MUMBAI / NEW DELHI: The 'cleanliness drive' at Zee continues. The Zee Telefilms board has cleared another major phase of capital restructuring to clean up its balance sheet further.

The media major has decided to write down its investments in its overseas subsidiaries by Rs 17.716 billion.

Now that a majority of Zee's overseas television channels are being shifted to India, the value of Zee's overseas investments into these businesses is being restructured to correspond to business restructuring of foreign operations, says a company statement.

The upshot of this restructuring will show on Zee's net worth that will get reduced by Rs 19.207 billion from Rs 38.654 billion to Rs 19.447 billion.

Deloitte Haskins and Sells, which had been appointed to value the business of Zee's overseas subsidiaries, has pegged the current value of these businesses at Rs 12.3 billion - lower than the Rs 30 billion valued at the time of acquisition of these companies.

Zee Telefilms CEO corporate strategy Rajiv Garg told indiantelevision.com that the transfer of capital of overseas companies into Zee Telefilms would take up the company's valuation in proportion to the reduction that would happen in the overseas entities.

This move comes in the wake of Government policy changes regarding uplinking of channels from India. Following the lifting of regulations on uplinking, other than the three channels - Zee MGM, Zee English and Trendz - all other channels in the Zee bouquet are now being uplinked from India.

The restructuring move is being taken up to reflect the intrinsic value of its business, says the statement, adding that the restructuring measures are aimed to reflect the true book value of assets in Zee's financial statements.

Rs 1.5 BILLION SITICABLE LOSSES WRITE-OFF
Zee is also restructuring its investments in its cable arm Siticable. Accumulated losses in the company amounting to Rs 1.49 billion will be written off by way of reduction in the share capital of Siticable. As a result of this reduction, corresponding Zee investment in Siticable would also get reduced and that would be reflected by way of corresponding reduction in Investments and Share Premium Account of Zee.

This restructuring comes on the heels of the implementation of Headend in the Sky (HITS) project, which would cause certain moveable assets to be replaced by technologically upgraded equivalents.

Garg clarified that the capital restructuring is being done to also facilitate the company and its subsidiaries like Siti Cable to properly chart out a future roadmap.

Quizzed by indiantelevision.com whether this restructuring also means spinning off Siti Cable as a separate company and going in for an initial public offer (IPO), Garg said that "these are all possibilities." On Siti Cable being made a public company, Garg said, "That is certainly an option with us. Any final view on the matter would be taken at an appropriate time."

Further queries whether the restructuring being effected would also have a bearing on Zee News' operations from India as it has to comply with government norms of having its foreign holding capped at 26 per cent, Garg said that the case is being still studied and "appropriate action would be taken by the deadline (26 March)."

Zee Telefilms has convened an extra ordinary general meeting on 25 March to seek its members' nod for the proposed restructuring.