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Essel Group may divest up to 50% of promoter share in Zee Entertainment

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Mumbai : Subhash Chandra, a pioneer in satellite broadcasting in India, is likely to divest a chunk of his stake in Zee Entertainment Enterprises (ZEEL), India’s first home-grown private broadcast network.

The Essel Group, which holds 41.6 per cent in the media and entertainment company, is looking to divest up to 50 per cent of its promoter share (approximately 20.8 per cent of the whole) in the entertainment firm. At today’s value, the promoters’ 41.6 per cent stake is worth Rs 175 billion.

In a statement released to the stock exchanges, the promoters said: “It has been decided to undertake a strategic review of Essel’s shareholding in ZEEL with a view to maximise value for the business.

 

The proposed transaction to divest up to 50 per cent of Essel’s holding to such a partner, is expected to address Essel Group’s capital allocation priorities and will allow ZEEL shareholders to capture the full value of India’s largest entertainment broadcaster with an ever strengthening bouquet.”

Essel Group to divest up to 50% of promoter share in Zee Entertainment Essel has appointed Goldman Sachs Securities (India) its investment banker and New York-based boutique investment bank LionTree, which specialises in mergers and acquisitions, international strategic advisor for this exercise.Essel expects the outcome of the strategic review to be concluded by March-April next year.

The changing media landscape, technological advancements and convergence are some of the reasons the promoters decided to undertake the strategic review of shareholding. Chandra and his family, along with advisors, had met during the Diwali weekend to undertake a strategic review of its businesses. The family realised it needed “to accelerate efforts to stay ahead of fast-changing trends”.

The ZEEL promoters identified two main gaps in the business — investment in technology in an era of convergence and access to the global stage. The company is thus focusing on a strategic partner which has a strong presence in the global media and entertainment tech space.

“We hope this transaction will meet the objectives of the Essel Group as well as the minority shareholders of ZEEL …. Regardless of the outcome of this exercise, Essel is committed to create significant long term value in ZEEL,” the statement added.

Essel Group to divest up to 50% of promoter share in Zee Entertainment Managing Director and Chief Executive Officer Punit Goenka said: “While we could have acquired a tech company, it would have taken several more years of investment to catch up and compete with global players. Instead, we feel that partnering one of the leaders will give us better and faster access to their technological capabilities and the global market, while ZEEL in turn can provide the partner access to the Indian market.” He added ZEEL was in talks with potential partners through investment bankers.Punit Goenka and Amit Goenka, chief executive officer, international broadcast business, ZEEL, are Subhash Chandra’s sons.

The promoters’ meeting had noted that with the current 1.3 billion viewers globally and close to 50 million digital viewers growing at a fast pace, ZEEL is well placed to benefit from current market trends due to its strong brand and bouquet of domestic and international channels. Adding to that strength, its OTT platform ZEE5 will further enable the company to leverage the benefits of changing video consumption trends, contributing significantly over the coming years.

The management of ZEEL under Punit and Amit Goenka has been well appreciated by all stakeholders and reflected in the performance of the company, the statement said.

Speaking on where the business stands today, Jawahar Goel said: “Punit and Amit have made the right sustainable investments for the future and the business is growing ahead on all fronts in a focused and disciplined way.” Goel, chairman and managing director of group company Dish TV, is Subhash Chandra’s younger brother.

ZEEL reported revenues of Rs 16.77 billion for the quarter ended September 2018, while the net profit stood at Rs 3.77 billion.

When asked if the move to divest promoter stake is also a way to prepare for the emergence of Reliance Jio as a competitor in the distribution and entertainment space, Punit Goenka said, “We have had competitors with deep pockets earlier as well. Fox (Star India) had deep pockets and so did Viacom (Viacom18 in India). This move is more about getting access to global technology and evolving into a media tech company as efficiently as possible.”


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Cabinet clears setting up of centralised GST appellate authority

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New Delhi: The Union Cabinet on Wednesday approved setting up of a centralised Appellate Authority for Advance Ruling (AAAR) under the goods and services tax that would decide on cases where there are divergent orders at the state level.

The setting up of a centralised AAAR would require amendments to the GST Acts. The centralised authority as an appellate body will only take up cases wherein the Authority for Advance Ruling (AAR) of two states have passed divergent orders.

The Goods and Services Tax (GST) Council, headed by Finance Minister Arun Jaitley, and comprising state counterparts, in December decided to establish the centralised AAAR.

 

“The Cabinet has cleared the GST appellate authority,” a source said after the meeting of the Cabinet headed by Prime Minister Narendra Modi.

In view of the confusion created by contradictory rulings given by different AARs on the same or similar issues, the industry had been demanding a centralised appellate authority that could reconcile the contradictory verdicts of different AARs.

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Urbanisation to be big driver of Indian economic growth: Kant

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Davos: Urbanisation will be a big driver of economic growth in India going forward, supported by favourable macroeconomic factors, accelerated infrastructure building and continuing reforms, NITI Aayog CEO Amitabh Kant said.

Speaking here at an event on sidelines of the World Economic Forum Annual Meeting, he also said the Indian economy may even exceed the IMF growth forecast of 7.5 per cent for the country.

Kant said IMF has forecast 7.5 per cent growth for India despite a gloomy outlook for the global economy and this itself is good, though there are expectations that this estimate would be surpassed. He said India is giving a big push to urbanisation with more than 100 smart cities being developed.

 

The country is also using technology in a big way to change the way business and governance is done, he added. Besides a massive infrastructure building is happening, bank credit flow has rebounded and macroeconomic factors like inflation and fiscal deficit are also being supportive, Kant said.

DIPP Secretary Ramesh Abhishek noted that states are competing with each other to attract investments and all political parties have adopted the economic reform process. He listed various reform initiatives undertaken in India, including on areas like ease of doing business, FDI, manufacturing and taxation.

They were speaking at Institutional investors’ breakfast roundtable, organised by the industry chamber CII and Kotak Mahindra Bank. Other participants included CII Director General Chandrajit Banerjee and leaders from Indian and foreign companies.

On questions about some persisting issues in doing business including on tax and insolvency related issues, Abhishek said a lot of efforts have been put in to remove all bottlenecks and starting a business doesn’t take more than a day. Besides, special provisions have been made for startups and angel investors, he added.

Kant said efforts are also being made to remove all physical intervention and digitise the entire process of inter-ministerial and inter-department consultations to fast-track the decisions.

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India will surpass China, says Raghuram Rajan

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Davos: India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries, former RBI Governor Raghuram Rajan said.

Addressing a session on Strategic Outlook for South Asia, Dr Rajan said that the Indian economy would continue to grow while growth rate is slowing down in China.

“Historically, India had a bigger role in the region but China has now grown much bigger than India and has presented itself as a counter-balance to India in the region,” Dr Rajan said at the WEF Annual Meeting 2019.

 

“India will become bigger than China eventually as China would slow down and India would continue to grow. So India will be in a better position to create the infrastructure in the region which China is promising today. But this competition is good for the region and it will benefit for sure,” he said.

The comments assume significance with China working on a lot of infrastructure projects across the region. In 2017, India became the sixth largest economy with a GDP of $2.59 trillion while China was the second large with a GDP of $12.23 trillion.

At the same session, Nepal PM K.P. Sharma Oli cited collaboration with China as well as India as reasons for the economic growth.

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