Diligent Media Corporation 's Board of Directors has approved a significant financial restructuring plan, involving the reduction and cancellation of 4.36 billion preference shares valued at ₹436.26 crore. This strategic move aims to streamline the company's capital structure and address its financial obligations.

Key Details of the Scheme

The approved Scheme of Reduction of Preference Share Capital includes the following main points:

• Cancellation of 4,36,26,56,265 6% Non-Cumulative, Non-Convertible Redeemable Preference Shares (NCRPS) with a face value of ₹1 each.
• ₹173.40 crore (₹0.40 per share) will be adjusted against outstanding Inter Corporate Deposit Agreements.
• The remaining ₹262.86 crore (₹0.60 per share) will be entirely reduced.

Impact on Share Capital

Post-implementation of the scheme, Diligent Media Corporation's share capital structure will undergo a significant reorganization:

It's important to note that there will be no change in the company's authorized share capital or the number of equity shares.

Rationale and Benefits

The company cites several benefits for this capital reduction:

1. Liquidity Preservation: The non-cash settlement preserves the company's liquidity by setting off NCRPS liability against existing obligations.
2. Reduced Future Liability: Substantially reduces future liability related to NCRPS redemption.
3. Financial Certainty: Brings commercial finality to NCRPS redemption liability and ICD Agreement obligations.
4. Cost Avoidance: Prevents potential future litigation costs between the company and NCRP shareholders.

Shareholder Impact

The scheme is designed to have minimal impact on equity shareholders:

• No change in the number of equity shares or their proportion.
• No alteration to the equity shareholding pattern.
• The scheme is not expected to adversely affect the company's ability to meet its financial commitments.

Regulatory Compliance

The decision was made in compliance with regulatory requirements:

• Approved by the Board of Directors.
• Based on recommendations from the Audit Committee and Committee of Independent Directors.
• Follows an Arbitration Award.

The company will now seek necessary statutory and regulatory approvals to implement the scheme. Diligent Media Corporation has assured that this restructuring will benefit the company, its shareholders, and creditors as a whole, while maintaining its ability to fulfill financial commitments in the ordinary course of business.

This strategic capital restructuring represents a significant step towards optimizing Diligent Media Corporation's financial position and ensuring long-term stability.

Diligent Media Corporation Limited , the digital media company behind DNAIndia.com, has reported a net loss of Rs 188.60 lakhs for the quarter ended June 30, compared to a profit of Rs 245.26 lakhs in the same period last year. The company's financial performance has taken a hit, with revenue from operations declining significantly to Rs 78.67 lakhs from Rs 296.30 lakhs year-over-year.

Financial Performance

The company's total income for Q1 stood at Rs 80.80 lakhs, down from Rs 660.61 lakhs in the corresponding quarter of the previous year. The decline in revenue was accompanied by a reduction in total expenses, which decreased to Rs 270.87 lakhs from Rs 416.33 lakhs in the same period.

Management Changes and Appointments

In a series of strategic moves, Diligent Media's Board of Directors has approved several key appointments:

1. New CEO: Mr. Chitresh Sehgal has been appointed as the Chief Executive Officer of the company, effective August 1. Sehgal, a seasoned media professional with over 10 years of experience specializing in web-based news, holds a Bachelor of Arts (Honours) degree in Political Science from Delhi University.

2. Senior Management Elevations:

   • Ms. Kusum Lata, currently serving as Team Lead at DNA Hindi, has been elevated to a Senior Management position.
   • Ms. Srishty Choudhury, the Editor of DNAIndia.com, has also been promoted to a Senior Management role.

3. Board Re-appointment: The Board has recommended the re-appointment of Mr. Ronak Jagdish Jatwala as a Non-Executive, Non-Independent Director, subject to shareholder approval at the upcoming Annual General Meeting on August 26.

Financial Challenges and Ongoing Arbitration

The company continues to face financial challenges, with accumulated losses exceeding its paid-up capital and reserves. However, management maintains that the company has adequate liquidity to meet its obligations, citing higher current assets compared to current liabilities.

An ongoing arbitration matter involves inter-corporate deposits (ICDs) of Rs 17,340.27 lakhs with Veena Investments Private Limited (VIPL). The Board has given in-principle approval to a proposal for setting off the redemption of preference shares worth Rs 43,626.56 lakhs against VIPL's obligation to repay the ICDs, subject to the final outcome of arbitration proceedings.

Future Outlook

Despite the current financial setbacks, Diligent Media's management remains focused on expanding its digital media operations. The company's ability to continue as a going concern is significantly dependent on the successful expansion of these operations and the generation of sufficient cash flows.

As Diligent Media navigates through these challenges, the newly appointed leadership team will play a crucial role in steering the company towards financial stability and growth in the competitive digital media landscape.