Decks are being cleared for the Sun Group to launch its direct-to-home (DTH) operations. The Ministry of Company Affairs (MCA) has given the go-ahead to the Mr Kalanidhi Maran-promoted Sun Direct TV Private Ltd's proposal.
"We were examining the proposal under the Companies Act. The findings reveal no violations of the law and we have forwarded it back to the nodal Information and Broadcasting (I&B) Ministry," said a senior Government official. The ball is now in the I&B Ministry's court.
The proposal for starting DTH operations through a separate entity within the Sun group, under Sun Direct TV Pvt Ltd, was submitted a few months ago. Since the Maran family was making investments as individuals, questions were raised on whether the existing guidelines were being flouted.
As per the application, Mr Kalanidhi Maran held 96.67 per cent while his wife, Ms Kaveri Maran, holds the remaining 3.33 per cent. The paid-up capital is about Rs 150 crore, while the authorised capital is pegged at about Rs 200 crore. Mr Maran is also the Chairman and Managing Director of the Chennai-based Sun Group with 60 per cent stake. Since, the group owns the Sun bouquet of channels and some cable networks, there were questions on crossholding between the two entities.
According to the existing DTH guidelines, while the total foreign equity holding, including FDI/NRI/OCB/FII in the applicant company should not to exceed 49 per cent, the FDI component has been fixed at 20 per cent. Also, no cable or broadcasting company can hold more than 20 per cent equity stake in the DTH venture. Simultaneously, the applicant company is also not allowed to hold more than 20 per cent in any broadcasting or cable company.
Earlier, there were reports that the DTH application of the Maran family-promoted Sun TV appeared to have run into rough weather with the MCA finding the proposal not conforming to the guidelines.
The company, which is a dominant player in the southern market, is planning to use the DTH route to expand to other markets. According to analysts, the group is keen on controlling distribution of channels and entering DTH is viewed as an option. "It is on the verge of buying out RPG Netcom, an MSO in Kolkata, and is eyeing other cable networks to consolidate its presence," they added.