Dr Subhash Chandra Exclusive Interview: In an important announcement set to boost shareholders’ confidence, Zee Entertainment Enterprises Ltd (ZEEL) Founder and Chairman Emeritus Dr Subhash Chandra told Zee Business Managing Editor Anil Singhvi the Zee Board has approved a Rs 2,237 crore promoter investment plan. In an exclusive interview with Singhvi, Dr Chandra said that the promoter stake will be taken beyond 18 per cent. ZEEL’s promoter group shareholding stood at 3.99 per cent, as of March 31.
In the interview, Dr Chandra not only discussed the company’s future mega plans but also told the story of the difficult period when the promoter stake had to be sold after the company failed to pay debt. Speaking about the promoter investment of Rs 2,237 crores in the company, Dr Chandra said that the investment is proof of his unwavering commitment to the company and its shareholders.
In the interview, Dr Chandra not only discussed the company’s future mega plans but also told the story of the difficult period when the promoter stake had to be sold after the company failed to pay debt. Speaking about the promoter investment of Rs 2,237 crores in the company, Dr Chandra said that the investment is proof of his unwavering commitment to the company and its shareholders.
Struggle of past and resolve to repay the debt
Dr Chandra recalled the period when he first failed to fulfil his commitment to the financial markets on January 25, 2019.
He said it was a period when he sold a 44 per cent stake in ZEE to pay off debt of over Rs 40,000 crore. In the process, the promoters’ stake in ZEE was reduced to just 4 per cent.
Dr Chandra admitted that the group’s other troubles, especially the mistakes in the infrastructure business, also affected ZEE Entertainment.
He said, “The infrastructure business was a big mistake, which was handed over to the wrong people.”
But after paying off the debt, he is now putting the recovery amount back into the company.
Promoters’ mega plan: Rs 2,237 crore ‘booster dose’
To put this belief into practice, the board of ZEE recently took a historic decision, Dr Chandra said.
On JP Morgan’s advice, one of the world’s largest investment banks, the board approved the issuance of 16,95,03,400 convertible warrants to the promoter group.
1. What is the whole deal?
The promoter group will invest a total of Rs 22,37,44,48,800 in the company. After this investment, the total stake of the promoters in the company will increase to 18.39 per cent.
2. Why buy at a higher price than the market price?
Dr Chandra revealed that the most positive thing about this deal is that the promoters are buying shares at a price of Rs 132 per warrant, which is more than the regulatory price (Rs 128.58).
According to Dr Chandra, this is the biggest proof of how much confidence they have in the future of the company.
How will shareholders get ‘double’ benefit?
In the interview, Dr Chandra said that the increased promoter holding will benefit the shareholders in many ways.
1. Restoration of trust
Dr Chandra said that the shareholders were uncomfortable with the promoter’s holding of only a 4 per cent stake.
Minority shareholders also believe that no one other than the promoters can run a large and complex business like ZEE, he said.
Increasing the promoters’ stake will strengthen investors’ confidence, Dr Chandra emphasised.
2. Zee’s growth will gain momentum
Dr Chandra said that the fund of Rs 2,237 crore will act as a ‘booster dose’ for the company.
This money will be used mainly for growth in content and technology, strengthening the balance sheet and rapidly implementing the strategic growth plan, Dr Chandra said, adding that it will put the company in a better position to compete with big competitors like Reliance and Disney.
Roadmap for the future: what next?
Dr Chandra said that there is still money to be paid in some accounts, which is being paid on the due date.
Also, money for infrastructure is also pending from the state governments, which was stuck for 4-5 years, said Dr Chandra.
He also said that there was already a plan to increase its holding in ZEE.
The board believes that by increasing the stake of the promoters, they will be more motivated for the growth plan of the company, said Dr Chandra.
This investment will put ZEE in a good position for the future, he said.
This news is a very positive sign for the investors of ZEE.
When the owners of the company themselves are increasing their stake by investing thousands of crores of rupees, that too at a price higher than the market price, it shows that they expect tremendous growth in the company in the future, said Dr Chandra.
This step will not only strengthen the company financially but will also increase the confidence of investors in the market, which can have a direct impact on the performance of the stock in the coming days, he said.
ZEEL share price rises
On Thursday, the stock of ZEEL was trading at Rs 144 with a gain of about 2 per cent.
In the last 1 month, the stock has gained 10 per cent. In the last 6 months, the stock has seen a growth of 14 per cent.
At the same time, this year the stock has jumped 16 per cent so far.
(This Article was originaly Published In Zee Business)
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