February 10, 2011

Information Wanted on Bennett Coleman And Bharat Nidhi Develpoments If Any

Viswaasp 's Query

Bharat Nidhi Ltd : There is some information that in Jeetega Jaun site that ther is likely to be reverse merger of Bhart Nidhi with BCCL and THere is likely to b IPO of BCCL in 2012. Any readers her Can commentabout implicatons if suchdevelopments materialise.?

In view of my earlier message Sellers in Bharat Nidhi think whether rethinking necessary? 

Bharat Nidhi ltd :Shri Sathyakam Mishrajee Can you please throw further light on the reported developments.


Satyakam Mishra said...

Part 1 -

In a reverse merger a private company merges with a publicly listed company that doesn’t have any assets or liabilities. The publicly traded corporation is called a “shell” since all that remains of the original company is the corporate shell structure. By merging into such an entity the private company becomes public. After the private company obtains a majority of the public company’s stock and completes the merger, it appoints new management and elects a new Board of Directors.

Though I believe many options are open for BCCL to list, am not sure that the BCCL will take this route. By definition in case of reverse merger the acquisition of a public company by a private company, allowing the private company to bypass the usually lengthy and complex process of going public.

I don’t think that BCCL is in hurry to list since we have seen that they have so far resisted the idea of listing. According to Times Group insiders, internal valuations attach the company at up to $30 billion (Rs 1,20,000 crore), while media analysts said that would be ambitious pricing since revenue is only $1.1 billion, and profit $0.3 billion. So its kind of vague predictions out there. I am sure BCCL will attract premium valuation as compared to its peers.

BCCL has diluted equity in individual businesses that are a part of the group:
• Zoom Entertainment Television: 25 percent to Merrill Lynch for $30 million; valuation of $120 million
• ENIL (Radio Mirchi, Times OOH) - BCCL owns 73.2 percent; raised Rs. 194.4 cr via an IPO
• Times Internet Ltd : raised $7 million from Westbridge Capital (now Sequoia Capital India)

Bennett's promoters, the Jain family, have apparently maintained in the past that the very profitable publishing house didn't need to raise external capital to fund its expansion and we have to agree to that. Indu Jain, the owner of BCCL, is the second richest woman in India. Her wealth is estimated at US $ 4.4 billion (Rs 17,307.4 crore), according to Forbes. So I assume that valuation of BCCL will be somewhat close that figure.

Satyakam Mishra said...

Part 2 -
There are various reason a company chooses to go for reverse merger. Some of them elucidated here. Lets discuss them with reference to the current rumors of Bharat Nidhi merging with BCCL.

Argument: The ability for a private company to become public for a lower cost and in less time than with an initial public offering (IPO). When a company plans to go public through an IPO, the process can take a year or more to complete. This can cost the company money and time. With a reverse merger, a private company can go public in as little as 60 days.
Ans: Since both are privately held there is no reason that they will go for reverse merger. Since they have waited so long and resisted listing, I am sure that they can surely wait for just listing that in appropriate way.

Argument: Public companies have higher valuations compared with private companies. Some of the reasons for this include: greater liquidity, increased transparency and publicity, and they have a faster growth rates compared to private companies.
Ans: Since both are privately held there is no reason that they will go for reverse merger.

Argument: Reverse mergers are less likely to be canceled or put on hold because of the adverse effects of current market conditions. This means that if the equity markets are performing poorly or there is unfavorable publicity surrounding the IPO, underwriterscan pull the offering off the table.
Ans: Since BCCL and Bharat Nidhi, both of them enjoy a dominant shareholding of the promoter group, there will be no hindrance to its reverse merger.

Argument: The public company can offer a tax shelter to the private company. In many cases, the public company has taken a series of losses. A percentage of the losses can be carried forward and applied to the future income. By merging the private and public company, it is possible to protect a percentage of the merged company's profits from future taxes.
Ans: Since both are privately held, there is no reason that they will go for reverse merger. Moreover, there are no issues of taking the benefit of accounting treatment of losses.

So the above points somewhat validate that the reverse merger is something BCCL will surely not opt for. Lets now see why they wuould want to go for reverse listing. We have seen in the case of Essar Telecommunications which is merging into its listed group company India Securities Ltd. to discover the true value of its stake in Vodafone Essar. Vodafone had objected to the move, saying it is concerned that the value of India Securities after the merger could be misinterpreted as a fair market value of unlisted Vodafone Essar.

So, if for god’s sake Delhi Stock Exchange starts, and they might reverse merge BCCL to discover the potential valuation of BCCL. Since they are the major holders in both companies, the valuation can be manipulated.

Most important: The shares of Bharat Nidhi and other group companies which holds stake in BCCL such as PNB Finance, Camac Commercial etc are heavily bought by some investor group. I don’t know if I am allowed to mention the name, but I think, in public interest I will. A group called Shri Parasram Holding (based in Delhi) and its associates holds substantial stake in all these above companies. They are kind of market makers in Bharat Nidhi, PNB Finance, Camac Comm etc. So some of the price rise and artificial volumes you see in Bharat Nidhi and PNB are kind of controlled by them and their associates.

Hence I would advice that to take cognizance of the series of completely false and baseless rumors. I think it will take some time to play out the BCCL and Nidhi stories. Let’s wait till then.

vishwaasp said...

Thank you very much Shri Satyakam Mishraji for the valuable information.

Satyakam Mishra said...

I dont see part 2 of my post. Mr Agarwal, please look into this.

Anonymous said...

For Bharat Nidhi and other Holding companies of BCCL.....this is an important update. Sir...pls post and share for everyones benefit.

Bennett, Coleman Said to Weigh IPO in India in Next Two Years
By George Smith Alexander - Feb 16, 2011
Billionaire Indu Jain’s Bennett, Coleman & Co. plans to give stock options to employees in preparation for a potential initial public offering in India in the next two years, said three people with direct knowledge of the matter.

Some senior staff at the Mumbai-based publisher of the Times of India and Economic Times were told about the stock options last week, said two of the people, who declined to be identified because there hasn’t been a formal announcement. Bennett, Coleman Chief Executive Officer Ravindra Dhariwal yesterday declined to comment.

An IPO by the publisher of the world’s largest English daily would allow investors to tap revenue growth in Indian newspapers even as U.S. and European rivals face declines in advertising sales. The Asian nation’s newspaper market, which has more readers than the U.S. population, may expand 6.8 percent annually, PricewaterhouseCoopers forecast last year.

“Overall media spends have been pretty buoyant” in India, Chennai-based Aashish Upganlawar, an analyst at Spark Capital Advisors Pte., said by telephone today. “As people spend more on consumption like automobiles, education and real estate, we are looking at higher spends in the smaller towns too.”

Bennett, Coleman may compensate employees with cash if the shares aren’t listed by Dec. 31, 2015, according to an internal document obtained by Bloomberg News. The options, which offer employees the right to buy shares at 446 rupees ($9.80) each, will vest over four years from the date of the grant, it said.

Indian Newspapers

India’s newspaper publishing market, which has 356 million readers, may expand 6.8 percent annually to $4.1 billion by 2014, PwC said in a report last year. The Times of India has 7 million readers, it estimated.

U.S. newspaper circulations continued to decline in the six months through September, with the average daily circulation for 635 newspapers falling 5 percent from a year earlier, according to Audit Bureau of Circulations data released in October. The Wall Street Journal had the highest weekday circulation of 2.06 million, while USA Today was second at 1.83 million and New York Times was No. 3 with about 876,600, it said.

New York Times Co., publisher of the namesake newspaper and the International Herald Tribune, on Feb. 3 reported a 26 percent decline in profit for the fourth quarter as print advertising and circulation revenue shrank.

Blackstone Group LP, the world’s biggest private-equity firm, in April said it planned to invest 2.25 billion rupees in Jagran Media Network Pvt. to benefit from a surge in readership in India. A unit of Jagran Media prints the Hindi-language Dainik Jagran, the nation’s most-read daily with 16.3 million readers, according to PwC.

The Times of India is the world’s largest broadsheet English daily and the group’s Economic Times is the second- largest financial newspaper, according to the website of the company’s Times Internet affiliate. Bennett, Coleman also has television, radio and advertising assets.

Jain’s net worth is $3.1 billion, according to a Forbes ranking in September.


vishwaasp said...

I am eagerly waiting for part 2 of Shri Satyakam Mishrajees Note.In the meantime there is News in Bloomberg site today that BCCL IPO could be in next two years. Please find in that site for deatails

vishwaasp said...

Shri Agarwaljee,Can you kindly arrange to post part 2 of Shri Styakamjees message

prabha said...

Bharat Nidhi Ltd. Buyer @ Rs6900

vishwaasp said...

Shri Agarwaljee,is part2 of Styakamjees message lost or missing.Why no action yet?Sir,?

vishwaasp said...

Respected Satyakamjee, can you follow up for publication of that part2 of your comments which is not done yet even after several days,and is being ignored. I value your learned views immensely and hence this repeated request,

Satyakam Mishra said...

Dear Mr Vishwaasp,

I dont have the copy of the same and hence request you to follow with Mr Agarwal.

vishwaasp said...

Dear Satyakamjee it is surprising that there is no response from Blog administrator as yet even after so many days .I am wondering why this is so.

vishwaasp said...

Now that part 2 of Satyakamjis comments are published I am happy dear Agarwaljee.

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