Chronicle of mis-deeds: How long will DCHL survive?

Deccan Chronicle Holdings (DCHL) probably signifies everything wrong with our financial system.

The auditors' report presented at the annual general meeting on Thursday reveals that the company has done very few right things but still managed to pull it off until July last year, when former managing director N. Krishnan quit bringing to light the financial troubles at the group.

According to a report in the Times of India, auditor CB Mouli & Associates, in its report raising doubts about the company's viability, has alleged that there was no adequate information to verify whether the loans DCHL borrowed were indeed used for the purpose they were availed for.

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Earlier, media reports had said that banks, which are now trying to recover their dues, have found that the collateral provided by the company covered less than half of the Rs 4,000 crore loans it had taken from various lenders.

This is not all. The auditor has also expressed concerns about DCHL's financial statements, the TOI report said.

The auditor has alleged that the management has not been able to give details about the outstanding loan liability and other dues.

On the company's restructuring and reinstatement of liabilities and assets, the auditor has raised concerns about the way in which the unnamed "independent valuers" pegged the value of the intangibles and brands at around Rs 3,700 crore.

"Cancellation of IPL franchise by the BCCI and some of the lenders and creditors filing a petition for winding up of the company indicate the existence of uncertainty that may cast doubt on the company's ability to continue as a going concern," the ToI report quoted the auditor as saying.

Interestingly, the auditors' report is in stark contrast to the promoters' claim that the company will turn around in two quarters.

According to a report in Mint, as a proof of the management's resolve, PK Iyer, vice-chairman, DCHL, told shareholders that newspaper publication was not stopped "even for a single day" despite the financial troubles and also that the company has been paying salaries on time.

According to the Mint report, the AGM on Thursday was for the period April 2011 to September 2012. The 20-minute meeting was attended by few shareholders, the report said.

According to a recent report in the DNA, state-owned Canara Bank wants the Central Bureau of Investigation to widen the scope of probe into the alleged financial irregularities at DCHL.

The company borrowed about Rs 350 crore from Canara Bank for which it provided collateral worth only Rs 200 crore, said the report quoting sources.