment year 2010-11, Roys had sold their shares in NDTV to RRPR at ₹4 against market price of ₹140 on the BSE. These RRPR shares were used to take a loan from VCPL, a company currently controlled by Mahendra Nahata, board member of Reliance Jio. IT added LTCG on sale of shares by the Roys first to RRPR and then to VCPL.

ITAT order also drew on the SEBI’s 2018 order saying, “The takeover exercise has been conveniently couched as a loan agreement with the predominant intention of VPCL to acquire control over NDTV without contemplating any repayment of the loan.”

The income tax department had contented that NDTV founders Prannoy-Roy and Radhika-Roy supressed income of more than Rs 117 crore each over two assessment years in a June 14 ruling.

Following ITAT, the I-T department moved against the Roys and file a prosecution complaint, akin to a chargesheet, in a competent court.

The order also paved way for enforcement agencies to probe charges of alleged money laundering allegations against the promoter couple.

(With Inputs from IANS)

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