89-year-old family-run newspaper Gujarat Samachar heading towards a split
Justice (Retd) Deelip Bhosale, ex-Chief Justice of Allahabad High Court, has been appointed as an independent director of the company to improve corporate credibility and governance
Gujarat’s most read daily for close to a century is heading for a split. Running under parent company Lok Prakashan Ltd and first published as part of freedom movement, Gujarat Samachar is now looking at a split between Shreyans Bhai Shah Group and Bahubali Shah Group, as per the latest NCLT order.
Justice (Retd) Deelip Bhosale ex-Chief Justice of Allahabad High Court has been appointed as an independent director of the company to improve corporate credibility and governance. A business succession plan would be framed by the reconstituted Board of Directors. Also, the new board would be expected to appoint two valuers to evaluate tangible and intangible assets of the company for the purpose of splitting up operational activities and non-operational activities between the two groups.
The two brothers Shreyans Bhai of Shreyans Bhai Shah Group and Bahubali Shah of Bahubali Shah Group running the newspaper were partners with 40.75% and 40.62% shareholdings. Between 2001 and 2005 disputes started in families with conflict around bank account signatories and the row only increased in the following years when a committee was formed to resolve issues.
With the failure of the committee to resolves the issues between both parties, Bahubali Shah filed a petition against Lok Prakashan Ltd (Gujarat Samachar) and Shreyans Bhai alongside some other stakeholders in 2017 pleading the court to either bring an end to the mismanagement in the company or split the company and its brand Gujarat Samachar by appointing independent directors and valuers. The same year NCLT passed interim order directing the appointment of an independent
director who would be the chairman of the company to oversee the management. Following which, Shreyans Bhai filed an appeal in the higher court against the interim order. One thing led to the other with NCLT finally passing the present order where the Board of Directors is directed to devise a scheme of splitting up the company between two groups after expiry of six months if the existing deadlock is not resolved.
However, even with all the internal disputes, as per the last available IRS numbers, Gujarat Samachar continued to be the highest read newspaper in the state with a total readership of 91.6 lakh and an average issue readership of 83.55 lakh. However, despite the leadership position, it was alleged that a huge portion of profits of the company were coming from investments in equity and mutual funds and not from the core business of newspapers.
Also there was no major expansion of business in almost one decade. The last new edition launched was the Bhuj edition in 2011 that too after a hiatus of nine years.
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