I did not find intercorporate deposit in HMVL Annual Report. I think you are referring to Ht Media’s 80 odd cr loan to Digicontent.
Firstly, shareholders of HMVL are not affected by HT Media’s loan to Digicontent.
Secondly, Digicontent has digital assets like Livemint.com, Livehindustan.com and hindustan times.com. They also have content sharing agreement with HMVL for which they charge close to 55 cr. Given this situation, they are in a reasonably sufficient position to service the debt of HT Media.
From my perspective, the management of HMVL have gone wrong in 4 areas.
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They did not have a capital allocation framework for a long time. They allowed investors to get frustrated and lost their credibility in the process
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Now that they are finally utilising their cash reserves, they have fallen short in disclosure norms. Most investors have no idea about HT labs and the startups contained there in. In Q2, the company made a net loss of 30 Cr and the burn rate in startups is presumably 31 Cr. Instead of me diving deep and figuring this out, they should have put it across in a better way rather than dumping it in unallocated expenses under Segment reporting.
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Thirdly, they are bundling two different organisations under the same corporate structure. A hundred year old legacy vernacular printing firm is held under the same corporate structure as a bunch of new age tech startups.
In what way does this make any sense. They should consolidate HT labs under a wholly owned subsidiary so that its results are not combined with the newspaper business. -
Finally, they have failed in articulating their change in Strategy. Essentially, they are following the Info Edge model wherein Naukri.com would be the cash cow which funds in-house startups like Jeevansathi and 99acres while also participating in growth stories like Zomato and Policybazaar through equity infusion. There is nothing inherently wrong with this strategy. The management should come up with a decent communication strategy and convey it to shareholders. They should leave it to the judgement of shareholders whether they believe in the vision and execution capabilities of the management. But non-communication is not a great idea.
In revenue terms, the HT Group is the second largest media conglomerate after the Times group. They have the brains, bandwidth and werewithal to manage the media resources. The fact that they have failed for so long in Investor Relations is appalling.
There is still time for them to recover and stage a turnaround. They need to instrospect on why the Investor community has lost faith in the group and come up with right solutions soon to salvage the situation.