"I have been short changed by my uncle, " fumes Mr Sashikumar, erstwhile promoter of Asianet Communications, which owns the Asianet Malayalam channel. The person against whom the charge is being levelled at is Dr Raji Menon, the current head of the company, and a man who has been in the news lately.
Contending that Dr Menon had got him to sell his 50 per cent holding in Asianet Communications for a paltry Rs 15 crore (Rs 4.5 crore for his equity stake and Rs10.5 crore as non-compete fee) in early 1999 when he decided to call it a day, Mr Sashikumar says, "Dr. Menon assured me that my stake would be worth a minimum of Rs 40 crore and paid me the above sum as advance. He asked me to wait for a due diligence report to be prepared by Korke & Raval, a Mumbai based chartered accountancy firm."
However, in December 1999 Dr Menon wrote to Sashikumar saying that Korke & Raval had valued his stake at far less than the advance already paid to him. Despite this, he said he was ready to forego the difference between the valuation and the amount already paid.
"On the other hand, unknown to me, in a back-to-back deal Dr Menon negotiated to sell 51 per cent in Asianet Communications to Zee Telefilms Ltd for a whopping Rs 400 crore. This is a clear case of cheating," Mr Sashikumar alleges.
While Mr Sashikumar contends that he was not shown Korke & Raval's valuation report, Dr Menon in his letter has mentioned that a copy of the report was sent to the former.
But was Sashikumar so naïve to accept the Rs 15 crore settlement silently? Answering the above query he says, "I was disappointed a bit at the consideration offered. But I trusted Dr Menon and the professional audit firm." In the same breath he adds, "The channel is my baby and I didn't want the company to flounder for want of funds or management problems. Ever since Dr Menon was inducted as an equal equity partner, the tussle for management control began and the matter had even gone to the police station." (see The channel with a chequered existence).
Interestingly way back in 1995, Sashikumar had roped in the Mumbai-based Rajan Raheja group company, Hathway Investments (P) Ltd, as an equal partner in the cable company for Rs 37 crore. Needless to mention, with Internet-over-cable becoming a reality, valuations of the cable company, which had a right of way over Kerala State Electricity Board's transmission poles, would have increased dramatically in 1999.
Moreover at the time of severing his relationship with Asianet Communications, the company was clocking a turnover of Rs 35 crore and also owned 14 acres prime land (worth around Rs 2 crore, according to Sashikumar) in Trivandrum. The company had no major outstanding debts. The cable company, Asianet Satellite had a revenue of nearly Rs 40 crore and a one-lakh subscriber base.
Life after Asianet seemed smooth sailing for Mr Sashikumar. Away from the tension of running the channel and cable business, he busied himself in setting up the Media Development Foundation, with the intention of setting up a journalism school.
On his part, Dr Menon sold Asianet Communications' balance stake in the cable company to Hathway Investments for an undisclosed sum.
But Sashikumar's peace turned out to be short lived. Ever since the high profile deal between Dr Menon and Mr Subash Chandra of Zee Telefilms Ltd was announced in April 2000, he has been fretting and fuming.
According to the stock and cash deal, Zee Telefilms would acquire majority control of Asianet Communications for Rs 400 crore, nearly hundred times what Korke & Raval is said to have valued Mr Sashikumar's 50 per cent holding in Asianet Communications just four months earlier. (Korke & Raval when contacted refused to comment on the issue)
Zee Telefilms is understood to have valued Asianet Communications media assets at Rs 460 crore. The channel's TV software was valued at Rs 5,000 per hour and the rights of every movie at Rs 5 lakh. Asianet Communications has 4,000 hours of original programs and rights for nearly 1,200 movies. "I bought the movie rights at cheap rates at a time when its TV potential was not well known," claims Sashikumar.
The fight is on
Convinced that his uncle has, with the help of a faulty valuation report, taken him for a ride, Sashikumar is now rolling up his sleeves for a fight.
As a first step, he has sent a legal notice to Dr Menon, demanding payment of the full value of the shares sold to him. In the notice, Sashikumar charges Dr Menon with manipulating and fraudulently fixing the worth of Asianet Communications in collusion with the chartered accountants.
A warning letter has also been sent to Mr Subhash Chandra, chairman, Zee Telefilms to the effect that his company would be acquiring majority stake in the Malayalam channel at a huge risk.
Probably this is one of the several reasons for Zee Telefilms is reportedly having second thoughts about the deal signed. (Subsequent media reports state that the Zee deal has fallen through, though Asianet officials deny any such incident.)
As the next step, Mr Sashikumar is planning is to approach the Company Law Board (CLB) for rectification of Asianet Communications' members register. Section 111(4)(a)(ii) of the Companies Act provides for an application to be made to CLB for reentering the name of a person in the members register if his name, after having been entered in the register is omitted without any sufficient cause.
Additionally, he is contemplating a police complaint against Dr Menon for defrauding him.
However Dr Menon is also gearing up for a fight, as the stakes are big. In his letter dated 25 June 2000 to Sashikumar, Dr Menon says, "It is surprising that you have raised false and incorrect contentions in your advocate's letter. The transfer of shares between Zee Telefilms and myself cannot be annulled or cancelled and there is no justification to threaten Zee Telefilms or Mr Subhash Chandra on this issue."
Dr Menon further continues, "I am not bound to disclose my subsequent negotiation and transactions to you. I am not inclined to enter any further correspondence in this matter, as your letter and reply 6 May 2000 claiming additional amount from me is not bonafide and the same is meaningless. Please note that no additional amount is payable to you. Please also note that if you adopt any proceedings in this matter, I will defend the same at your cost and consequences."
However attempts to contact Dr Menon for his views on the issues raised by Sashikumar turned out to be futile. Questions that were faxed and e-mailed to his office remained unanswered.
Let's wait for round two!