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Subhash Chandra to divest stakes in AB Corp, B4U

Anjan Mitra & Surajeet Das Gupta

The Subhash Chandra-promoted Essel group will divest the equity stakes held in AB Corp and B4U which was bought from Ketan Parekh.

The Essel promoters will also return the money used for the acquisition of the shareholding in these companies to Zee Telefilms before June 30, 2001. Zee had extended Rs 500 million inter-corporate deposits to Parekh in lieu of the stakes in AB Corp and Essel.

"We have decided that Essel will keep the shareholding in AB Corp and B4U in its own books and divest it at the first opportune moment. It will not be transferred to ZTL at any time," Subhash Chandra, chairman of Zee Telefilms, said on Tuesday.

Chandra said the decision by the Essel promoters to retain the shareholding in their book was taken as the minority shareholders of ZTL objected to such investments in companies where proper valuations had not been done

According to Chandra, "As promoters we will also not like to keep these assets as it will be in conflict with the interest of the minority shareholders and other businesses of ours. At an appropriate time we'll sell off too."

Pointing out that big bull Ketan Parekh, now under CBI's scrutiny, did trade in ZTL shares till six months back, Chandra said, "One of our investment companies, which I do not control and is looked after by a family member, had given Rs 500 million (to Ketan Parekh as part of inter-corporate deposits) sometime back."

Though Parekh is yet to return the amount loaned to him "in desperate times", Chandra said it is secured against Parekh and companies' shareholding in AB Corp and B4U and some other assets.

Chandra said, "This was a commercial decision, but whether it was a good decision or bad decision I don't know. He (Ketan Parekh) was in desperation. When some investment banker comes up with a proposal that whether we would like to pick up shareholding in other media companies where we would be interested, it seemed a good move. Where we went wrong is that we did not know he had deeper problems."

Chandra said Parekh had invested about Rs 750 million in AB Corp, which has earned substantial revenues this year.

Chandra also pointed out that stakes in AB Corp and B4U made sense as ZTL had picked up minority shareholding in several TV software companies. Parekh had investments in other media companies too like Tips and Subhash Ghai's Mukta Arts. "We had earlier taken a decision to invest in media companies which we thought had synergies with Zee."

ZTL has already taken minority positions in TV and film production companies like Tracinema, Pakhi Entertainment, Pratham Media Entertainment and Karma Network Ltd.

On being asked whether Parekh actually holds 15 per cent stake in B4U (disputed by the company), Chandra said,"That's what was represented to us and it is on document."

Asked specifically about Zee and Parekh's relationship, Chandra said, "There was no association earlier with Ketan Parekh except that he was an investor in the ZTL stocks."

Dwelling on the quantum of shareholding that Parekh through his companies held in ZTL, Chandra said in April 2000 the holding was about 1.1 million shares (about 0.2 per cent), while in April 2001 Parekh's companies held 56,000 shares. "We could get that as a record. For the last 8-9 months, we learn, he had exited from our stocks," he added.

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