Chandra's foreign holdings to be transferred to Indian investment company

MUMBAI: Zee Telefilms Ltd. (ZTL) chairman Subhash Chandra will be transferring his foreign holdings to an investment company in India. Under ZTL's demerged restructuring into separate entities, this is seen as a move to comply with the uplinking regulations on foreign holdings in news channels which are capped at 26 per cent.

The total foreign shareholding in Zee Telefilms is 54.69 per cent. While the holding of foreign promoters is 22.77 per cent, foreign institutional investors (FIIs) have 31.51 per cent.

As part of the corporate restructuring, ZTL is spinning off its news and regional channels into Zee News Ltd (ZNL). According to the formula that has been worked out, 137 ZNL shares will fetch 100 shares in ZTL.

"Chandra will be transferring his foreign holdings to an Indian registered investment company. This will help Zee comply with the uplinking guidelines for the news business," says Essel Group chief executive officer of corporate strategy and finance Rajiv Garg.

The shares to be issued to FIIs in ZNL will have to fall within the 26 per cent cap. Foreign shareholders will, thus, be given preference shares of equivalent value to bring it under limit. Along with this, the promoters' foreign holding will be transferred to an investment vehicle in India.

The foreign holding of promoters is primarily through Delgrada Ltd. which has 19.98 per cent stake in Zee Telefilms. Delgrada is an overseas corporate body (OCB) owned by Chandra. The balance 2.79 per cent is held by Lazarus Investments Ltd.

In the fiscal ended 31 March 2006, Zee posted a turnover of Rs 2 billion from its news and regional channels line of business and a net profit of Rs 161 million. "Zee News Ltd targets a turnover of Rs 2.5 billion in FY07 and Rs 2.9 in FY08," says Garg.

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