Network 18 has finally realized that it’s “Senior Professional Welfare Trust” that owes it more than 550 cr. is mostly a dud borrower. After giving it that much money as a loan, the company has now had to write off Rs. 380 cr. as a provision because they are unlikely to recover money from it.
Let’s recap:
  • The Network18 Senior Professional Welfare Trust is an entity controlled by past Network18 promoter and CEO, Raghav Bahl, which was “supposed” to be for the benefit of senior management of the company.
  • In 2011, we noted that Network18 pledged its shareholding in subsidiaries so that this “trust” could borrow money, from financial entities, to the tune of 100s of crores. The trust used the money to buy shares of Network18 itself.
  • In 2012’s annual report, we noted that Network18 then loaned this trust more than Rs. 500 crores (which apparently used the money to repay the loans it had taken)
  • In 2013, Network18 continued that 500 cr. loan. By this time, the “Trust” had shares of Network18 which were worth only Rs. 50 cr. and it looked unlikely that the trust could ever repay.
  • And in 2014, Reliance confirmed that it actually owned Network 18 (since 2012)
  • What happens now is the logical consequence.