Proxy Shareholder Advisory Services Remain Divided over Dish TV Voting

The boardroom battle at Dish TV that has pitted Yes Bank against the current promoters of the company has taken an interesting turn. The proxy shareholder advisories that advise shareholders on matters of voting and corporate governance, have given contrasting advice on the issue.

The three resolutions in focus are – adoption of standalone and consolidated accounts for the year, reappointment of Ashok Kurien as a non-executive and non-independent director, and ratifying the remuneration of the cost auditors. The Annual General Meeting (AGM) is set for today (30 December).

The AGM has been delayed for months as Yes Bank and the current promoters have been caught in a battle over the control of the company. The current promoters own a single digit stake in the company while the bank owns 24 per cent of the company. Yes Bank had taken over the pledged shares after several of Essel Group’s companies breached contracts with lenders. Essel Group is the parent of Dish TV. Since then Yes Bank has been looking to take over Dish TV to recover its dues.

InGovern Research has advised that shareholders should vote in favour of the promoters for all the resolutions in favour of the current management. In contrast, its peers Stakeholder Empowerment Services (SES) and Institutional Investor Advisory Services (IiAS) have advised to vote against these resolutions.

The auditors have highlighted certain issues related to internal financial controls in the financial year 2021 (FY21) annual report. These pertain to not checking for impairment of assets among others. There have been several investments made by Dish TV in a related company Dish Infra Services, and it believes that these dues are recoverable. Non-current investments in the company amount to Rs 5,152 crore while the non-current loans in the wholly-owned subsidiary amount to Rs 741 crore.

According to the company, the money has been invested in order to produce content, and develop the company’s OTT entertainment platform. However, the money does not appear to have been recovered. Further, the net-worth of Dish Infra Services is currently negative. As a result, IiAS has advised against the adoption of financial statements prepared by the company.

However, SES has taken a softer stance on the issues, saying that supporting Yes Bank could lead to bigger problems.

“The Special Notices given by YES Bank and suggested resolutions for approval of shareholders if acted positively, would leave the company in a serious problem, without any board, non-compliant in many respects and may end up in consequences not envisaged by YES Bank,” said SES in its report.

While SES does hope for a board change, it believes that it is constrained by the resolutions not being legally tenable, nor are they in favour of the company.

InGovern’s proposal has been positive as the advisory believes that no new adverse qualifications from the auditors have come up. The same issues had been raised in 2020 by the auditors, hence, shareholders should stick with supporting the promoters as per InGovern. In addition, InGovern wants shareholders to vote in favour of the current promoters in the AGM.

The Essel Group has been fighting tooth and nail to save its crown jewel Zee Entertainment from being overtaken by Invesco, its largest shareholder. Dish TV as well, could be overtaken by Yes Bank as it tries to recover its dues from the company. However, so far, the promoters have managed to save the company from Yes Bank. With the lender owning a large number of shares, and the promoters holding a small percentage, it could be difficult for the promoters to retain control.