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Bankruptcy looms over NDTV as auditor’s review shows a grim picture

NDTV in recent times has been embroiled in controversies over alleged financial irregularities. NDTV is facing multiple cases related to violation of FDI norms, Income Tax violation, and non-compliance with disclosure norms.

The auditor’s review in its quarterly filing with the stock exchanges reveals that the losses incurred by the media house has high liabilities which exceed its current assets by Rs 88.92 crore, thereby significantly impacting its ability to perform as going concern entity.

Excerpt of audit report of NDTV which the company has filed with the bourses.

As seen above in point no. 7, the auditors of NDTV draw the attention to the financial statements [pdf] which presents the profits and loss. NDTV had posted the net loss of Rs 10.16 crore and Rs 1.17 crore for the quarter and six-months ending 30th September 2019. As of that date, the company’s current liabilities exceeded the current liabilities by Rs 88.92 crore.

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The limited review (and not audit) is conducted by the auditors to obtain moderate assurance that the company financials are free of material misstatements. The auditor’s review further states that there is significant doubt on the parent company’s ability to carry on the business as a going concern. “Management has stated that the parent company has initiated certain strategic and operational measures included in the note to mitigate the uncertainty. Accordingly, they have prepared the statement on going concern basis,” the review reads. However, the auditors have not modified their conclusion on this respect.

A going concern concept is an accounting term which states that the company has enough resources to continue operating as it is indefinitely and not get bankrupt. A company becomes bankrupt once it stops being a going concern.

Read: Here is why Prannoy Roy and Radhika Roy were stopped at the airport and were not allowed to leave the country

NDTV in recent times has been embroiled in controversies over alleged financial irregularities. NDTV is facing multiple cases related to violation of FDI norms, Income Tax violation, and non-compliance with disclosure norms. CBI is probing a case against NDTV in relation to a Rs 375 crore loan from ICICI Bank and a corresponding wrongful loss of Rs 46 crore to the bank. There is a chain of borrow, repay and borrow where Roys took a series of loans in 2008 as they sought to buy back a large chunk of NDTV shares from the market, allegedly violating foreign direct investment (FDI) rules in a 2007-09 investment, a charge denied by the company.

An FIR was filed against Prannoy Roy, Radhika Roy, NDTV, RRPR Holdings Pvt Ltd and unknown officials of ICICI Bank by a company called Quantum Securities Limited in June 2017. The charges levelled were those of criminal conduct, conspiracy and cheating. QSL is a shareholder both in NDTV and ICICI and filed the FIR as an aggrieved party of the alleged misdeeds.

Read: Islamists celebrate the brutal murder of Kamlesh Tiwari, NDTV leading the charge with their attempts to trivialise the crime

In August this year, the Securities Appellate Tribunal (SAT) had upheld a SEBI order imposing a penalty of ₹2.10 crore on NDTV and ₹3 lakhs each on 3 directors for violation of disclosure norms. It is alleged that the company and its directors failed to inform the stock exchanges about a tax demand of ₹450 crore served by the income tax department.

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