Tag: ZEEL

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ZEEL to Merge With Sony Pictures Networks India – Top Indian Market News

Zee Entertainment announces merger with Sony Pictures Networks India

The Board of Directors of Zee Entertainment Enterprises Ltd (ZEEL) has given in-principal approval for the company’s merger with Sony Pictures Network India. Both companies have entered into a non-binding term sheet to combine linear networks, digital assets, production operations, and program libraries. The merged entity will be a publicly listed company in India. Sony’s shareholders will infuse $1.575 billion (~Rs 11,600 crore) and hold a 52.93% stake in the merged entity. Meanwhile, ZEEL’s shareholders will hold a 47.07% stake.   

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KPIT Tech to acquire 25% stake in Germany-based Future Mobility

The Board of Directors of KPIT Technologies has approved the acquisition of a 25% stake in Germany-based Future Mobility Solutions GmbH (FMS). The company will acquire the remaining stake over the next three years. The total consideration for the acquisition will not exceed €15.6 million (~Rs 135 crore). FMS is engaged in software and feature development in autonomous driving, advanced driver-assistance systems (ADAS), and vehicle safety.

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IDFC shareholders reject Vinod Rai’s reappointment to the board

The shareholders of IDFC Limited have rejected a resolution to re-appoint Vinod Rai as a non-independent, non-executive director of the company’s board. At IDFC’s annual general meeting, 62.3% of the shareholders voted against the resolution while 37.7% voted in support. Rai is currently the non-executive chairman of IDFC, and his term as an independent director ended on July 30.

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Ashoka Buildcon to acquire 49% stake in Ashoka Highways (Durg)

Ashoka Concessions (ACL) has entered into a share purchase agreement with Highway Concessions One (HC1) for purchasing a 49% stake held by HC1 in Ashoka Highways (Durg) Ltd (AHDL). The aggregate consideration for the acquisition is Rs 5 crore. ACL is a subsidiary of Ashoka Buildcon Ltd. The company already holds 51% of the issued, subscribed, and paid-up capital of ADHL.

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Excise Dept asks SpiceJet to pay GST dues of Rs 285 crore to Haryana

The Excise and Taxation Department of Haryana has asked SpiceJet Ltd to clear Goods and Services Tax dues of Rs 285.86 crore after rejecting the airline’s proposal to clear its admitted dues in installments. As per a tax authority order, SpiceJet owes Rs 163.22 crore in forward charge liability and a reverse charge liability of Rs 122.64 crore from 2019-20 till September 7, 2021.

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Jubilant Ingrevia divests 10% stake in Safe Foods Corp

Jubilant Life Sciences International-Singapore, a wholly-owned subsidiary of Jubilant Ingrevia, has divested its 10% stake in US-based Safe Foods Corporation. The consideration received for the stake sale is $18.2 million (~Rs 134.2 crore). Jubilant Ingreviais is a global integrated life science products and innovative solutions provider that serves the pharma and agrochemical industries.

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Ramkrishna Forgings secures order worth Rs 65 crore in mining & earthmoving segment

Ramkrishna Forgings Ltd has secured an order worth Rs 65 crore from an Indian arm of Hitachi for supplying mining and earthmoving components. The order will be executed in FY22 and FY23. Kolkata-based Ramkrishna Forgings manufactures and supplies open and closed die forgings of carbon and alloy steel, micro-alloy steel, and stainless steel.

Paras Defence IPO subscribed 40.57 times on second day

The Rs 170.78 crore initial public offering (IPO) of Paras Defence and Space Technologies Ltd was subscribed 40.57 times on the final day of bidding. The IPO has received bids for 28.96 crore equity shares against the issue size of 71.40 lakh shares. Retail investors have subscribed 68.57 times against their reserved portion. Non Institutional investors (NIIs) and Qualified Institutional Buyers (QIBs) have subscribed 26.32 times and 1.67 times, respectively, against their reserved portions. 

To learn more about the IPO, click here.

Route Mobile to raise Rs 2,000 crore via QIP

The Board of Directors of Route Mobile Ltd has approved a proposal for raising up to Rs 2,000 crore. The company will issue equity shares or non-convertible debt instruments on a private placement basis in one or more rounds. Route Mobile’s board will convene an Extraordinary General Meeting (EGM) on October 16, 2021, to seek the approval of the members for the proposed fund-raising activities. 

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Editorial

What Led to the 40% Rally in ZEEL?

The shares of India’s largest media house, Zee Entertainment Enterprises Ltd (ZEEL), surged 40% to hit Rs 261.55 on Tuesday. It was a stellar intraday rally. The shares of its group companies such as Zee Media (+5%) and Zee Learn (+20%) were also locked in their respective upper circuit limits on Tuesday. 

Unfortunately, ZEEL has found itself in the midst of a complicated boardroom battle. In this article, we shall analyse the events that transpired over the past few days.

Concerns Raised by IiAS

On September 10, proxy advisory firm Institutional Investor Advisory Services (IiAS) raised fresh concerns at ZEEL. They asked the media company’s shareholders not to vote for the reappointment of two independent directors on its board— Manish Chokhani and Ashok Kurien. They were both members of the company’s audit and remuneration committees. Chokhani and Kurien had resigned from their respective posts ahead of ZEEL’s Annual General Meeting (AGM) on September 14.

In its report, IiAS pointed out that ZEEL’s Nomination and Remuneration Committee (NRC) had approved a 46% increase in CEO Punit Goenka’s pay for the financial year 2020-21, during a time when employees did not receive raises. Moreover, the CEO’s revised pay was much higher than what shareholders had approved back in the AGM of 2020. The advisory firm also warned shareholders against the adoption of ZEEL’s financial statements, citing serious corporate governance issues. 

The problems did not stop there. Ashok Kurien is classified as one of ZEEL’s promoters. However, IiAS alleged that the company had reclassified him as a non-promoter without mandatory regulatory filings or shareholder approval. Further, both Chokhani and Kurien failed to address and deal with crucial governance concerns that led to the resignation of several independent directors in the past.

Interestingly, IiAS had raised concerns over Goenka’s pay revision last year as well. It had asked shareholders to vote against the CEO’s reappointment at ZEEL’s 2020 AGM, citing weak oversight and control, loan & investment write-offs, sketchy related party transactions, and pay revision. Thus, a lot of red flags have been raised with respect to the company’s Board of Directors and management.

What’s Next for ZEEL?

Invesco Developing Markets Fund and OFI Global China Fund, which together hold a 17.88% stake in ZEEL, have now called for an Extraordinary General Meeting (EGM) of shareholders to pass important resolutions. This includes the removal of CEO Punit Goenka and the appointment of six new independent directors. As per reports, the Board of Directors of Zee Entertainment Enterprises may call an EGM within three weeks. If the board fails to call for a meeting, investors or shareholders may call an EGM themselves within three months.

Possible Future Scenarios

Market analysts have narrowed down three possible scenarios:

  1. There could be a change in ZEEL’s board, followed by a change in management. This scenario assumes the appointment of a new Chief Executive Officer (CEO) by a new board. There is also a possibility that the new board would receive interest from strategic investors to acquire a majority stake and management control in ZEEL.
  1. There could be a change in the media company’s board, but with continuity in its management. Punit Goenka would continue as the MD and CEO. However, they would seek better cash generation and tighter control on capital allocation.  
  1. There would be continuity of management with a new set of investors. This case assumes that existing shareholders would exit ZEEL, and a new set of investors will emerge by backing Punit Goenka as MD & CEO.

Conclusion

ZEEL is one of India’s largest media and entertainment companies, with nearly 46 channels broadcasting in 11 languages. As per reports, the change in management is unlikely to affect the company’s brand and market position. Moreover, the appointment of a new professional board and leadership team can be considered a positive move. This may have been a trigger for the stock’s breakout/rally on Tuesday. 

Over the past few years, ZEEL has reinvented itself by reducing its debt and improving financial performance. The company’s OTT platform, ZEE5, is the largest domestic non-sports platform with ~8 crore monthly average users. While ZEEL has started seeing an improvement in its business prospects, the move by major shareholders was backed by a narrative that highlights corporate governance issues. These issues have time and again damaged the company’s reputation.

The staggering 40% rally of ZEEL’s shares was fuelled by bulk deals from ace investor Rakesh Jhujhunwala’s Rare Enterprises and BofA Securities Europe SA. On Sept 14, Rare Enterprises bought 50 lakh shares (0.52% stake) of ZEEL at Rs 220.44 per share through bulk deal transactions on NSE. Meanwhile, BofA Securities purchased 48.65 lakh shares (0.51% stake) at an average price of Rs 236.2 per share.

If you wish to learn more about ZEEL, you can read our in-depth company analysis published in June. What are your views on the entire ZEEL saga? Are you invested in the company? Let us know in the comments section of the marketfeed app.

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Market News Top 10 News

WPI Inflation Rises to 11.39% in August – Top Indian Market News

WPI inflation rises to 11.39% in August

India’s wholesale inflation, measured by the Wholesale Price Index (WPI), spiked to 11.39% in August 2021. WPI grew 11.16% in July and 12.07% in June. The food articles segment witnessed a (-)1.29% change in August, as prices of vegetables and fruits contracted. Inflation in the fuel and power segment stood at 26.09% in August, compared to 26.02% in July. The manufactured products segment registered inflation of 11.39% in August. The data was released by the Ministry of Commerce & Industry.

Read more here.

Invesco calls ZEEL EGM for removal of MD, directors

Invesco and OFI China, which together hold a 17.88% stake in Zee Entertainment Enterprises Ltd (ZEEL), have called for an extraordinary general meeting (EGM) of shareholders to pass resolutions, including the removal of current CEO Punit Goenka and the appointment of new independent directors. The move comes on the back of institutional proxy advisory firm IIAS calling for investors to reject the resolution for reappointment of certain directors to ZEEL’s board at the Annual General Meeting (AGM).

Read more here. 

Tata Motors signs pact with Tata Power for rooftop solar project in Pune

Tata Motors has signed a solar power purchase agreement with Tata Power to install and operate a 3 megawatt (MW) solar rooftop project at its passenger vehicle plant in Pune. The project will generate nearly 45 lakh kilowatt-hour (kWh) per year and reduce carbon emission by ~3,538 tonnes per year. Tata Motors said it will continue to introduce measures to conserve energy at its manufacturing facilities, optimise the consumption of non-renewable fossil fuels, and lower operating costs.

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Escorts partners with IndusInd Bank to provide affordable loans to farmers

Escorts Ltd has signed a Memorandum of Understanding (MoU) with IndusInd Bank to provide affordable financial offerings to the farming community. Both entities will jointly launch various financial programs to help customers invest in modern farm machinery to enhance their productivity and income. IndusInd Bank will utilise its understanding of rural customers and penetration throughout India to help Escorts achieve its goals of supporting the farming community.

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Gravita starts operations at aluminium recycling unit in Mozambique

Gravita India’s step-down subsidiary in Mozambique has commenced commercial production of aluminium from its new recycling plant. The unit has an aluminium recycling capacity of 4,000 million tonnes per annum (MTPA). It also has a lead recycling facility with a capacity of 4,500 MTPA. Gravita’s subsidiary is in the process of setting up a plastic recycling unit in Mozambique (East Africa). The company expects to achieve additional revenue of ~Rs 50 crore per annum and gross margins of 18% from the new recycling plant.

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HCL Tech enters into strategic partnership with HANCOM

HCL Technologies Ltd has signed a strategic partnership with South Korea-based HANCOM Inc. The two companies will share advanced software technology solutions and establish a mutual bridgehead for overseas expansion. HCL Tech will support training for software development at HANCOM’s research & development (R&D) center in India. The IT firm will also share its development studio and provide HR support to meet demand and development capacity at the R&D center.

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BLS International partners with NHA to process Ayushman Bharat cards across India

The National Health Authority (NHA) has selected BLS International Ltd for processing Ayushman Bharat cards under Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). The scheme offers financial security against medical treatment costs, medicines, diagnostics, and pre-hospitalisation expenses. BLS International Services is an outsourcing service provider for government and diplomatic missions worldwide

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Laurus Labs partners with Unitaid, CHAI to develop pediatric HIV drug

Laurus Labs has partnered with Unitaid and the Clinton Health Access Initiative (CHAI) to develop, commercialise, and register the second and third-line HIV treatment darunavir boosted with ritonavir (DRV/r) for children. Unitaid and CHAI will work with Laurus Labs to ensure Children Living with HIV/AIDS (CLHIV) have access to the generic, fixed-dose combination version of DRV/r.

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Tata Steel commissions India’s first-ever carbon dioxide capture unit

Tata Steel Ltd has commissioned a carbon capture unit at its plant in Jamshedpur. The unit can capture up to five tonnes of carbon per day. Tata Steel has become India’s first steel company to adopt such a technology that extracts carbon dioxide (CO2) directly from the blast furnace gas. The steel company will reuse the captured CO2 on-site to promote a circular carbon economy. The project has been executed with technological support from Carbon Clean, a global leader in low-cost CO2 capture technology.

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HG Infra declared lowest bidder for Rs 448 crore road project in Rajasthan

HG Infra Engineering has been declared as the lower (L-1) bidder by Public Works Department (PWD), Rajasthan, for a road project. The project involves the development and maintenance of the Bewar Masuda Goyala section of SH-26A, Arian Sarwar section of SH-7E and NH-12, and Laxmipura Dora Dabi Ranaji ka Gudha Section of SH-115. The total length to be constructed is 160.63 km. HG Infra’s bid project cost is Rs 448.11 crore. The project has to be completed within 550 days.

Read more here.

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Market News

ZEE reports net Q4 loss of Rs 765.82 crores

Zee Entertainment Enterprises Ltd (NSE: ZEEL) reported a net loss of Rs 765.82 crore for the quarter ended March 31 (Q4 FY20). The company had posted a profit of Rs 292.53 crores for the corresponding quarter of the previous financial year.

ZEELQ4 FY20Q3 FY20Q4 FY19QoQ%YoY%
Total Income1991.742119.62076.06-6.03%-4.06%
Total expenditure2677.771608.571612.666.47%66.05%
Net Profit/Loss-766.68349.43291.88-319.41%-362.67%
Values in crore rupees

ZEE’s operating revenue stood at Rs 1951.74 crores in Q4 against Rs 2048.65 crores in Q3 of FY20, down 4.73% QoQ (quarter-on-quarter) and down 3.4% YoY to Rs 1,951.1 crore. This fall was mainly attributed to the loss in advertising revenues due to the unexpected situations which followed the COVID-19 induced slowdown in the industry.

A one-time provision of Rs 343.3 crore was included  for  “subscription and other assets where recovery has become doubtful on account of COVID-19 led uncertainty”, as said by ZEE.

ZEE in its BSE filing said that it achieved a 33% growth in domestic subscription revenues,the highest in the industry. Some key takeaways from the filing were :

  • ZEEL exited FY20 as the market leader with 18.3% viewership share.
  • ZEEMUSIC Co, a subsidiary of ZEE, maintains a highly successful YouTube channel with 55 million subscribers and 800 crore total views.
  • ZEESTUDIOS was the 3rd largest movie studio in the country in terms of box office collection.
  • ZEE5, the online streaming service, recorded 6.31 crore global monthly active users(MAUs).
  • Multiple domestic channels were introduced despite lockdown and the company expects it to boost revenues.

ZEE is expected to grow in the coming years alongside the entertainment industry. The ever-increasing demand for content will lead to advertisers will gradually returning. What is worrying is the investment of ZEE into new TV channels instead of focusing on online content distribution. With more of India population on the internet , ZEE5 and ZEEMUSIC can be pushed to become the main income generating platforms for the company. It is time to question whether ZEE is yet to get a wake-up call that online streaming is the future for the entertainment industry.

Shares of Zee Entertainment Enterprises(NSE:ZEEL) on Friday ended down 4.84% to Rs 151.25 in anticipation of poor results. You can read the complete BSE filing here.