On 16th September, the offices of Theo Connect private limited, that owns the NW News Network, were raided by the Income Tax department. According to HW News, the raid went on for more than 50 hours, and mobile phones of the journalists were seized by the officials. HW News is a little-known digital news outfit, most known for employing Vinod Dua, the controversial pro-Congress journalist who is accused of stalking and sexually harassing filmmaker Nishtha Jain.
The exact reasons for the raid, and its outcome, are not known at present. But a cursory study on the financials of Theo Connect do raise doubts about its state of affairs. The company is not performing very well, but it still seems to able raise funds with ease. The paid-up capital of the company is Rs 5 lakhs, and its directors are Ganesh Jagtap and Siddhant Jagtap. Sujit Nair is the managing director of the company, who originally owned it, but later sold it to Ganesh Jagtap. Vinod Dua is the consulting editor of the digital news network, and he runs a program called the ‘The Vinod Dua Show’ on the network.
According to the financial statement of the company accessed by OpIndia, its revenue in the financial year 2017-18 was Rs 54 lakh, which nosedived to Rs 28 lakh in the year 2018-19. The company suffered a loss of Rs 2.95 crore in that year, up from a loss of Rs 1.98 crore the previous year.
While the company’s revenue was just Rs 28 lakh in the year 2018-19, its expenses were Rs 3.23 crores. It means the expenses were more than eleven times the revenue, clearly a vey bad position. Even if one considers that revenues can’t match expenses for start-ups during initial years, the worrying fact is that the major source of fund for Theo Connect seems to be debt, not equity.
In the year 2018-19, the company managed unsecured loans amounting to Rs 3.09 crore. With the existing loans of Rs 1.87 crores, the company’s total loans at the end of the year stood at Rs 4.96 crore, a very high amount for revenue of just Rs 28 lakh.
It makes little sense as to how the company with such poor financial performance manages expenses of more than ₹3 crore, and even manages to raise funds in the form of unsecured loans. It seems the entire expense of the company is paid by raising unsecured loans, as the company earned a very meagre revenue.
Another interesting fact is that a bulk this unsecured loan of Rs 3.09 crore came from a company called Dream TAG Realty Private Limited, a company with the same directors as Theo Connect. The revenue of Dream TAG was just Rs 94 thousand in the year 2018-19, down from Rs 34.85 lakh. It reported a loss of Rs 35.78 lakh in that year. Therefore, it is a mystery how the company managed to give crores in unsecured loans when its financials are not that healthy.
Ganesh Jagtap was a was a bureaucrat from Maharashtra, and has been a Press Secretary to the Deputy Chief Minister of the State. His other company Dream Tag Realty is a Mumbai based Project Management, Real Estate and Infrastructure Company.
Therefore, it is a mystery how HW News Network is operating with expenses that is almost six times its revenues. Further, it manages unsecured loans from entities with similar financial positions. With the raids by Income Tax department in its offices, it is expected that the source of its dubious funds will be known.