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Ramoji-HUF response to Rangachary Committee report -- Highlights
Brief comments on the order dated 19th February,2007 of One man committee headed by Sri N Rangachary in the case of Margadarsi Financiers
· Margadarsi Financiers is a unit of Ramoji Rao-HUF. The group businesses include Ushodaya Enterprises Ltd (owners of Eenadu, the largest circulated Telugu daily, ETV net work with 11 regional channels and one national channel and Priya foods), Ramoji Film City developed in over 1600 acres of land- largest integrated film city in the World, Dolphin Hotels Ltd, Margadarsi Chit Fund Ltd – largest chit fund company with a turnover exceeding Rs.3000 crores and other group businesses.
· The order of the one man committee is full of contradictions, factually erroneous and failed to take cognizance of the financial strengths and the market value of businesses and assets of the group in which Ramoji Rao- HUF holds more than 99% shares.
· The committee failed to appreciate the unblemished track record of Margadarsi Financiers, which has not committed even a single default in the last 34 years. The committee also failed to take note of the views of the depositors who have reposed complete faith and trust in the group, despite vilification campaign over 100 days.
· The order was issued in great haste, without considering the basic financial statements and net worth of all the group entities. The committee did not carry out the basic exercise of studying all financial statements of the group companies in which the investments have been made, before coming to a wild conclusion that the group has no capabilities to meet the commitment to depositors.
· The one man committee has estimated the value of the group at 49% at one point of the liability and at another point valued at 16% virtually ignoring the investments in businesses of the group, which again shows the haste with which the order was issued. The order also completely ignored the arrangements being made by the group with M/s Blackstone group of USA whereby it was agreed to divest 26% of the ownership in Ushodaya Enterprises Ltd for a consideration of Rs.1217 Crores and the fact that the total equity value of just one company is over Rs.4690 crores as evaluated by a leading International firm. Further the order of the committee also ignored the arrangement with a bank for securing a loan to an extent of Rs.850 Crores on the strength of the assets owned by group.
· The committee has exhibited double standards whereby it has conveniently chosen to ignore the national media reports on the arrangement of the group with Blackstone group, even while taking cognizance of local media reports on court proceedings for issuing an immediate notice.
· Both the one man committee as well as the competent authority have acted as hatchet men in the hands of political masters to harass the media group so as to create panic/scare in the minds of depositors and to destroy the financial sinews of a reputed media group. This is evident from the fact that the one man committee submitted hasty and fallacious report dated 19th February, 2007 to mainly facilitate the search and seizure by the competent authority which carried out the searches on 21st February, 2007 till 10.30PM, blatantly ignoring the stay granted by local court on the same day.
· The government of AP also failed to give an opportunity to the organization to refute the hasty findings of the one man committee, before ordering the search operations.