Sony Pictures Television hopes to close the proposed deal of buying about 32 per cent held by Indian promoters in Multi Screen Media Private (MSM), which runs Sony Entertainment Television in India, by March 31, 2013.
“We hope to close the deal by the end of this financial year, after which the Indian venture would be a wholly-owned subsidiary of Sony Pictures Television,” Andrew J Kaplan, president (worldwide networks), Sony Pictures Television, told Business Standard. The company had actually aimed to close the transaction by December 31, according to a previous statement by it.
It got a bit delayed as regulatory approvals took more time than expected. The department of industrial policy and promotion had asked the foreign investment promotion board (FIPB) to seek the views of the ministry of corporate affairs on whether the deal undervalued the shares and rights of the minority shareholders. The issue was discussed at the FIPB meeting on October 19. “We have got approvals from all authorities. A formal letter of approval is to be received,” said Kaplan on Monday.
In June, MSM had sought approval from FIPB for transfer of 12.11 per cent holding of Atlas Equifin in MSM India to SPE Mauritius Investments, Mauritius.
Besides, it has asked permission for transfer of 20.28 per cent stake of MSM India, held by Grandway Global Holdings Ltd, Mauritius to SPE Mauritius Investments Ltd, Mauritius.
After the sale and transfer of shares to SPE Mauritius Entities, SPE Mauritius will hold 94.39 per cent in MSM India, increased from 62 per cent. Foreign holding in MSM India would increase from 87.99 per cent to 100 per cent.
“A deal is a deal. There would not be any change in the deal structure once it is sealed,” he said.
DIPP has also mentioned that examination of fund flows has revealed that funds have been routed through Mauritius-based Conduit Company through a multi-layered structure to avail the India-Mauritius DTAA. DIPP has cited it as a clear case of treaty shopping.
Atlas Equifin was shown as the only resident shareholder, while Grandway was shown as the non-resident shareholder. Shares held by Grandway Global Holdings, Mauritius were transfer to SPE Mauritius Investments Ltd, Mauritius.
DIPP had said that approval should be given once the company pays the due taxes on the transaction based on the facts and valuation of shares arrived at after examination. The Department of Revenue (DoR) has also said that the taxation of dividend and future capital gains on alienation of shares by the investor shall be governed by India-Mauritius DTAA, on the principle of ‘resident based taxation’.
In FY11, MSM’s revenue stood at $395.1 million, while its revenue stood at $592.5 million during FY12. EBIDTA has also increased from 67 in FY11 to 139.9 in FY12, according to the company’s balance sheet.
MSM runs eight channels — Sony TV, SET Max, SAB TV, Sony Pix, AXN, Animax and the recently launched music channel Mix and sports channel Six.
