Vijay Television Private Ltd (VTPL), a joint venture between STAR Group and UTV Software Communications, has incurred accumulated losses of Rs 79.4 crore.
The loss, which is up to March 31, 2003, is expected to continue for at least the next couple of years, a source in UTV said. The audited figures for March 31, 2004, is still not out, but VTPL is expected to suffer net loss for the year. “The losses are as per the anticipated business plan of the joint venture. It is in investment mode and is making efforts to grow its business,” the source added.
According to the latest audited figures, VTPL posted a net loss of Rs 8.5 crore and a revenue of Rs 40.29 crore for the year ended March 31, 2003. VTPL provides content and infrastructure services to Vijay TV, a Tamil language 24-hour television channel.
Meanwhile, STAR increased its stake in VTPL by 5.11 per cent to 56.11 per cent through a combination of infusion of fresh capital and buying of a small part of UTV’s shareholding last year. In January 2003, STAR hiked its original stake of 51 per cent to 54.93 per cent. Subsequently in December, STAR bought five lakh shares at Rs 20 per share. Currently, STAR holds 56.11 per cent while the balance 43.89 per cent is with UTV. The current equity holding of UTV is at a carrying value of Rs 29.17 crore as at January 31, 2004.
STAR’s stake may go up further in the event of additional funds infusion out of cash flow deficit or repayments of funds borrowed by VTPL in case UTV does not increase equity proportionately. Borrowed funds include Rs 28.56 crore (as at March 31,2003) from banks. VTPL has also borrowed Rs 19.05 crore from SVJ Holdings Ltd (Mauritius), a STAR Group associate company, which is repayable starting March 2010.
UTV acquired from United Breweries Group Vijay Tele-vision Ltd, which operated a 24-hour Tamil language channel. In 2001-02, UTV entered into a joint venture with SVJ Holdings which acquired 51 per cent equity in VTPL for a total amount of Rs 19.92 crore. The business of VTPL was also restructured to cover the business of providing content, marketing and infrastructure support to South Indian language TV channels.