Friday was carnage on Dalal Street for the Subhash Chandra-led Essel Group. The infrastructure-to-packaging and media conglomerate’s flagship company, Zee Entertainment Enterprises Ltd (ZEEL) saw its share price get hammered on the bourses, tanking 26.43% to end at ₹319.35 apiece.

A news report by BloombergQuint from earlier today, said that Essel Group had lost around ₹14,000 crore of its market value in a single day after a report on the news website The Wire stated that the business group was being investigated for making a large deposit soon after demonetisation in November 2016.

To clear the air, Essel Group chairman Subhash Chandra issued an open letter on late Friday evening. This letter didn’t refer to The Wire’s report in any way. Instead, he pointed to the debt situation of the group’s promoters, which he said was a consequence of some wrong business decision and other systemic issues. He also sought to assuage lenders and asked them to repose faith in the group and its promoters’ ability and intention to repay the debt.

Chandra’s open letter appears to be an indication that the Essel Group is reeling under a severe debt burden, which may soon become difficult to manage if ZEEL’s share price continues to slide like it did on Friday. In November, Chandra and his family, including his two sons – Punit Goenka, ZEEL’s CEO and MD and Amit Goenka, CEO of Zee5 Global – arrived at a decision to sell half of their promoter’s stake (which works out to around 21%) in the media and entertainment company. Though it was speculated that the move was triggered by the promoters’ compulsion to generate funds to repay debt associated with other business ventures, Punit Goenka had said at the time that the expected proceeds from the sale of infrastructure assets would be enough to cover the group’s debt obligations.

From a strategic point of view, the stake sale in ZEEL was envisaged to bring in a global media/technology partner who could help Zee5, the company’s over-the-top video streaming platform go truly international.

Chandra alleges in the letter that certain vested and negative force was out to scuttle his plans to sell a portion of his family’s stake in ZEEL and repay debt, by leading to an orchestrated attack on the company’s share price. In the end, he urges lenders not to panic and “react in an anarchical manner,” and maintains that ZEEL is close to finding a buyer for Zee5.

Here is the full text of Chandra’s letter:

Open Letter from the Desk of Subhash Chandra, Chairman, ZEE & Essel Group

Dear Friends,

At a very early stage of my life, I have learnt the most important lesson from my grandfather, Shri Jagannath Goenka, which taught me that a direct dialogue with the creditors should be maintained, should you find it difficult to repay any sort of loans, and this message is my earnest effort in doing so.

First and foremost, vide this message I would like to express my deepest apologies to our esteemed financial supporters. I have always been the first to accept my faults and we have been consistently accountable of the decisions taken, and I will maintain the same today as well. For the first time in my career of 52 years, I am compelled to apologize to our bankers, NBFCs & Mutual Funds, since I believe that I have not lived upto to their expectations, despite the best of my intentions.

I am extremely certain that there is no promoter in India Inc., who has dared to sell the jewel of his crown, to pay off the liabilities. While the process is still ongoing, there are some forces which are not willing to see us succeed.

That said, I am not indicating that there are no mistakes done from my end, and as always, I am willing to face the consequences of the same. I assure you, that I am not running away from the core issue and will do my best to repay each and every person. The best time for the same, however, is difficult to be mentioned at this stage.

I would also like to state through this message, the key points which have gone wrong:

1. Essel Infra: As most of the infra companies, even we have made some incorrect bids. In usual cases, Infra Companies have raised their hands and have left their lenders with non performing assets, but in our case, My Obsession of not walking away from the situation, has made me to bleed 4000 Cr. to 5000 Cr. of Rupees. Despite the loss making projects, we continued to pay the interest and the principle, by borrowing funds against our shareholdings in Listed Companies.

2. Acquisition of D2H: My recommendation made to my brother Jawahar Goel to buy D2H from Videocon was one more key error, which costed me and Jawahar both, a fortune.

3. When our family business separation was implemented, as the eldest member of the family, I had taken the entire burden of the debts. I believe, it was my mistake to have told myself that “Subhash you can earn and repay the creditors”. Post which, most of my bets on the new businesses have not worked, which led to the increased debt, due to the added interest levels.

4. The situation at hand, became further unmanageable after the IL&FS issue, came to public light. Till then, we were managing our borrowings efficiently. The IL&FS meltdown stopped the roll overs, diminishing our ability to service our borrowings.

5. From May / June 2018 onwards a negative force which was acting against our grip as promoters became strongly active. This was followed by some anonymous letters being sent to all Bankers, NBFCs, Mutual Funds, Shareholders, etc.

6. Whenever we have reported some really good results from the operating Companies, the share prices were intentionally hammered by these negative forces, driving away the investors.

While the above, are the reasons of the current situation, I must also mention what steps were taken from our end:

• We wrote a number of complaints to the Department of Police, Home Minister of Maharashtra, SEBI and other concerned authorities, right since November 2018, but all the efforts did not result in any action.

• Till December, we continued to pay the due interest and principle, to all lenders.

• I have also given my best to expedite the stake sale of ZEE Entertainment. Infact, I have just returned back from London, last night itself, after a series of positive meetings with potential suitors.

The mentioned negative forces, possibly after getting a hint of these positive meetings, have attacked the share price today, with a clear intention of sabotaging ZEE

Entertainment’s strategic sale process.

I must also mention that there is no systematic protection against the insidious attack on us by the mentioned negative forces, but we will continue to seek the support of the system in order to thoroughly investigate the matter.

About the Operating Companies:

• All Operating Companies, especially our most precious one which is ZEE Entertainment, are performing exceptionally well and are under NO stress whatsoever. The debt burden is purely at the promoter level, which is reflecting negatively on the Companies.

• I would like to reiterate that ALL the Companies are performing exceptionally well and there is no problem whatsoever.

Having said the above, I still believe, strongly feel and would like to urge the lenders, not to react in an anarchical manner and to maintain patience, till the process of ZEE Entertainment’s stake sale is completed. Post the sale process, we will be positively able to repay the entire dues, but if the lenders react in a panic situation, it will only hurt them and us.

I would again like to reiterate that I have no intention whatsoever, to keep a single rupee, till all the dues to the lenders are paid.

Yours truly,

Subhash Chandra

Follow us on Facebook, Twitter & YouTube to never miss an update from Fortune India. To buy a copy, visit Amazon.