The Reddys were also the owners of the now-defunct IPL team Deccan Chargers
Stock Exchange regulator SEBI has barred the promoters of Deccan Chronicle Holdings Ltd (DCHL) from the securities market for a period ranging from one year to two years as well as imposed penalties totaling Rs.8.20 crore for various violations. Erstwhile media barons Reddy family who earlier owned Deccan Chronicle and Asian Age newspapers were caught for stock market violations and giving fake financial statements during 2008 to 2012. In 2012, DCHL shares were hyped to Rs.75 and now it is delisted and valued at only Rs.2. Later DCHL went into insolvency and the current owner is with an investment fund owned by the SREI Group.
The regulator imposed a fine of Rs.4 crore on DCHL, Rs.1.30 crore each on T Venkattram Reddy, T Vinayak Ravi Reddy, Rs.20 lakh on N Krishnan, and Rs.10 lakh on V Shankar. “… Restrains T Venkattram Reddy, T Vinayak Ravi Reddy, P K Iyer, N Krishnan, and V Shankar from accessing the securities market and further prohibit him from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in a manner for a period ranging from one year to two years,” SEBI said.
Reddy family which controlled the media space in Andhra Pradesh till 2014 started facing bank frauds amounting to Rs.8,000 crores. The Group had also owned Deccan Chargers, the IPL Cricket team, and chartered flights and Odyssey Books shops chain across India. Later the promoters were charged by CBI and Enforcement Directorate for bank frauds and money laundering.[1]
Moreover, in 2015, T Venkattram Reddy was arrested by Delhi Police for trying to murder a whistleblower.[2]
Pursuant to the SEBI investigation, it was found that DCHL has underreported the loan amounts, interest payments, and finance charges in the books of accounts of the company during the financial year 2008-09 to 2010-11 and thereby misled the investors and shareholders by reporting to the public such manipulated financials of the Company and transferred the outstanding loans in the books of Deccan Chronicle Marketers (DCM).
T Venkattram Reddy and P K Iyer as the Chairman and Vice-Chairman of DCHL failed to present true and fair financial statements, understate the liabilities and overstate the profit into the accounts of the company and then by offering buyback of shares at a price that was higher than that of the ruling market price of the scrip despite the absence of reserves. They have knowingly deceived the investors and induced them into investing in the shares of the company.
Moreover, Reddy, Ravi Reddy, and Iyer have also failed to make disclosures encumbrances of shares held by them, created pursuant to the signing of those Non-Disposal Undertakings (NDU) or pledge agreements with various lending institutions and hence, failed to comply with various regulations. DCHL and its promoters have kept the investors in the dark about the increase in their shareholding on account of the buyback of shares of the firm.
The market watchdog noted that the misleading information with respect to its business activities and the true nature of its income had the potential to mislead the investors was unfair.
[with PTI inputs]
Reference:
[1] ED attaches Rs.122 crores worth assets of Deccan Chronicle newspaper group and its promoters Reddy brothers – Oct 16, 2020, PGurus.com
[2] Delhi Police arrest media baron Venkattram Reddy on charges of assault – May 03, 2015, HT
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