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Rediff News  All News  » Business » Star to have 2 directors on Balaji board

Star to have 2 directors on Balaji board

August 20, 2004 09:07 IST

The Star group, which has agreed to acquire a 25 per cent stake in Balaji Telefilms through a preferential issue, will appoint two directors on the board of the software production company.

Asian Broadcasting FZ-LLC, an affiliate of the Star group, said it will subscribe to 17.26 million fresh shares, representing a 25.1 per cent stake of the expanded equity capital of Balaji Telefilms, for Rs 90 a piece.

Star arm to buy 25% in Balaji

The total investment is pegged at Rs 155 crore (Rs 1.55 billion).

A source in Sony Entertainment Television said its relationship with Balaji Telefilms will continue unless the management control of the company is changed.

"We will have a relook at our strategy if the ownership of the company changes," the source said. Sony Entertainment Television now shows two Balaji serials -- Koi Dil Mein Hain and Kkusum.

Sources in Balaji Telefilms said the representation of the Star group would expand the size of the company's board to eight.

Now the Balaji Telefilms board comprises Jeetendra Kapoor, Shobha Kapoor, Ekta Kapoor, Raj Bothra, Akshay Chudasama and Dhruv Kaji.

A Star group spokesperson told Business Standard from Hong Kong that the funds being infused through acquisition of preferential shares would enable Balaji Telefilms to grow faster.

She added the management as well as operational control would continue to be with the promoters of Balaji Telefilms. "The Star will be a strategic investor in the company. It has no plans to increase its stake in the company," she added.

The price of the preferential issue has failed to cheer the market.

The Balaji Telefilms stock closed at Rs 88.35 today, a 4.21 per cent lower than its overnight close. It opened at Rs 92.15, scaled an intra-day high of Rs 97. The intra-day low was Rs 87.75.

Balaji Telefilms is one of the key content providers to Rupert Murdoch's Star group flagship channel in India -- Star Plus. The deal, according to analysts, could be viewed as a backward integration move by Star to consolidate its position in India.

Star Plus is currently the leader in the India cable and satellite industry with maximum viewership. The distant number two player is Sony Entertainment Television followed by Zee TV.

As on June 30, the promoters held 52.94 per cent stake in Balaji Telefilms.

Foreign institutional investors held 23.79 per cent stake, while the combined holding of mutual funds and UTI was 1.15 per cent. Private corporate bodies held 7.46 per cent, while 13.43 per cent was widely held by the public. Non-resident Indians hold 0.25 per cent stake.
BS Corporate Bureau in Mumbai