Deccan Chronicle's revival plans hit roadblock: Here's why

There seems to be no end to Deccan Chronicle Holdings (DCHL)'s troubles. A recent forensic audit conducted by Canara Bank on the financial accounts of the fraud hit company has revealed severe irregularities in the DCHL balance sheet, with it allegedly indulging in multiple mortgages of its properties. For instance, of DCHL's total Rs 4,000 crore liabilities, about Rs 360 crore is lent by Canara Bank and over 40 percent of the loan is secured. Yet, the extent of security is not really certain as the same property is apparently shown as security to other banks.

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RK Dubey, CMD, Canara Bank said "As there are multiple claims because the company did some fraud in filing wrong registration certificates. That also came out of forensic audit. The security charged to me, it's also charged to other banks. I can't exactly say what part of security is available to whom."

Not only has the CBI started investigating the matter but now there's a question mark over the company's proposed demerger of its print business into a new entity, land interactive media.

While canara bank says DCHL has not even approached lenders with a demerger plan, analysts say lenders will not agree to the proposal as it’s unlikely to solve the problems.

"I don't see any acceptance by banks of this proposal because currently the liability is so large that banks are the ones who can stop the sale. If they sell the main units, I think the value of the company would go down further and banks might need to take more haircut," says Satish Kantheti, MD, Zen Securities.

At its end, DCHL maintains that it is in the process of finding an amicable solution to fix issues with banks and financial institutions. As of now the demerger looks like its headed for a roadblock.