Apex court says SEBI can seek relevant information from Sahara group companies, but should not restrain them from raising money from capital markets
In what appears to be a severe blow to the market regulator, the Supreme Court on Tuesday asked the Securities and Exchange Board of India (SEBI) not to restrain the Sahara group from raising money from the capital markets. The apex court also said SEBI can seek all relevant information directly from Sahara group companies.
The Supreme Court order was on a petition by SEBI challenging an Allahabad High Court stay on a ban by the regulator on the Sahara group raising money from the markets. The dispute is related to SEBI’s restriction in November on Sahara India Real Estate Corp Ltd (SIRECL), Sahara Housing Investment Corporation Ltd (SHICL) and Sahara group chairman Subrata Roy.
A bench headed by chief justice SH Kapadia said, “We make it clear that SEBI is entitled to call for any information which it deems fit, including names of the investors who have invested in optionally fully convertible debentures (OFCDs).”
The bench, however, declined the plea by the SEBI counsel to stay the plans of Sahara group companies to raise money from the market through OFCDs. The Supreme Court also asked the Registrar of Companies to appear before the Allahabad High Court and file its reply in this matter.
SEBI had acted on complaints it had received against Sahara Prime City Ltd (SPCL), which alleged that the company's sister concerns, SIRECL and SHICL were issuing OFCDs, in violation of the statutory requirements of disclosure. Subsequently, the market regulator issued an order restraining the Sahara group companies from raising money through OFCDs for non-disclosure of information.
SIRECL challenged the SEBI order before the Lucknow bench of the Allahabad High Court, saying that the market regulator has no jurisdiction over the company, as it was neither a listed company in any stock exchange nor intending to be listed in the future. It said that the company was regulated by the Ministry of Corporate Affairs under the Companies Act 1956 and not by SEBI.
The Sahara group claimed that in February 2008, SIRECL decided to raise funds from OFCDs by way of private placements. This was mentioned in its red herring prospectus filed with the Registrar of Companies at Kanpur. In the filing, SIRECL also mentioned that in the OFCDs only those persons would be eligible to apply to whom the information memorandum was circulated or approached privately and associated with Sahara group of companies.
Objecting to SIRECL's claims, SEBI said that according to section 67 (3) of the Companies Act, an offer made by less than 50 persons could be treated as a private placement, but if the offer is made by more than 50 persons then it should be treated as a public offer. Till June 2010, the total investment made through OFCDs in SIRECL was about Rs4,843.40 crore and interest accrued and due for payments was around Rs541.80 crore. SEBI said that keeping in mind the amount involved, this should be treated as a public offer and should require the company to become a listed entity.
The High Court bench observed that the issue was still open and that the union government is examining it. The bench then stayed the SEBI order.
The case is due to come up at the High Court again on 12th January. But SEBI approached the Supreme Court to decide on the validity of the interim order of the Allahabad High Court.
Fragmented market and rising costs leave entertainment channels facing another year of struggle
2011 is here, and the media is glowing with optimism. Perhaps, it's what also sells. For, the media sector will be hoping that it can do better in the next 12 months, than it has recently. Particularly television channels, which are gearing up to improve their share of advertisement revenues. The advertising pie is expected to grow to a whopping Rs21,000 crores this year. But it's difficult to foresee how the broadcasters' efforts will work out in a sector that continues to be fragmented?
Thus far, TV companies have by and large relied on gorgeous costumes and elaborate sets to hook viewers. But with more options available now-like the internet-the shimmer and sequins may not be enough to hold their attention. Television has had many gala launches and glamour events. And as new launches (of programmes and even more channels) gave rise to new hopes, broadcast companies have seen their revenues shrink. However, producers are not deterred and they are making renewed efforts to jazz things up.
Experts believe 2011 will be the year of high definition (HD) TV. It has already caught on in Europe and the US, and now our very own Hindi channels are working along these lines. Producers are banking on premium audiences paying for the HD format, which is available only through DTH services.
The costs of serials, reality shows and other programmes produced to dazzle audiences have skyrocketed. An example is Sony's latest instalment of Jhalak Dikhla Jaa that is on a much grander scale, while Imagine is also polishing its new productions. Serials like Star's Gulaal and Pyaar Ki Yeh Ek Kahaani feature extensive outdoor shoots. Costumes and sets for most programmes are painstakingly detailed. But who's winning the TRP fight? Analysts say, no one in particular. (TRPs, or television rating points, is a measure of the popularity of channels or their programmes that is particularly useful for advertisers.)
"With so many channels and so many programmes, the options have increased," says Atul Nadkarni, a financial analyst. "After the death of the Tulsi-Parvati addiction, it has become very difficult to sustain the viewer's attention. The problem is, the content across the sector is so similar that people hardly find anything of interest. Targeting niche audiences who are willing to pay to see more grandeur may work, but the chances are slim."
Star Plus, is among some of the Hindi general entertainment channels (GECs) that launched the HD format some time ago. The result was a massive loss as most subscribers did not think it worth paying more to watch a channel on HD that they could enjoy pretty much on the existing DTH platform.
BBC Entertainment, which launched in India last year, saying it would provide 'original' entertainment instead of re-runs, managed the incredible feat of not being able to garner even a single advertisement. Warner Brothers declared that it had made a profit, but sank without a trace, and it is left to show bombs like Catwoman. Even some popular GECs like Colours, Zee and Sony, managed to make money intermittently.
So why are these otherwise much-talked about entertainment channels struggling? A lack of consolidation, suggests Mr Nadkarni. "When there are similar channels providing similar entertainment, the audience loses interest. The launch of new channels has only fragmented the sector, which has its effect on advertisement revenues."
The attempt to glam up could result in bigger losses-because as the costs rise, very few people will be ready to pay more. And with all the channels jazzing up, viewers will get similar bling any and everywhere. This age, which has seen people tire of 3-D, is unlikely to go crazy over shinier sets, whether it is for dance or food shows.