Astro’s India digital venture faces problems

NEW DELHI: Malaysia’s Astro Group is entangled in a dispute with yet another portfolio company here.

According to a report in the Economic Times of India, minority stakeholders in the Singapore-and India-based TO THE NEW Digital are looking at a management buyout of Astro’s entire 85 per cent stake in the company over the dispute.

The company is a subsidiary of TO THE NEW Ventures, which also operates ecommerce brand American Swan and digital video network #fame.

Astro, said the ET report, had invested about USD60 million (RM240 million) in TTN Ventures, including about Rs 80 crore (RM48 million) in TTN Digital, a provider of digital marketing, technology and content solutions.

ET quoted a spokesperson for TTN Digital as saying Astro had not paid the company for the technology and digital marketing services it provided.

Astro is also accused of reneging on “funding commitments”.

“We approached Astro about two weeks back to discuss the possibility of a management buyout of their stake in TO THE NEW Digital. However, we are yet to get any response from them till date,” Raman Mittal, chief marketing officer at TTN Ventures was quoted by ET as saying.

The dispute between Astro and TTN Digital comes a little less than two months after ET reported that Astro was engaged in a battle with another portfolio company, GETIT Infoservices, which owns online classifieds Ask-Me and ecommerce store AskMebazaar.

According to ET, minority stakeholders in Ask-Me Group, in which Astro owns about 90 per cent stake, have accused the Malaysian investor of not clearing dues of about Rs 300 crore (RM180 million).

Astro, which had first invested in TTN Digital in 2012, said it did not owe an “unlimited obligation” to fund any company indefinitely.

“To date, Astro Overseas Limited (AOL) has invested more than USD60 million into TTNV, of which more than USD25 million was provided as a working capital loan despite continued underperformance of most of its investments,” a spokeswoman representing Astro told ET in an email reply.

“It is highly unlikely that AOL will be able to fully recover its investments in the company.” As for the management buyout offer, Astro said it was fundamentally flawed, according to the ET report.

“It does not include a funding plan supported by a credible backer. Instead, the MBO offer requires AOL to continue funding the businesses which are heading toward insolvency.

AOL is keen to exit the company if the founders/promoters are willing to infuse funds, or identify any new investors as part of their MBO proposal, to keep it as a going concern,” Astro was quoted as saying.

Mittal was quoted by ET as saying,”No investor is identified right now as the company is profitable. We will endeavour to pay Astro through internal cash flows and get an investor over the next couple of years,”

He added that securing third-party funding was an issue because Astro had a majority stake.

“No investor will come into a company to where the existing backer holds an 85 per cent stake,” he said.