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What is the status of the sale of the stake in ZEE? Will this happen before the 30 September deadline agreed by the lenders?
When we started the process, Goldman Sachs and LionTree brought the case to about 12 to 14 vigilantes in December 2018. We pulled out two potential players. But apart from these two, we now have three new players who joined the dialogues, who approached us directly without going through the bankers. The big names have been around, but at this point, I will not confirm or deny any name. Now, among those five preselected players, I sincerely believe that we should have sheets of non – binding terms by the end of April or the first week of May.
"No dislike for any financial investor"
The lenders have given us until September 30, and I am confident that the transaction should very much materialize by then. Our main goal is to get out of it simply by repaying everyone's money and that too fortunately.
Why are these players keen on EEZ?
Every player on the list has a different reason to deal with us. But the common thread is that all want to have direct access to 1.4 billion people.
Some appreciate our know-how in creating quality content at a reasonable cost, not just in Indian languages, but even in foreign languages, while someone would like to know more about the Indian market and there enter. For them, there is no better platform than ZEE to deepen the knowledge of the Indians.
Some want to badociate content with e-commerce. Everyone has different and unique reasons to participate in the transaction. Some wish to take full control, some are doing well with 50%, and others are doing well with less participation. I hope that there is good and healthy competitive tension between the last two, as this will only generate a higher value.
Do you also have your own criteria for selecting the potential buyer?
Our desire is certainly to choose some for values rather than for evaluations. The player must add value to its stakeholders and help ZEE to grow globally: a claimant who values India and Indian traditions will certainly be chosen, and even more so who is pure in the commercial approach overall, without any vested interest.
Are the five selected players international or national?
Selected candidates range from Japan to India via Europe and the United States, including the west coast and the east coast. You might be surprised by the names.
Earlier
you were looking for strategic partners. Now that the scenario is different, do you also consider financial investors?
Today, even private equity firms are becoming very aggressive. Let's see how it looks. As I said, our goal is to get a refund from all the lenders, which does not matter, as long as the partner is able to add value to the business. Although I will not go into detail at this stage, we are not opposed to any financial investor.
Is Sony permanently eliminated?
I would maintain the same position. We can not really say anything at this point.
What are the other activities of the Essel group?
In the case of infra activities, we try to complete the projects and sell them to get the good value, post that, Essel Infra stay as a platform, which was built with the potential of bid a unique tender for Rs 30,000 crore. We will then take one last call if we were to sell the platform equally or not.
Other non-core activities such as Essel Finance and mutual funds will also be sold. I am also looking to sell some of my private properties. I do not feel any shame in selling properties to help me repay the money.
Is there a possibility that, if other companies are sold, the obligation to sell ZEE's interest is not felt?
No. Even if the other companies generate a good sum, we will have to sell a stake in ZEE to be able to cover the debts.
You said that people wanted to buy more than 50% of the capital. How flexible are you in this regard?
It all depends on the respective commercial preferences of the preselected players. It is (more) complicated than it appears and we will collectively come to a decision that will best suit the company and its stakeholders.
Much has been written about the current financial situation of the Essel group. How do you see these concerns?
Many companies are stressed throughout the country, but I think the Essel group is different from the others. Regardless of everything written on our companies since January 25th – when stocks have fallen – we are not reacting. In fact, the activities are proceeding normally as operational companies continue to perform exceptionally well. At ZEE, we continue to deliver double-digit growth and there is no stress. Some projects in the infrastructure sector have surely encountered obstacles. But we built strong businesses and received no favor from a political party.
My sons – Punit and Amit – work much better than before, which is the greatest satisfaction for me as a father and founder. In addition, our goal remains to create value for our shareholders. So, from the outside, you may perceive that the group is stressed, but if you talk to our employees, they will stand for good functioning.
As president of the group, how do you intend to get him out of the current situation?
In 90 years of Essel's existence, it is the third slowdown that I see – the first occurred in 1967, then in 2008 and now the current one. I firmly believe that, because we have remained focused, we could overcome the so-called valleys of death and I am 100% confident that this time also we will emerge as strongly as we did before.
In the last 50 years alone, we paid 39,000 crores of interest to the banking system. It was one of the elements of cost always. Compared to that, the current debt is much smaller.
We have a plan in place. If you look at the sale of badets in our sector below, I think it will be completed between July and September. With this debt of 15,000 to 16,000 crores of operating companies and 3,000 crore of corporate debt, it will be cleared. So, overall, about 20,000 crores of debt will be easily erased. The rest will be supported by the sale of interests in ZEE.
Is it true to say that it is the burden of debt that prompted you to announce your intention to sell an interest in EEZ in November 2018?
The basis of the decision to sell the stake in ZEE was our discussion with technology company, which demonstrated its ability to help us take EEZ on a global level. Of course, we took into account the level of indebtedness of the promoters, but the treatment of this question was secondary.
Let me put it this way. If the Infrastructure & Leasing Services (IT & FS) problem had not arrived and the entire non-bank finance companies (NBFC) sector would not have gone through the difficult stages, our debt levels would probably pbaded unnoticed.
That being said, we had clear visibility on the repayment portion of our badets infra and others. In addition, this does not mean that we were stressed because whatever loans against the actions we had taken, they were renewed.
However, it is not the moment to look back and it is important to accept the same. One day, we suddenly experienced the fall of share prices, which no one could have managed. I am happy that we have now more or less forgotten these negative forces, because we have remained positive only after this episode, especially after my open letter and my meetings with the lenders.
What prompted you to send an open letter accepting your trade mistakes? Looking back, was it the right choice?
On January 25, when our stocks were exhausted, myself, a student at Vipbadana, I remained calm in my room and began to write the letter. The team was surely reluctant, but I said no, I must write what is true and correct. You can accuse me of bad business decisions, but no one can blame me for keeping a single rupee. People can say anything about me, but I am sure of my commitment and trust to repay every lender. That's why, even now, I sleep well.
Recently, Kotak AMC criticized the ZEE exposure for the reason that it was unable to meet its fixed-term plan commitments with respect to investors.
I am surprised why this issue of Kotak AMC was addressed, despite the confirmation that they will support us until September 2019. They are really part of the global consortium of lenders who have unanimously agreed and we have given time until September. I do not understand why this was mentioned, and I have no idea of their agreements with their investors. If they did not pay their investors, I really can not say the same. HDFC, on the other hand, emphasized the fact that they had won a lot of the group and that if they were to pay a penalty, they would pay it, which would enhance our overall trading relationship. Each banker has a different way of working. But I will leave it there.
What do you see as a trend for the media in the future?
Content creation will remain the core of the media sector. The content will be independent of the platform and the innovations will continue. Your series will have scenes that can take you to a virtual reality zone. The screens will become a futures market, which will allow e-commerce, medical aid, communication, design, presentations, testing of new clothes on the screen, and so on.
What do you think of the merger of Dish TV and Airtel Digital TV?
Dish TV is directed by my brother Jawahar. I will not comment on the same thing.
Reflections on the future of the band?
We will talk about the future once the agreement is reached and the lenders are fully paid.
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