ZTL accuses Padmalaya promoters of fraud, to sue

MUMBAI: This is one takeover that appears to have gone horribly wrong for Subhash Chandra's Zee Telefilms Ltd (ZTL). Zee's plans to use Hyderabad-based Padmalaya Telefilms Ltd (PTL) for carving out a movie production and animation empire may turn sour with the company deciding to take legal action against its chairman and managing director GA Seshagiri Rao and promoter shareholders.

ZTL's interest in PTL through a 64 per cent stake buy in holding company Padmalaya Enterprises Private Ltd. (PEPL) stands at the crossroads with allegations of misappropriation made against Rao and the promoter shareholders. The misappropriation of 6.265 million shares of PTL held by PEPL has brought down Zee's indirect interest in PTL from about 33 per cent to around 13 per cent.

PEPL's holding in PTL has fallen from 50.3 per cent to about 20 per cent. The promoter shareholders had pledged the PTL shares held by PEPL against raising loans without informing the board of PEPL and ZTL. "Keeping the Board of PEPL and ZTL in the dark, the promoter shareholders fraudulently with dishonest intentions, misappropriated 6,264,631 equity shares of PTL held by PEPL to provide security for raising loans in the name of Rao, brother GSR Krishna Murthy and their related entities/companies, primarily Padmalaya Studios Private Limited and Padmalaya Vision Ltd," Zee informs in a release.

The ZTL board, which met today, has directed the company management to take suitable criminal and civil action against Rao and his relatives and to make efforts to recover the losses suffered by the shareholders because of the fraudulent acts.

ZTL has also accused the promoters of cooking up the accounts of PTL in 2002-03 and 2003-04. "Substantial amounts of fictitious transactions were put through resulting in overstating of turnover and profits and consequent inflation in current assets," the release says. "Huge amounts of cash were withdrawn from PTL and funds were diverted to related to the promoter shareholder."

As a result of ZTL's inquiry into the books of PTL for the year 2003-04, its audited accounts were recast. As per the earlier audited accounts dated 26 July 2004, PTL's total revenue was stated at Rs 1.06 billion with a net profit of Rs 180 million. As per the re-cast accounts approved by the board in its meeting held on 6 December 2004, total revenue was restated to Rs 940 million with a net loss of Rs 320 million.

Zee's accusations are based on an investigation it initiated after alleged irregularities in the functioning of PEPL and PTL were brought to its notice. The company appointed M/s Guru and Ram, Chartered Accountants, Chennai, to look into the matter. A final investigation report was submitted on 9 December, 2004.

When ZTL had acquired stake in PEPL and thereby in Padmalaya Telefilms (promoter shareholders), it nominated Rao as managing director of both the companies. According to the shareholders agreement, PEPL can't deal in the shares of PTL unless agreed to by the company and promoter shareholders and approved by the board of PEPL. No person, including the board of PEPL, had authority to deal with its investments in PTL.

"The loans raised on the misappropriated shares were not reflected in the books of accounts of PEPL and no explanation has been furnished as to the end use of the funds so raised," the release says.

At the time of filing this report, attempts by to elicit a response from Rao on the charges Zee had thrown his way were to no avail.

Latest Reads
LIVE Coverage of Tour De France on DSPORT this year

LIVE Coverage of Tour De France on DSPORT this year

Television TV Channels Sports
Business news most benefited genre in Chrome DM week 24

With a growth of 1.24 per cent as compared to last week (23), the business news genre marked the highest opportunity to see (OTS) among all categories in week 24. Zee Business gained the highest OTS with 84.3 per cent in six metros, according to the data compiled by Chrome Data Analytics and Media...

Television TV Channels Viewership
Zee TV to launch the third season of 'India's Best Dramebaaz'

MUMBAI: Locked in a see-saw battle with Colors for top billing in the Hindi GEC space, Zee TV has made its latest move. The Puneet Goenka-led channel's latest offering to the Indian audiences is season three of 'India's Best Dramebaaz'. Having enjoyed a successful run during the first two seasons...

Television TV Channels GECs
Sony to soon launch Indian Idol season 10

MUMBAI: Indian Idol, one of Sony’s most acclaimed reality shows, is all set to come back on small screen with its tenth installment. Considering that all its previous seasons have done exceedingly well, there are great expectations this year as well. Sony has released its first promo, captioned #...

Television TV Channels GECs
VIVO IPL: VIVO IPL on Star Sports register highest ever engagement

Revolutionizing the way, the world experiences VIVO IPL, Star India reimagined VIVO IPL in to a six-month fiesta instead of just a two-month tournament. Keeping fans at the heart of the experience, Star India used the confluence of technology, consumer insight, and experience in cricket coverage,...

Television TV Channels Sports
Abhishek Upadhyay joins &TV as marketing head

Abhishek Upadhyay, who headed marketing for OLX, has been appointed marketing head of &TV, the Hindi language GEC channel of Zee Entertainment Enterprise Limited (ZEEL).

Television TV Channels People
Saral Jeevan adds three new programs to its prime time offering

Saral Jeevan, a Kannada infotainment channel, is launching three shows today. While one of them is season two of Jnanapada (based on folk songs), the other two programs are based on factual content. With a focus on non- fiction programming like history, mythology, travel and insights from Indian...

Television TV Channels News Broadcasting
Discovery joins hands with BYJU’S for quiz show

Discovery Communications India and BYJU’S, the Learning App, has joined hands to launch a school quiz show called the Discovery School Super League.

Television TV Channels Factual & Documentary
Time Warner to be renamed Warner Media, Turner CEO exits

AT&T announced on Friday, its first full day of owning Time Warner, that the operating businesses in the $85 billion acquisition will be contained in an entity called WarnerMedia. The names of the operating units - HBO, CNN, Warner Bros., TNT, etc. - will stay the same.

Television TV Channels People

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories