Kerala Media Monitor Professional Hijacking of Media Empire
A majority of the six million Indians in west Asia originate from Kerala, the southern Indian State, which has Malayalam as its main language. Sometimes back the network hired a new CEO in journalist Mohan Nair, corporate editor of the Economic Times. Asianet owner Raji Menon who bought out his nephew Sashi Menon's stake in the channel in a dubious manner has been trying to focus on "professionalism" by inducting managers working in other professions. Even though Mr.K.P.Mohanan's involvement in the Kuwait Indian school scandal was well known, Raji Menon has been keeping him as the high profile journalist for Asianet. Is there any reason to keep such "professionals" in high positions?
It is also well known that Menon himself was arrested on $9 million fraud charges. Menon, who was earlier based in Russia, had issued the cheques two years back for exports of some medicines from an Indian company, which bounced later. The company had filed a case against him. Menon was later let out on bail.
The dubious manner in which he managed to sideline Shashi Kumar, the man who created Asianet from scratches also speaks volumes about his integrity. The left leaning Shashi Kumar was chucked out from Asianet and a new coterie took over the channel's control.
Asianet Satellite Communications Ltd (ASCL), Kerala's premier satellite-cable TV company, was taken over by Mumbai-based Hathway Investments, promoted by the Rahejas. The several-month-old takeover bid by Rahejas was successfully completed when the Chennai-based holding company, Asianet Communications Ltd (ACL), promoted jointly by media celebrity Sashi Kumar and his uncle Raji Menon, a Moscow-based NRI businessman, agreed to sell their remaining 50 per cent shares in the Thiruvananthapuram-based ASCL to Hathway Investments, which has been already holding 50 per cent stake. The price at which the shares were transferred was a closely guarded secret. However, media reports quoting Asianet sources said the shares were sold to the Rahejas at a fancy price.
The first batch of 50 per cent shares in ASCL was purchased from ACL by Hathway Investments at a price of Rs 55 ieshares of the face value Rs 3.5 crore were purchased at a consideration of Rs 19.25 crore, giving the promoters a profit of Rs 15.75 crore. Another feature of the original deal was that in addition to the appreciation of shares worth Rs 3.5 crore on consideration of Rs 19.25 crore, Hathway had agreed to invest Rs 13.25 crore worth of capital in ASCL. The original promoters -- ACL -- by getting Rs 19.25 crore on sale of shares worth Rs 3.5 crore, got ample leverage to invest a further amount of Rs 13.25 crore in the equity capital of ASCL, by which ACL and Hathway Investments got equal holding of 50 per cent each in ASCL. Hathway and ACL had five directors each in the 10-member ASCL board.
According to Shashi Kumar, the valuation of Asianet as stated by auditors Korke and Raval, which placed the share value of Mr Kumar's holding of 50 per cent at Rs 4.5 crore in December 1999 was incorrect. About Rs 10.50 crore was given by Dr Menon to Shashi Kumar for a no-competition clause to complete the buy-out. This amount precluded Kumar from starting another channel for four years, reported Indian newspapers.
Further, in what happened to be another back-to-back deal, Asianet Satellite Communications Ltd which is the cable distribution company and a wholly-owned subsidiary of the main channel company, was sold by Dr Menon to Hathway Investments Pvt Ltd. Hathway had earlier acquired 50 per cent equity of the cable channel distribution company when Mr Kumar was managing director for Rs 35 crore.These funds were used to run the channel company as Dr Menon could not bring in the requisite funds promised, reports added.
Asianet Communications Ltd was started by Mr Kumar in 1991, his contribution being more by way of sweat equity. He brought in his uncle Dr Menon who contributed Rs 10 lakh. However, this was not adequate for building up the channel. While the Kerala government did its bit to help, the position improved in September 1994 when Hathway took equity in the cable company. Mr Kumar, who engineered this deal, however insisted on management control of the cable company. Resultant problems on this front also led to a misunderstanding between the two Asianet promoters. Advertisers soon got wind of the situation and started taking advantage of the situation.
As Asianet's fortunes started taking a downswing, it was decided that only one partner should remain. As Dr Menon opted for staying in command, the other decided to sell his stake. An initial sum of Rs 15 crore was paid, with the final settlement pending valuation by Korke & Raval. The valuation exercise dragged on much beyond the stipulated six months, to a full year. Mr Kumar said he then received a letter stating that he had been over-paid (at Rs 15 crore), though he had expected a figure of Rs 40 crore at the least.
Tired of haranguing, Mr Kumar claims that he decided to agree and formally relinquished control. During 1998-99, the channel had a turnover of Rs 38 crore and was making marginal profits. The cable company had a turnover of Rs 35 crore having more than a lakh of subscribers.Sashi Kumar, who divested his entire stake in Asianet wanted to continue as an advisor to the channel while exploring other options including setting up his own television software production company. "I have been requested to be an advisor to Asianet for some time by Raji Menon (who now owns the channel). I amalso planning something different and a television software company seems an exciting proposition," Sashi Kumar told the Indian Express. However, he could not embark on anything that directly competed with Asianet, Sashi Kumar said, while ruling out launching another satellite channel. "I do not want to go through all the difficulties that I had faced in developing Asianet. Besides, I don't want to limit myself to a region; I would like to do something on a national level," he said.
Mr Kumar who accepted the figure of Rs 4.5 crore in December 1999 later challenged the same on the ground that `the worth of Asianet was manipulated and fraudulently fixed'. According to him, within four months Dr.Menon arrived at a cash-and-stock deal towards selling the channel for Rs 400 crore to Zee Telefilms! Mr Kumar had sent a legal notice asking for the unpaid balance in lieu of Zee's valuation, failing which immediate steps for cancellation of transfer of shares and rectification of register would be taken. ``If the valuation was around Rs 30 crore to Rs 40 crore, I wouldn't have minded so much. But I object to being made to look foolish,'' he told The Financial Express.
K.P.Mohan, who was a good journalist returned from Kuwait at this crucial time in Asianet management change. Dr.Raji Menon was facing severe liquidity problem and wanted fund to pay Shashi Kumar. Mohan came from Kuwait with the huge amount siphoned off from the Indian School Kuwait. Now the billion dollar question is -- did he invest the Kuwait School fund to buy stake in Asianet? The stubborn attitude of Asianet management force many indepdent observers to believe that Mohan is more than an ordinary employee of Television Channel. Otherwise, why the channel is protecting a convicted criminal? --keralamonitor.com January 6, 2002.
This report is based on published facts only.
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