D B Corp, the media company that runs Hindi daily Dainik Bhaskar in several markets, is facing a challenge to its ownership of the newspaper title just before the launch of its initial public offer.
The challenge has been thrown by Mahesh Prasad Agarwal -- brother of the late Dwarka Prasad Agarwal, whose son Ramesh Chandra Agarwal of D B Corp publishes the newspaper in Madhya Pradesh, Rajasthan, Chhattisgarh, Punjab, Haryana and Chandigarh. Mahesh Prasad publishes Dainik Bhaskar in Jhansi.
Mahesh Prasad and his son Sanjay Agarwal claim that they own 30 per cent in Dwarka Prasad Agarwal & Brothers, the company that holds the Dainik Bhaskar title. Sanjay Agarwal says, "If D B Corp does not fully own the Dainik Bhaskar title, how can it use the brand name to raise money?" The contenders for the title have also written to the Securities and Exchange Board of India to restrain D B Corp from using the brand name in its IPO as there is a lack of clarity on the title's ownership.
However, D B Corp executives claimed that there was no dispute over the title as it had been settled by the Supreme Court order of July 2003. D B Corp Company Secretary K Venkataraman emailed a copy of the Registrar of Newspapers for India letter to the district magistrates of Gwalior, Indore, Jhansi, Jabalpur and Bhopal, which said that its records on the title of Dainik Bhaskar have been updated and the ownership status had been restored to what it was prior to June 29, 1992, when it was registered under five different companies at five locations.
In an emailed response to Business Standard's queries on the dispute over the title ownership, Venkataraman said, 'With a view to clarify the matter raised by you, we are enclosing herewith.a copy of the letter dated June 18, 2004, issued by the Registrar of Newspapers for India mentioning that they have implemented the order dated July 7, 2003, of the Hon'ble Supreme Court of India and also mentioning the five different owners of the title 'Dainik Bhaskar' and every owner is complying with the above said order.'
However, under the 'Risk Factors' section, D B Corp's Draft Red Herring Prospectus states 'the ownership of the newspaper Dainik Bhaskar has been challenged by certain relatives of one of our promoters as well as by other persons. Although pursuant to the letter of the Registrar of Newspapers for India dated June 18, 2004, based on the order of the Honourable Supreme Court of India dated July 7, 2003, our title to the newspaper Dainik Bhaskar has been established, we cannot assure you that such persons will not raise any similar or other disputes in the future. In the event such disputes are raised and subsequently determined against our company, the same could have an adverse impact on our reputation and goodwill.'
The prospectus also mentions that the company may 'face restrictions in publishing the newspaper Dainik Bhaskar in other states of India in future.' It states that 'as per applicable laws, we cannot presently publish a newspaper titled Dainik Bhaskar in the state of Uttar Pradesh where certain of the other parties operate. We also cannot assure you that other parties will not commence publication of the newspaper Dainik Bhaskar in a state in India where our company does not currently operate. We also cannot publish Dainik Bhaskar from certain districts of Madhya Pradesh and the state of Maharashtra under an arrangement with other parties.'
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