BackEros International to simplify corporate structure
The company has also constituted a board to provide it with possible solutions on simplifying the structure
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Mumbai: NYSE-listed Eros International Plc is planning to make changes to its current corporate structure, to simplify it and make it more transparent, say analysts tracking the company. The company has also constituted a board to provide it with possible solutions on simplifying the structure. “The board has appointed a committee to investigate potential solutions, which we believe could include de-listing or acquiring outstanding shares in the Indian subsidiary," said Jefferies LLC in its research dated November 15.
Eros International declined to comment on the development.
This, however, would require joint action with Reliance Industries (RIL) as it would provide investors with greater transparency along with a simplified operating structure, added Jefferies.
This February, RIL bought a 5% stake in Eros with a commitment to invest up to Rs1,000 crore to produce and acquire Indian films and digital originals across all languages. RIL and Eros also partnered to jointly produce and consolidate content from across India.
So far, RIL has Hotstar and Roy Kapur Films on board. Last year, RIL also bought a 24.9% stake in Alt Balaji, a wholly owned subsidiary of Balaji Telefilms, for Rs413 crore. Alt Balaji is a subscription-based video-on-demand platform.
Eros’ chief executive officer Jyoti Deshpande joined RIL’s media and entertainment business to build RIL’s initiatives in media and entertainment to organically build and grow businesses in broadcasting, films, sports, music, digital, gaming, animation etc., as well as integrate RIL’s existing media investments such as Viacom and Balaji Telefilms.
With funding from RIL, Eros expects to maintain the financial flexibility to continue investing in both Eros and the studio. “Looking at F2019, management expects to put $75 million behind Eros Now and $175 million in the studio, for a total of $250 million in capital expenditure. Over the course of the next three years, Eros anticipates investing $750 million total (covering both originals as well as the studio slate), predominantly funded with free cash flows," added Jefferies.
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