Financial Daily from THE HINDU group of publications
Saturday, Feb 21, 2004
Zee Telefilms board okays capital restructuring proposals
Mumbai , Feb. 20
THE board of directors of Zee Telefilms Ltd has approved capital restructuring proposals to correctly reflect the intrinsic value of the business.
Investments in overseas subsidiaries standing in the books of Zee have been restructured to correspond to business restructuring of foreign operations, a result of shifting of majority of television channels to India.
As a result, value of the company's overseas investments into this business is now shifted to the country.
Most of Zee channels are now uplinked from India following changes in the government policy. However, three channels - Zee MGM, Zee English and Trendz - within the Zee bouquet are being uplinked from outside the country.
The board has also approved the restructuring of investments in Siticable on account of implementation of head-end in the sky project and deployment of the next generation technology suitable to its revamped business model.
The past business losses at Siticable totalling Rs 149.1 crore would be written off by way of reduction in share capital of Siticable.
As a result of reduction in share capital, corresponding investment by ZTL in Siticable would also get reduced, requiring restructuring by way of adjustments of investments and share premium account correspondingly.
These measures are in tune with the reworked business model of Siticable in which it has prepared itself for offering consumer addressability on the cable platform and provide infrastructural support for the DTH services of ASC Enterprises.
"Both measures are aimed to reflect the true book value of assets in our financial statements. Such restructuring will better reflect the return on capital employed,'' the company said in a press release.
The capital restructuring proposal of the company is subject to necessary approvals of its shareholders and the Bombay High Court.
An extra ordinary general meeting of the members of the company has been convened on March 25, for obtaining approvals.
The company said it has taken operational and strategic initiatives to improve shareholder value.
ZTL had appointed Deloitte Haskins and Sells to value the business of overseas subsidiaries under the changed circumstances.
The value of businesses of overseas subsidiaries is Rs 1231.9 crore, which is lower than Rs 3003.5 crore valued at the time of acquisition of these companies.
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