To consolidate its digital businesses, the Board of Directors of Zee Entertainment Enterprises Limited (Zeel) approved the acquisition of balance 49 per cent equity stake in India Webportal Pvt Ltd (IWPL), a 51 per cent subsidiary of the company, from its existing shareholders for USD 30.7 million (Rs 200 crore); and 12.5 per cent equity stake (on fully diluted basis) in Tagos Design Innovations Pvt Ltd., Bangalore for USD 2.5 million (Rs 16.15 crore).
IWPL is engaged inter-alia in the business of media content management, including digitisation, content aggregation, conversion, creation, distribution through webportals, communication facilities and providing digital infrastructure, application, facilities, etc. IWPL distributes media content on digital platform through various websites, including India.com, Bollywoodlife.com, Cricketcountry.com, Thehealthsite.com, BGR.in, Oncars.in etc.
IWPL had a total income of Rs 411.6 mn in FY 14-15 while the company had recorded a loss of Rs 88.6 mn. In the next year, it had witnessed a turn around with profit of Rs 26.3 mn on a total income of Rs 716.9 mn. In FY 16-17, the company reported a turnover of Rs 647.2 mn and a loss of Rs 137.9 mn.
IWPL acts as digital arm of the company and has the potential to consolidate and scale-up the digital business. The acquisition is based on a valuation report issued by an independent valuer BDO India LLP, Chartered Accountants, recommending fair value of INR Rs 16.35 per equity share of Re 1 each. Upon completion of this acquisition, IWPL shall become a wholly-owned subsidiary of Zeel.
The in-video discovery platform developed by Tagos in synergy with the company’s OTT business has potential to scale up revenues of OTT business.
Zeel shall subscribe to 1 equity share of Rs 10 each and 2,905 preference shares of Rs 10 each (convertible into equivalent number of equity shares) of Tagos at an aggregate consideration of USD 2.5 mn (equivalent to INR 16.15 crore). The investment on a fully diluted basis (post conversion) will be equivalent to 12.5 per cent in the paid-up capital of Tagos.
Both the transactions are expected to be concluded within 30 days.