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The Curious Case of Dish TV

Its promotor and funds are increasing stakes in this loss-making company

Dish TV was the first direct to home entertainment service in India and thus it had the first mover advantage in this segment.

The company had chalked up losses in its FY09 results, both in last quarter and for the fiscal. For the March 2009 quarter net loss was Rs 7,866.81 lakh, while for the FY09 the net loss was Rs 47,627.73 lakh.

But what is now creating ripples is that lately its promoter holdings have seen some sharp swings.

In its December 2008, quarterly results the promoter’s holdings stood at 57.94 per cent, whereas in March 2009, the holding stood at 80.15 per cent, registering a jump. The company, in its latest filing for June 2009 ending quarter has said that its promoter holdings now stand at 79.83 per cent. 

This surge in promoter holding during March quarter was due to its underwriting of the rights issue in January. The company had unveiled a rights issue in November 2008 and it had underwritten the 518,149,592 shares at the rate Rs 22 a share. It was reported during November 2008 that promoters of Indian companies are increasingly resorting to rights issues to increase their stake in their companies, for example Tata Motor’s and Hindalco had brought out their rights issues during the downturn. After the issue promoter’s stake in Tata Motors went up to 42 per cent from 33 per cent, In Hindalco, promoters’ stake went up to 35.1 per cent from 31.9 per cent.

The company in its March 2009, quarterly results had also reported that the owners had pledged 4.04 per cent of its holdings. As per the latest (June 2009) disclosure this has reduced to 0.29 per cent.

In tandem with owners hiking stake in the company, mutual fund managers too have bought into the company at a pace never seen before. On an average the fund count i.e. the number of equity diversified funds that had this stock in their portfolio for the period June 2008 to April 2009, was between 6 to 8.

The disclosures of May and June portfolios by fund houses have revealed that the fund count has gone up phenomenally to 22 funds.