Six months into 2019, and the layoffs across DNA’s bureaus show no signs of slowing down. On May 11, 26 pink slips were handed out to employees—including those from the editorial team—at the newspaper’s Mumbai bureau. More recently, on June 8, Deepak Lokhande, DNA’s managing editor for Mumbai and Ahmedabad, was laid off—clearly indicating that the newspaper’s efforts at cost-cutting are still underway.  

But a closer look at the shareholding structure of the paper and its parent group shows that DNA‘s destiny is in many ways tied to its parent group’s infrastructure business.

Diligent Media Corporation is the parent company that runs DNA. Its two largest shareholders are 25FPS Media Private Limited and Arm Infra & Utilities Private Limited, holding 35.31 per cent and 33.79 per cent of Diligent Media shares respectively. A company called Primat Infrapower and Multiventures Private Limited holds 100 per cent of the shares in both 25FPS and Arm Infra & Utilities. Primat is in turn owned by Spirit Infrapower & Multiventures Private Limited, which went by the name Spirit Textiles till 2017. The largest shareholder in Spirit Infrapower & Multiventures, with 51 per cent stake, is Sushila Goenka, whose husband Subhash Chandra is the chairman of the Essel Group.

This is where the thin line between Chandra’s infrastructure business and his news business vanishes.

The Essel Group’s flagship infrastructure company is Essel Infraprojects, a company saddled with over ₹13,000 crore in debt. Essel Infraprojects is linked to DNA through Spirit Infrapower & Multiventures. The largest shareholder and the holding company of the Essel Infraprojects is PAN India Network Infravest Limited, which holds 61.58 per cent of its shares, while Spirit Infrapower & Multi Ventures holds 12.32 per cent shares.

Spirit Infrapower & Multi Ventures—the ultimate holding company of DNA and in which Chandra’s wife is the largest shareholder—reported zero revenue from operations in 2017-18. Its total income during the year was ₹64.63 crore, classified as “other income” in its books. This “other income” of the company was primarily derived from dividend received from shares and other book adjustments. Technically, it showed losses of ₹259 crore. In 2016-17, its revenues were only ₹67.95 crore. In 2015-16, its revenue from operations was ₹93 lakh.

Yet it had made investments of ₹1,557 crore in its various subsidiaries and associate companies as of 2017-18. Of these current investments, ₹1,062.7 crore was made in PAN India Network Infravest—the holding company of Essel Infraprojects. On the other hand, no substantial investments were made in its subsidiary company—Diligent Media Corporation—which operates DNA newspaper.

As of March 31, 2018, Essel Infraprojects had a debt of ₹13,741 crore. Its long-term borrowings had increased by almost ₹4,500 crore as compared to the previous financial year of 2017. This company has hundreds of subsidiaries and is heavily invested in green energy, toll roads and urban infrastructure projects across India. Almost ₹9,300 crore of Essel Infraprojects’ outstanding debt is from banks and financial institutions, while ₹3,148 crore was raised by issuing non-convertible debentures. Spirit Infrapower & Multiventures, a company with zero revenue from operations, had unsecured long-term borrowings of ₹3,042.30 crore as of 2017-18. This included non-current debt of ₹2,617.30 crore and current debt of ₹425 crore. This money was borrowed by this company from banks and non-banking financial companies by pledging shares of listed companies owned by Subhash Chandra. Chandra’s listed companies include Greatway Estate Private Limited, Zee Learn and Zee Entertainment Enterprises Limited (ZEEL).

It should be noted that Spirit Infrapower & Multiventures picked up loans from mutual funds in which ordinary people invest. For a company which has no definitive source of income, various mutual funds had invested money as of 2017-18. These include mutual funds operated by HDFC, Axis Bank, State Bank of India, ECL, Edelweiss, ICICI Bank and the Aditya Birla group.

This effectively means that if the share prices of the pledged entities like ZEEL and Zee Learn were to crash, these mutual funds could face losses of various amounts based on their exposure. A case in point is Aditya Birla Sun Life Trustee which paid ₹650 crore to Spirit Infrapower & Multiventures on November 24, 2017, for allotment of 10,000 debentures. Similarly, on August 3, 2017, Credit Suisse paid ₹250 crore for 2,500 non-convertible debentures.

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On January 24, 2019, The Wire reported that Zee’s controlling shareholder Essel Group’s name had emerged in a probe linked to large deposits made after demonetisation. The report said the Serious Fraud Investigation Office was probing a company called Nityank Infrapower (formerly Dreamline Manpower) for making deposits of over ₹3,000 crore between November and December 2016. Demonetisation was announced on November 8, 2016.

Following the publication of The Wire’s report, Chandra’s Essel Group reportedly lost market capitalisation worth approximately ₹11,000 crore across stocks—namely, Zee Entertainment Enterprises, Essel Propack, Zee Learn, Dish TV India, and Zee Media Corporation. BloombergQuint reported that shares of the Zee Group of companies tumbled at least 19 per cent, and “shares of broadcaster Zee Entertainment Enterprises Ltd fell nearly 25 per cent—the most since October 2008—to ₹326.60 a piece on National Stock Exchange”. The report also pointed out that the stock was on track for its worst-ever single-day fall since March 1999.

Between January 25 to February 1, the immediate period following The Wire’s report, several lenders, including Credit Suisse, sold part of the Essel Group promoters’ shares in Zee Entertainment Enterprises worth over ₹1,000 crore that was pledged with them.

On February 3, the Essel Group bought an eight-month extension from its consortium of lenders to clean its books. The group stated that it had signed a formal agreement with its lenders—those who had taken pledged shares of the group’s flagship and listed entities, Zee Entertainment Enterprises and Dish TV India—to keep it afloat. This understanding gave Essel Group time until September 30, 2019, to deleverage or pare its debt. According to Firstpost, the agreement was to not declare the company a defaulter as it had admitted that it could service the debt only up to December.

On February 6, DNA’s Delhi edition was shut down—a move that affected at least 15 people from across marketing and circulation teams. At the time, an internal message had stated that this move wouldn’t affect the newspaper’s editorial team: “The management has decided to close Delhi DNA edition with immediate effect. There is no need to panic. Nobody in editorial is losing job. We are now converted into bureau. Management wants to concentrate on main Mumbai edition and get back its lost glory. We will absorb city colleagues into Bureau as much as we can. Take care and continue to work. We are still within 5 leading English language dailies in country. No need to panic.”

Seventeen days after the closure of DNA’s Delhi edition, which began its circulation in the capital in October 2016, DNA’s Jaipur edition was shut down with effect from February 21. The decision was taken to “optimise cost and cut-down losses,” said Diligent Media Corporation Limited, the Bombay Stock exchange-listed entity that operates the newspaper, in an announcement. The paper was founded in Mumbai in 2005.

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When it comes to DNA’s May layoffs, a senior reporter with the newspaper told Newslaundry that 26 pink slips were handed out as recently as May 11. Twenty-five of those laid off were from the editorial team. This was a pan-India move that went against the internal message circulated when the newspaper shut its Delhi edition on February 6.

The senior reporter also said 10-15 of the 26 pink slips were given to employees from DNA’s Mumbai bureau. Of these, four were reporters from the newspaper’s city section, two photographers, a sports reporter, two or three from the design team, and a person who was in-charge of the library. Apart from this, four reporters were removed from the newspaper’s Delhi bureau and two others from Ahmedabad—bringing the total number of editorial layoffs in these two cities to 10. Another reporter from Kolkata was laid off along with a reporter from Kashmir.

The senior reporter said they were told the company is “going for cost-cutting”. “Prior to this, around 70-80 per cent of the marketing and circulation team was removed from Mumbai, Ahmedabad and Delhi, and the Jaipur and Delhi editions had been shut down between January and February. The editorial team was removed from Jaipur, while the Delhi editorial team was retained as a bureau.”

The reporter added: “These [layoffs] taking place in bits and pieces is giving the newspaper a slow death. If you’re shutting down editions, then you should remove editorial too—you’re not even doing that. They’re just kept hanging in limbo. Basically, now the company is looking to break even because they’re not even achieving the operational cost.” The reporter said that in March-April 2019, it was rumoured that the newspaper will be converted into a solely business publication. “No sackings have been made from DNA Money and nobody has been touched on the business team as well, which could mean that the plan is still on the cards.”

According to the reporter, the layoffs are part of a plan. “There was a meeting 15-20 days back, in which the chairman (Chandra) told higher-ups that from the editorial team pan-India, which has a total strength of around 110-120 employees, that the number needed to be brought down to 85.”

The mood in the Mumbai bureau is low, the reporter said, since there’s uncertainty whether the paper will be kept alive or shut down. “That is why reporters are not going much on the field, because everyone is asking us ‘kya ho raha hai (what is happening)’. Still, those who are getting jobs are resigning. Four or five reporters have resigned in the last few months itself. Those who are not getting other jobs are sticking around, thinking that something or the other will materialise internally. The thing is that even during all these chaotic layoffs, the salary has always come on time, just like any other month, and has never gone missing.”

Earlier this year in March, DNA shifted its Mumbai office from its posh Marathon Futures building in Lower Parel to a smaller Zee-owned office in Worli. This was part of a cost-cutting exercise since the Marathon Futures property was on rent.

The reporter said: “DNA has always been like this. Kabhi shuru hota hai aur kabhi bandh hote rehta hai (sometimes it starts and sometimes it closes). But everyone believed that nothing would happen in the Mumbai bureau since this is where the paper was founded and has its strongest presence. In the last 14 years. There have been individual or small sackings at the Mumbai branch as well, but nothing like this mass sacking that took place on May 11. Right now, the paper does have a brand presence but no market presence—that is the main issue. Every day, we reporters are on a mission … but instead of getting stories from outside we are hunting stories from the inside.”

A few weeks before the May 11 layoffs, Chandra had a face-to-face meeting with the Mumbai bureau. This was just two days before he held a meeting with higher-ups in the company where the decision to cut down DNA’s pan-India editorial was supposedly taken. “He said we would have to work hard and that even though he (Chandra) had had many losses in DNA, it was his fault since he had not paid much attention to the paper. He said he was in confusion about whether to shut shop or not, and that it was now up to us, employees, to run the paper efficiently with whatever manpower was available.” Yet, weeks later, the layoffs took place.

One of the reporters who was laid off on May 11 says Diligent Media is not in good shape. DNA’s Ahmedabad bureau currently remains functional with five people. “Three people from editorial were asked to leave on May 11. This included two reporters and one photographer. I don’t think anyone knows what exactly is going on, but I believe that the end (for the paper) is very near.”

The reporter said none of the DNA staffers across India were paid their variable pay—a non-fixed salary component—in the past two years. “Now, the people who are being asked to leave are being paid this backlog amount of money. There is a severe financial issue and cash crunch and the company is bleeding.” Referring to layoffs in the marketing team, the reporter said when this happens “it becomes clear that the paper is not in for the long run”.

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On May 8, 2019, Reliance Mutual Fund (RMF) sold off pledged Zee shares worth ₹410 crore. RMF sold these shares in the open market, resulting in a 9.7 per cent decline in share prices after a five per cent decline the previous day. RMF is the first big fund to sell Zee’s pledged shares after various mutual funds entered into an agreement with Essel Group that they would not exit their holdings till September.

According to the report, in response to an email query, a Zee spokesperson said: “Reliance Mutual is not a part of the consortium of lenders with whom Essel Group has arrived at an arrangement.” Reliance Mutual declined to comment on the sale of Zee shares.

Newslaundry reached out to Sanjeev Garg, the CEO of DNA, and  Essel Group chairperson Subhash Chandra. The Essel Group spokesperson’s response has been produced in full:

“DNA is an integral part of Essel Group’s news media offering and the Group has always invested immense time, resources and energy in enriching it as a news platform, making it relevant and immensely informative for its readers, and will continue to do so. The Group does not wish to comment on any strategic steps taken or decisions made, to further sharpen the mentioned news platform.”

The spokesperson added: “Reliance Mutual is not a part of the consortium of lenders with whom Essel Group has arrived at an arrangement. All lenders who are a part of the consortium, have shown utmost trust in the Group’s approach towards repayment and have given a timeline of September 2019. The Group has already communicated that its stake sale process of ZEEL has reached at an advanced stage and it has already received two non–binding term sheets.”